Since I retired from the movie business (marketing, distribution, and production) I've watched the transformation with a schizophrenic mood--optimism and nostalgia. For producers and creatives two consequential issues stem from the decline of theatrical, which were here before COVID:
- FINANCING. Financing avenues for independent producers are changing and becoming constricted.
A) Independent producers' financing models are under pressure. Since the 90s they (including my old boss, a veteran producer) have financed projects by pre-selling int'l licensing rights to foreign theatrical distributors and using those contracts as collateral to bundle financing packages (bank loans, tax credits, equity financing, etc.) But streaming has affected theatrical everywhere, including these foreign distributors; they are under pressure as much as North American giants like Warner. So there is a domino effect from streaming to foreign theatrical to indie-film financing. Foreign distributors might be more risk averse in this new world and more selective about pre-buying licensing rights. Indie producers will have to scramble for financing options even more, which will probably mean fewer indie-movie projects will ever move to production.
B) On the other hand, streamers like NF, Amazon, and Hulu are financing a lot of projects and giving smaller producers and directors a distribution channel they didn't have a decade ago. But the terms of these financing deals are not the best unless you are a really big, established name. So it's a road open with caveats.
- MARKETING IMPACT. Streaming release for original movies just hasn't had the same marketing impact as theatrical, which is partly why Nolan is so bent up. I honestly can't think of a single streaming-only-release movie that's had the impact of any of Nolan's theatrical movies. There's still nothing like wide-release theatrical to create pop-culture impact, at least in film. (Streaming "TV" series have been more successful at this branding, witness "Stranger Things" or "The Crown"; maybe a long-long narrative form in 10-13 episodes and multiple seasons creates more of a continual water-cooler event for viewers). Crazy Rich Asians illustrates why theatrical is still important to movie producers and creatives. The principal stakeholders, primarily int'l best-selling novelist Kevin Kwan (whose novel the movie is based on) and director John Chu (Now You See Me 2, GI Joe: Retaliation), turned down a huge upfront payday from NF (complete with creative freedom) for a straight-distribution theatrical deal from Warner that was far less lucrative upfront. (Warner didn't front any production costs, but only covered recoupable marketing and distribution costs--low risk for the studio.) Kwan said the big NF payday was retire-to-an-island-and-never-work-another-day-in-his-life. But he and director John Chu, much to the dismay of other stakeholders and agents, went for the Warner deal because they wanted their film to have a pop-cultural impact so big it would change movie economics around Asian casting. They thought only wide-release theatrical could do this, and didn't see NF having that kind of marketing effect. Their gamble paid off. Crazy Rich Asians grossed $238.5M worldwide on a $30M production budget. Quite profitable (even taking into account typical marketing and distribution costs of 30-40%). And it's safe to say this BO success will have more impact on the studio C-Suite in supporting mainstream "Westernized" Asian-cast movies--exactly what Kwan and Chu wanted. Of course, this is more of an issue for blockbuster, tent-pole, or mainstream-commercial movies than indies. But regardless, when theaters are back to normal I still think there will be a role for the theatrical survivors, if a smaller role. On the other hand, creatives like Nolan and Spielberg should use their clout to pressure streamers into being more creative about marketing streaming releases. If NF can turn Stranger Things or The Crown into pop-culture water-cooler fare, why not streaming movies?
