Movie theaterThese have been hard times for the movie theater business. Attendance peaked in 2002 at approximately 1.6 billion tickets sold. In 2019, that number had dropped by 25%, to around 1.2 billion. The proliferation of subscription streaming services is not the only force driving this trend, but it is certainly a substantial one. Against this challenging backdrop, the COVID pandemic has caused the studios to cut off theatrical release of new movies since March, so that theaters not affected by local shut down orders don’t have product to show even if they could induce audiences to come out to watch them.

Exhibitors have historically been able to maintain a 90-day exclusive theatrical exhibition window before a title is available to be viewed at home. This once meant home video; now the window includes release on streaming platforms. The studios have been pushing to shorten this window for years. They reason that as theatrical releases have become dominated by blockbusters that make most of their money in the first few weeks, there is less value to be gained from an extended theatrical run. They hope to reduce marketing costs by piggybacking marketing for the digital release on the initial theatrical marketing push and grab audiences while their attention is still keen. The exhibitors’ objection to this is simple–the sooner that consumers can expect a movie will be available for home viewing, the less likely they will be to watch it at a movie theater.

In some cases, the pandemic provided the studios with an opportunity and an excuse to make the moves they had long been angling for. Although they are willing to postpone release of potential blockbusters until theaters reopen, more modestly budgeted, genre and family fare are heading directly to streaming platforms on a pay-per-view model. For example, Universal achieved notable success with the animated feature Trolls World Tour, which earned nearly $100 million in rentals without a theatrical release.

But by pushing the envelope with Trolls, Universal also, to mix metaphors, stirred the pot. When Jeff Shell, the CEO of NBCUniversal, told the Wall Street Journal in late April that when theaters reopened Universal would be releasing films in both theatrical and pay VOD formats, AMC, the largest chain both in the US and worldwide, riposted that Universal pictures would henceforth be banned from its theaters.

It’s been a long summer, however. The pandemic shows no signs of abating and things have changed since April. In early July, AMC announced a major debt restructuring in order to avoid bankruptcy. And this week, the chain made peace with NBCU in a deal that could foreshadow a wholesale reshaping of the theatrical business model. The agreement, currently for the US only, collapses the 90-day exclusive theatrical window for Universal features to 17 days, including 3 weekends. After that window, Universal would have the option to release its pictures to premium VOD and pay AMC a share of its rental revenues, reportedly 10%.

It’s too soon tell what the immediate impact of this development will be. Reactions so far have been limited, although Cineworld, the parent of the number three US chain Regal Cinemas, has come out flatly in opposition to any shortening of the theatrical window. In the longer term, pandemics tend to accelerate trends already underway. The Black Death hastened the Renaissance and in a smaller way COVID-19 is likely to hasten the changes in theatrical exhibition that market forces have been driving for a decade or more.