Digital rental and streaming has been a haven for mid-budget movies - Business Insider

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11/30/2020 7:15:00 PM

Filmmakers say Apple, HBO Max, and digital rentals rescued their mid-budget movies amid the pandemic and will lead to big changes in Hollywood

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SonyBecome an Insiderand start reading now.Movie studios have sought alternative release strategies for movies amid the pandemic, such as premium-video-on-demand and streaming services.These alternative methods benefit low-to-mid-budget movies more than big-budget tentpoles, which generate significant revenue from the worldwide box office.

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Business Insider spoke with three filmmakers whose mid-budget movies have skipped theaters this year for PVOD and streaming."You have to ask yourself what's the best thing for the movie," said Ric Roman Waugh, the director of "Greenland."

This embrace of digital and streaming could have long-lasting ramifications after the pandemic, the filmmakers said.Visit Business Insider's homepage for more stories.Director Ric Roman Waugh was already working on his next movie in Saudi Arabia when he got a call last month that he said left a pit in his stomach. It was about "Greenland," his apocalyptic thriller starring Gerard Butler that was set for theatrical release this year.

The movie, about a deadly comet hurtling toward Earth, was the latest to skip theaters in the US for a digital release amid the coronavirus pandemic. It will debut on premium video-on-demand (PVOD) platforms on December 18 and then be available to stream on HBO Max in 2021.

Waugh told Business Insider that he had a "tremendous amount of anxiety" before the deal closed. While he would have liked to see "Greenland" on the big screen, it became clear that wasn't in the cards. All he could hope for was that the movie found a proper home.

"You have to ask yourself what's the best thing for the movie," Waugh said. "This pandemic isn't going anywhere anytime soon."It's a tough reality that many filmmakers have faced this year as the pandemic shifts the theatrical release calendar, forces many movie theaters to shut down, and pushes studios to rethink distribution strategies. Even big-budget tentpoles like Disney's "Mulan" and "Wonder Woman 1984" have pivoted to streaming releases on Disney Plus and HBO Max, respectively.

But these movies, in normal times, rely on the profits made from worldwide box office and "nothing has changed on that front" despite a newfound focus on digital and streaming, said Shawn Robbins, the Box Office Pro chief analyst. And while the Hollywood blockbuster will survive the pandemic, it has already transformed the industry in ways that could have long-lasting ramifications for low-to-mid-budget movies like "Greenland," which cost $35 million to produce.

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"Even before the pandemic, the mid-budget movie was becoming a tougher marketplace theatrically," Waugh said. Business Insider spoke with filmmakers of mid-budget movies that have had their planned releases upended by the pandemic. They were generally optimistic about the theatrical experience, but acknowledged that the pandemic could have longterm effects on Hollywood and make streaming deals more important.

"Greenland" arrives on PVOD platforms for digital rental on December 18 and will stream on HBO Max in 2021.STX FilmsPVOD and streaming could benefit mid-budget movies even after the pandemicWhen theaters are fully operational again, there are signs that studios will continue to embrace PVOD and streaming.

For instance, Universal Pictures has struck deals with several theater chains to shorten the theatrical window (movies that have bigger opening weekends will typically have longer windows as part of the deals). This could foreshadow a bigger trend and a change for low-to-mid-budget movies in particular.

"As much as I'll mourn the loss of the long window, the reality is that the world is just a different place today," said Adam Goodman, a producer on the upcoming straight-to-PVOD movie "Songbird" and cofounder of the production company Invisible Narratives.

"Songbird," which was the first movie to film in Los Angeles this year amid the pandemic, will debut on PVOD services on December 11 and then a yet-to-be-announced streaming service, similar to "Greenland" (both movies were produced by STX Films). 

"We obviously had hoped to be in theaters, not just for the theatrical experience but we wanted to be out of the pandemic," Goodman said.When it was obvious that that wouldn't be the case, the movie shifted gears. Goodman said that the movie is "budget-minded" for PVOD, but didn't disclose the movie's exact production budget. In other words, it's a low-to-mid-budget movie.

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Aaron Schneider, the director of Apple's Tom Hanks-starring World War II movie, "Greyhound," noted that the pandemic could cause a crowded release schedule once circumstances are back to normal, one in which movies that aren't "events" could struggle to break through. That makes digital and streaming deals essential.

"Nobody wants to see the theatrical industry harmed, but studios need audiences," Schneider said. "Imagine a world without streaming. The theatrical pipeline right now is like people standing outside the door forBlack Friday. The doors open and there's only so many cashiers. It's the same for theaters. There's only so many screens and so many theaters. All of these films will be standing in line for their turn once all this is over."

Many movies, from "Greyhound" to "Greenland," already dodged that bullet.Streaming services are looking for new contentSeveral major services jumped into the streaming war either just before or during the pandemic, from Disney Plus to Apple TV Plus, and HBO Max to Peacock.

These, along with the surge in digital rentals, created options for movie studios amid the pandemic that otherwise would have ground Hollywood to a halt. Studios have even experimented with a mix of both PVOD and streaming; Disney Plus debuted "Mulan" for an additional fee and "Wonder Woman 1984" will eventually head to PVOD after its HBO max run.

The streaming space has created a competitive landscape where companies are looking to snatch up content that might attract subscribers, like "Greyhound."The movie, which debuted exclusively on Apple TV Plus in July, cost $50 million to produce and Apple bought it for $70 million after a bidding war between streaming services, according to

Deadline.It seems to have worked out well for Apple. The movie's premiere generated the most sign-ups to Apple TV Plus this year, according to analytics company Antenna (Apple has not said how many subscribers Apple TV Plus has).The "Greyhound" premiere drove the most signups to Apple TV Plus this year.

Antenna"Were we disappointed it didn't go to theaters?" said Schneider, the "Greyhound" director. "Sure, we made it for theaters and we work in the theatrical motion picture business. But we were equally thrilled in the middle of a pandemic that we found a way to get the film to an audience. It boiled down to what's the most available audience for the film."

"Greenland" cost $35 million to produce and has earned $43 million from international markets where it opened in theaters. But as coronavirus cases surged in the US, the movie's production company, STX Films, decided it couldn't keep stalling and changed strategies.

HBO spent between $20 million and $30 million for the pay TV and streaming rights to the movie, according toDeadline,which will start in early 2021. Waugh didn't discuss deal terms, but said he was happy with the deal. HBO declined to comment on deal terms.

"You hope that if it goes to streaming that it doesn't just get dumped," Waugh said. "You wonder how it cuts through the clutter. But I was relieved to see a phenomenal deal. HBO will have to get behind it for how much they paid for it."

These streaming deals will continue to be important for mid-budget movies after the pandemic.As next year's (and maybe even beyond) theatrical calendar is weighed down by tentpole "event" movies, PVOD and streaming alternatives could continue to be a safe haven for more cost-friendly fare. The recent windowing deals Universal has struck with major theater chains like AMC and Cinemark signal as much, and it's possible that more studios look to land their own agreements with exhibitors. Studios will continue to weigh what's best for theaters and PVOD (or streaming) on a movie-by-movie basis.

"After the dust settles, a new ecosystem could arise," Schneider said. "Movies may look and feel different for a while."NewsletterSee the latest news and trends in advertising and media. Sign up for our newsletter now.LoadingSomething is loading.

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