Streaming Piracy Helps Theaters Advocate For Exclusive Theaters ‘Window’

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The Hollywood studio’s experiments of releasing new films on streaming services alongside their theatrical debuts have been a hit with investors and locked-down movie fanatics.

But there was also a downside. Known as “simultaneous release,” the strategy has led to near-instant availability of blank pirated copies of films such as Disney’s. Black Widow and Warner Bros’ Godzilla vs. Kong, which costs studios millions per week in lost revenue.

Copying a movie from streaming platforms can take “a few minutes or an hour at most,” said the founder of hacking tracker TorrentFreak. Under the pseudonym of Ernesto van der Sar, he declined to be named, due to the nature of his work. “That’s the problem with these simultaneous release strategies.”

Piracy tends to be higher for streaming, the studios acknowledge, as most use “4K” high definition standards, which means the quality is extremely good.

For struggling cinema owners, the studios’ streaming piracy issues have been a blessing, however. Widespread piracy helped them make their case for maintaining an exclusive theatrical “window” that the simulcast strategy had threatened to close.

Mark Zoradi, chief executive of Cinemark Holdings, the third-largest movie theater chain in the United States, said piracy fears had recently persuaded studios to forgo simultaneous release – at least for now.

The National Association of Theater Owners, the lobby group for US theater owners, has criticized what it sees as the studios’ aggressive promotion of their proprietary streaming services – which include Warner Bros. HBO Max, Disney + and Paramount + of ViacomCBS – at the expense of the box office. But investors have applauded when studios report a high number of subscriptions, even though streaming services are not yet profitable.

Two of Disney’s Marvel films appear to have helped make the case for preserving the theatrical window. After Black Widow was hacked from Disney + when it opened in July, the family entertainment group tried a more traditional release for their latest Marvel movie, Shang-Chi and the legend of the ten rings, this month.

The film had a strong box office distribution, and although it was pirated, the quality of the illegal copies – shot by hand with camcorders – is relatively poor.

Following Shang-Chi’s successful release – it grossed $ 196.5 million at the US box office and was the best film in North America for four weeks – Disney has announced that the remainder of its film releases in 2021 will have exclusive broadcasts in the cinemas before going to streaming.

Other studios, including Warner Bros., have made similar commitments until 2022. Disney has not revealed plans for next year.

Zoradi argued that the strong performance of Shang-Chi – and a reduced case of piracy with that release – had influenced studio decisions to allow exclusive release in theaters.

“When you see movies that weren’t released simultaneously, they tend to be lower on the pirate list than the ones that did,” he said at a press conference hosted by Goldman. Sachs last week. “It was a really big factor in all of the studio decisions.”

Disney did not respond to a request for comment.

Zoradi, who worked in studio distribution at Disney for nearly three decades, said he had “hope and expectation” that Disney will embark on exclusive theatrical releases next year. “I can’t put words in Disney’s mouth, but it was a very positive sign that [Disney chief executive] Bob Chapek decided to take everything else from 2021 and put some exclusive windows in it. ”

The group has taken the most demanding approach to streaming among Hollywood studios, evidenced by a bitter legal dispute with Black Widow star Scarlett Johansson.

The A-lister alleges the simultaneous exit of the group of Black Widow broke his original contract, slashing Disney’s share price at his own expense, as his bonus was tied to box office sales. Disney said there was “no merit” to the filing.

Disney is locked in a legal dispute with actress Scarlett Johansson over its decision to release Black Widow on the same day as its film release © Jay Maidment / Marvel Studios

But Disney + has grown rapidly during the pandemic, reaching more than 115 million subscribers worldwide.

Chapek told last week’s conference that Disney would be flexible with release windows going forward, with periods as short as 30 days – a far cry from the 90 days that theater operators have traditionally taken advantage of.

Reducing the exclusive cinematic window has been a studio goal for years. Preserving it won’t end digital piracy of movies, but it will likely delay the time it takes for high-quality copies to become available, Van der Sar argued.

In the past, pirated copies of high-quality movies only started circulating after Blu-ray discs were released or available on demand. “It’s not clear that there is more hacking, it’s just that hacking is happening sooner than before,” he added.

Cinema owners, who have struggled to regain audiences this year amid the spread of the Delta variant of Covid-19, are celebrating short-term commitments to preserve their cinema windows. But they probably haven’t seen any concurrent exit strategies either, analysts said.

The studios are expected to make films exclusively for their streaming services, with Warner Bros. planning films that will go direct to HBO Max.

Chapek emphasized the “flexibility” in how Disney films will be shown in the future, suggesting further experimentation to come as he promotes his platform.

“We love theatrical shows – we’ve seen the power of them over the decades – but at the same time, we know our service [Disney+] is strategically the most important thing we do, ”he said.


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