What Paramount’s VOD Deal with AMC Means for Home Viewers

If you pay any attention to the business side of the movie business, you know that collapsing theatrical windows — the period of time between when a movie hits theaters and when it’s available for home viewing — have been a giant, bitter bone of contention between exhibitors and distributors. Over the past few years, deals have been announced, threats have been made, and boycotts have been proposed, all because theatrical chains don’t want to see their already declining ticket sales disappear to the convenience of streaming and downloads. So it’s big news that one of the major chains and one of the major studios have come to an agreement to reduce the window — but it’s an agreement whose conditions and fine print are a good deal less revolutionary than the headlines it’s generating suggest.

Some background: since the beginning of widespread home viewing via the VHS tape, major studios and theater chains have agreed on a window of at least 90 days between a film’s theatrical premiere and its home video debut. When that tradition began back in the 1980s, movies would typically take six months or more to hit video, but that window has shrunk, in recent years, to four and even three months. At the same time, studios have attempted to launch premium on-demand services to stream films that haven’t yet passed that mark, but have proven reluctant to buck the boycott-threatening chains; the same chains have promised not to book the films on Netflix’s original film slate, which would open simultaneous to their streaming debuts.

VOD movie screen

A new deal between Paramount and AMC and Cinemark (two of the biggest chains in the US and Canada, respectively) would experiment with a new model. The conditions of the deal make two of Paramount’s fall films — Paranormal Activity: The Ghost Dimension and Scouts Guide to the Zombie Apocalypse — available for streaming 17 days after their domestic theater count drops below 300 screens (usually about five weeks). And during the period between that date and the end of the traditional 90-day window, the studio will share an undisclosed percentage of their digital revenues with the theatrical chains.

That last point is, of course, what makes this arrangement different from the previous attempts to collapse the window, and most certainly the key to why the chains are playing ball. Exhibitors have long seen the collapsing window as a direct hit to ticket sales, and for good reason; after all, they seem to tacitly admit, who would tolerate our shoddy exhibition and overpriced snacks and texting audience members and general indifference if they could just watch the same movie at home in a month (or less)? But offer them a payout, and suddenly they’re willing to sit down at the table.

Yet the specifics of this particular experiment make it sound less like a bold new exhibition model than a PR move. The films in question are low-budget horror movies, which traditionally make all of their money in the first couple of weeks anyway — a statement that holds doubly true when considering their respective release dates of October 23 and October 30. Nobody goes to see a horror movie after Halloween, and frankly, most fans see horror movies the first weekend; Paranormal Activity 4, which opened on roughly the same weekend in 2012, dropped 70 percent in week two, and saw a 50 percent drop between weeks two and three (the first weekend in November).

Still from "Paranormal Activity: The Ghost Dimension"

And that’s why this particular deal seems unlikely to change much, or tell us much of anything — because not only are horror fans first-weekend ticket buyers, but they’re also more prone to going to theaters, where the communal experience of a horror movie (jumping together, screaming together, laughing together, and, more often than not, texting together) is part of the draw. Paramount has merely figured out a way to hustle into homes two movies that wouldn’t be doing well in theaters during that period anyway, and will hand over some of the money it generates to the chains, for a block of time during which they most likely wouldn’t have seen any serious tickets sales.

Paramount’s not trying this experiment on a movie like this month’s Mission: Impossible — Rogue Nation, because that’s something the chains wouldn’t tolerate. They know that their bread and butter remains the big-franchise blockbusters, which moviegoers are more likely to insist on seeing on a big screen — and that’s fine with the studios, which increasingly only want to make those movies anyway. And that seems to be where the theatrical experience is heading; pay your 20 bucks, get your 3D glasses, see the movie that goes boom.

What the studios should focus on is how to rework the model to the advantage of, scant though they may be, their smaller movies for grown-ups — the portion of their audience that is more inclined to wait out the window and watch movies at home. Independent distributors have figured out how to cater to that audience, by releasing indies on demand at the same time as their limited theatrical release (or, often, before it), but the 90-day agreement prohibits the majors from adopting a similar strategy. And that could be the one thing we learn from this little experiment: that exhibitors are willing to make a deal, as long as it includes a favorable slice of the digital pie.