Maybe Movie Theaters Aren't Dead After All

[Pink Freud]

Ever since television came into homes in the early '50s, the death knell for movie theaters has sounded loudly and repeatedly:
TV will kill theaters.
Air-conditioned homes will kill theaters.
Color TVs will kill theaters.
Premium cable/satellite TV, with nudity and "R" language, will kill theaters.
Blockbuster Video will kill theaters.
DVR will kill theaters.
Time-shifting to make your own TV viewing schedule will kill theaters.
Streaming will kill theaters.

None of them worked...yet. And there's actually good news for theaters today:

For much of the past decade, Hollywood executives striving to catch Netflix started believing that the only way to increase the subscriber numbers for their own streaming services was either by significantly narrowing the time between a film’s theatrical release and its appearance on streaming or by putting both out simultaneously. Disney did it with “Black Widow,” much to the dismay of Scarlett Johansson. Warner Bros. did it with “Dune.” This was the future.

On top of that, the thinking went, streaming would give movie studios a chance to spend far less on the expensive marketing required for a theatrical release. The algorithm would do all the work instead.

But the industry has now largely come to a very different conclusion: The key to making a movie a streaming success and attracting new subscribers is to first release it in theaters. It turns out that all the things that make theatrical movies successful — expansive marketing and public relations campaigns, and valuable word of mouth — continue to help movies perform once they land in the home.

“We really believe that this theatrical marketing campaign and a theatrical window for this movie will only further amplify and enhance what we always believed was going to be a strong performance on the service,” Ms. Valenti said.

When “Red One” debuted on Prime Video last week, it became the No. 1 movie on the service, generating 50 million worldwide viewers in its first four days, the company said. It was Amazon MGM Studios’ most-watched streaming film debut ever, even though “Red One” is still playing on over 3,000 screens in North America — making it the latest theatrical release to find a big audience online.

Since August 2022, 65 percent of Netflix’s weekly top 10 English-language films were movies it had licensed from studios after they debuted in theaters. And when Nielsen, the audience measurement company, crunched its data for the past two years, only three of its top 20 streaming movies of 2023 had been released straight to a streaming service. (The outliers were Disney’s “Turning Red,” which was first released to its service in 2022; Netflix’s apocalyptic drama “Leave the World Behind,” starring Julia Roberts; and the Jonah Hill and Eddie Murphy comedy “You People.”)

In 2024, only four films in the top 20 went straight to streaming. Two of them, Netflix’s “Beverly Hills Cop: Axel F” and Amazon’s remake of “Road House,” were based on previous theatrical titles. (The two streaming originals that made the list were Netflix’s action film “Damsel,” starring Millie Bobby Brown, and the heist film “Lift,” with Kevin Hart.)

“You can objectively look at the data and see: Movies that have gone through the theatrical window perform better,” said Casey Bloys, who has overseen HBO content since 2016 and has overseen the Max streaming service since 2020. “For us, I know it for a fact, and you can see it in data for other platforms. We’re not the only one.”

Mr. Bloys’s sentiment is being echoed all over Hollywood.

“The better it does in theaters, the better it does on streaming,” said Joe Earley, the head of Disney+ and Hulu.

During Disney’s most recent earnings call, its chief executive, Robert A. Iger, said “a successful Disney movie today drives more value than it ever has in the past,” affecting all his other business lines, including streaming, theme parks and consumer products.

It’s not only new films that benefit from the copious marketing dollars spent on theatrical releases. (Summer blockbusters often cost north of $100 million in global marketing money, while even the smallest films have a hard time opening in theaters with marketing spends lower than $25 million.) When new chapters of a successful franchise are introduced to theaters, they prompt spikes in each company’s catalog of films.

Paramount Plus said that when “A Quiet Place: Day One” premiered on its service, viewers increased their “engagement” with the other films in the “Quiet Place” franchise by 207 percent. For “Mission: Impossible — Dead Reckoning Part One,” the percentage increase in interest in the other “Mission: Impossible” films was 181 percent.

“I think there’s no doubt that theatrical films drive not only sign-ups to streaming services but obviously drive engagement, too,” said Brian Robbins, the chief executive of Paramount Pictures. “They’re a very, very, very powerful acquisition tool.”

In many ways, the same hand-wringing that went into the latest declaration of the death of the multiplex is what fueled similar panic when new consumer technologies like televisions and DVD rentals were introduced. This time, things felt more pronounced, since the advent of streaming coincided with the coronavirus pandemic.

Mr. Robbins recalled that back in 2022, when he told an investor conference that theatrical movies would remain “the cornerstone” of Paramount’s business, it was a radical position to take.

“At that time, everybody was freaking out about how streaming was going to cannibalize theatrical,” he said.

It was a phenomenon, he said, that never happened.