NATO Responds To Exhibition Shutdown, While Defending Theatrical Window: “People Will Return To Theaters”

The National Association of Theaters has officially responded to the current shutdown of U.S. exhibition amid the coronavirus climate, and also had something to say about the window-busting that’s currently going on with titles, without mentioning Universal by name. In sum, NATO doesn’t expect other major studios to follow Uni’s cues in making future event movies day-and-date in the home and on the big screen.

“Although there has been speculation in the media that the temporary closure of theaters will lead to accelerated or exclusive releases of theatrical titles to home streaming, such speculation ignores the underlying financial logic of studio investment in theatrical titles. To avoid catastrophic losses to the studios, these titles must have the fullest possible theatrical release around the world. While one or two releases may forgo theatrical release, it is our understanding from discussions with distributors that the vast majority of deferred releases will be rescheduled for theatrical release as life returns to normal,” said NATO today.

While I hear most exhibitors completely understood Universal’s decision to make their current theatrical releases The Invisible Man, The Hunt and Focus Features’ Emma available to rent in home this Friday (for a 48-hour period) due to the nation’s movie theater system shutdown, I also hear that many theater owners were put off by Uni’s bold move to put Dreamworks Animation’s Trolls World Tour in-home over the Easter weekend on April 10 (and whatever cinemas are open at that time). As the sequel to a $347M global-grossing title, why rob theater owners of that money? For Uni, it’s a financial decision: Trolls World Tour cost a heck of a lot of money, and they need to start making that back. But according to NATO, nothing is richer in regards to a movie’s downstream revenues than a theatrical window system (now 90 days between screen and home).

And while we can estimate how much the remainder of the March, April and May domestic box office is set to lose (at least $2 billion per Deadline calculations), for NATO and others, that’s deferred money into another box office quarter, not lost money as the exhibition trade org projects “People will return to movie theaters because that is who people are” and it will be at a time when there’s even more robust titles on the marquee.

Below is NATO’s statement:

With the pandemic Coronavirus outbreak, the world is facing a difficult and trying time. As the virus takes hold in different regions at different times and in varying degrees of severity, people and public health officials are grappling with decisions about when to close public-facing businesses and when to restrict personal activity. As with other businesses that serve large groups of people, movie theaters have faced voluntary and mandated restrictions and closures. The majority of movie theaters have now closed. This industry will continue to meet its responsibilities to the public and will abide by public health mandates and adapt to local conditions.

Our partners in movie distribution have postponed major new releases in response to the Coronavirus situation in markets around the world. Other titles beyond the immediate horizon have not changed their release dates.

Although there has been speculation in the media that the temporary closure of theaters will lead to accelerated or exclusive releases of theatrical titles to home streaming, such speculation ignores the underlying financial logic of studio investment in theatrical titles. To avoid catastrophic losses to the studios, these titles must have the fullest possible theatrical release around the world. While one or two releases may forgo theatrical release, it is our understanding from discussions with distributors that the vast majority of deferred releases will be rescheduled for theatrical release as life returns to normal.

When those titles are rescheduled, they will make for an even fuller slate of offerings than normal as they are slotted into an already robust release schedule later in the year.

No one can precisely predict when public life will return to normal, but it will return. The social nature of human beings – the thing that exposes us to contagion, and that makes it so difficult to change behavior in response to pandemic threats – is also the thing that gives us confidence in the future. People will return to movie theaters because that is who people are. When they return they will rediscover a cutting edge, immersive entertainment experience that they have been forcefully reminded they cannot replicate at home. In the uncertain, difficult economy ahead, movie theaters will fill the role they always have in boom times and in recessions – the most popular, affordable entertainment available outside the home.

While movie theaters will suffer some financial harm in the near term, and many of their 150,000 employees will face personal hardship, when this crisis passes and people return to their hard-wired social nature, movie theaters will be there for them as they have always been, with a full slate of movies far into the future.