Trouble In The House Of Mouse

I need moviegoing to survive. I love its traditions, its legacy, and its potential for bringing people together. Week after week I write these essays hoping that people in the business of exhibition will see the potential of the future of moviegoing and build their own vision of what this business should look like away from the twisted influence of the studios. Streaming is at best a false god that erodes what should be a healthy ecosystem.

Disney has had a bit of a scare with the less that anticipated growth of Disney +. As a result the Mouse house made the decision to exclusively release to theaters its remaining 2021 movie slate. Starting with The Last Duel's release in mid October, Disney will ever so graciously give? theaters a 45-day window of exclusivity for its next tranche of movies before they appear on the Disney+ service.? In short when new Mandalorian episodes are nowhere near opening, there had better be something on Disney+ that has some marquee value.

In May, the entertainment giant reported 103.6 million Disney+ customers at the end of last quarter, shy of the 110.3 million projected. The shares fell as much as 5.4% in New York trading. This is significant.

But recently, a lack of new programming has made it much more difficult for Disney to compel new subscribers onto its platform. Production delays caused by COVID-19 have impacted Disney. As an aside, Netflix also posted disappointing subscriber numbers. Now Disney has projected that by 2024 they will have 260 million subscribers globally. If they do not make this benchmark, the boyars of Wall Street will let them have it.

Now on top of missing their projections, there is the deep threat of a strike by the 60,000 members of The International Alliance of Theatrical Stage Employees. If the union votes “yes” on a proposed strike authorization which is supposed to take place October 1st, a projected 60,000 IATSE members could start manning the picket lines making the strike be the largest private sector strike in the United States in over a decade.

The strike will shut down most production in North America. This strike would take camera operators, grips, costume creators, script supervisors, writers’ assistants, set decorators, and many crafts off the job. This essentially makes Hollywood grind to a halt. In regards to streaming, it significantly impacts its ability to attract new viewers.

As a result Disney has had to eat a little crow and has begun to realize that the only true way to sustain life is to feed the business of exhibition. Windows hurt everyone and diminish the ability for a movie to produce sustained revenue. This whole situation just gives deep testament that Hollywood really rises and falls by its Wall Street 10Q and 10K reporting. For them there is nothing else that matters. Okay streaming is doing okay, let's gut the theaters, streaming stumbles like a cheating spouse returning home…well hello theaters, We were so wrong baby its always been about you and only you. I’ve changed. I really truly have.

At the very least, the theaters should be demanding that Hollywood go sleep on the couch. Theaters must learn about the loyalty of the studios during this time of pandemic and they should be asking for a better deal. The value that theaters provide goes way beyond the box office, the residual value of a theatrical release? is usually 4x the impact of a streaming release. It is time that either through reduced rentals and less hold times that theaters should be compensated. It is just fair.

We know that if the streaming numbers see an uptick, the wandering eye of the studios shall come into play, economic adultery is a culture within the four walls of most Hollywood studios.? But we have other issues above and beyond the shenanigans of the studios.

Most industries consider the loss of a few percentage points in their market a severe setback, even a catastrophe. The companies that make up the business of motion picture exhibition have seen more than 50% of their market disappear due to the fears surrounding COVID. The fact that this industry is still standing is testament to its resilience. The business of exhibition really has a couple of options. The first is a form of corporate re-imaging: combining companies (primarily regional circuits) through mergers or acquisitions. The second is an internal re-imagining: shifting the way a company does business or what business they are truly in. Doing either in a time of pandemic is almost an impossible task.? Foundationally though within this industry of exhibition these thoughts should be taking place. It would be the height of short sightedness to think things are going back to where they were.

There are many tomes being published that the theaters? will be part? of a comeback story. I agree that theaters will be back, like all wars there will be casualties and the wounded.? Realistically I feel that once COVID has done its final dance, the business will land and remain fixed at 75% of where it was pre-Covid. We have to plan for that reality and shift the industry back to reclaim its position as the preeminent form of entertainment on the planet.

And maybe, just maybe, you should think of how to make Hollywood pay for its misdeeds.