CMCSA Comcast Corporation

By R.T. Watson 

Comcast Corp.'s Universal Pictures said it is making its movies available to watch at home while they are still in theaters, a massive change from Hollywood's long-established business model that could upend the industry if other studios follow suit.

The decision comes amid widespread closures of movie theaters as the global coronavirus pandemic spreads. Authorities in New York City and Los Angeles on Sunday ordered all movie theaters to close; exhibitors had previously said they would limit attendance in theaters to 50% of their capacity. China, the world's second-largest market, has kept tens of thousands of theaters closed since late January.

One of the nation's largest theater chains, Cineworld Group PLC's Regal Entertainment Group, said Monday that it is temporarily closing all of its 542 U.S. locations.

Major studios typically release new movies exclusively in theaters during a window of 75 days in a bid to maintain ticket sales, on the theory that fans are more likely to watch a new movie at home if that is an option.

Keeping that strategy in place has long been a priority for theaters, and major studios generally have been reluctant to do away with such windows altogether, even as the lengths of those periods have steadily shortened over the years.

Universal said that by Friday, recently released films like "The Invisible Man," "The Hunt" and "Emma" will be available for digital rental for $19.99 in the U.S., or the equivalent value in overseas markets. Paying the rental fee will allow customers 48 hours to watch the movie.

In an even bolder move, Universal also said "Trolls World Tour" will open simultaneously in theaters and at home on April 10.

Universal released "The Hunt" in theaters over the weekend while "The Invisible Man" and "Emma" both came out late last month. Costing just $7 million to make, "The Invisible Man" has already had a successful run in theaters, grossing $122.4 million globally in three weekends.

"Rather than delaying these films or releasing them into a challenged distribution landscape, we wanted to provide an option for people to view these titles in the home," said NBCUniversal Chief Executive Jeff Shell, who has long said he thinks theatrical windows would continue to shrink under pressure from consumers.

"We hope and believe that people will still go to the movies in theaters where available, but we understand that for people in different areas of the world, that is increasingly becoming less possible," he said.

Comcast's cable-television system also offers movies for rent through on-demand video. The company is also launching its own streaming service, called Peacock, in April. Universal didn't say when these movies would move from on-demand to the new service.

Universal isn't the only studio rattling the market with precipitous moves. On Friday, Walt Disney Co. said it was adding "Frozen 2" to its Disney+ streaming platform three months ahead of schedule, a move that could create a drag on DVD and online sales and rentals.

Hollywood has discussed for years the possibility of shortening the window, which prevented studios from releasing movies on DVD or online until a certain period had passed. Theaters have resisted such a move, though, seeing windows as key to their business model. A reduced window might cause more people to simply wait until titles are made available online rather than going to the theater.

At least as far back as 2018, executives at Universal and AT&T Inc.'s Warner Bros. film studio were considering making movies available to on-demand digital entertainment platforms 17 days after they premiered in theaters, The Wall Street Journal previously reported.

Prospective prices ranged from $30 to $50. The studios even offered to share the video-on-demand revenue with theaters.

For Universal, coordinating Monday's move could have been legally tricky, risking an antitrust-law violation.

Long before people were facing extended periods at home under self-quarantine in an effort to combat the spread of the new coronavirus, Hollywood studios have suffered financially, as large franchise films -- like Disney's Marvel and Star Wars titles -- tend to be the most reliable box-office performers.

As a result, streaming-subscription platforms like those offered by Netflix Inc. and Amazon.com Inc. have started to produce smaller-budget films, like adult dramas and comedies, which are less likely to draw massive crowds to theaters.

While in recent years theatrical ticket sales in the U.S. and Canada have posted some record years, much of the growth has been created by rising ticket prices as attendance plateaus. Disney has also attained an unprecedented level of dominance, capturing about a third of the market on the back of its Marvel, Star Wars and Pixar movies.

Meanwhile, robust growth in international streaming revenues powered global entertainment spending beyond $100 billion for the first time in 2019, according to data released by the Motion Picture Association.

(END) Dow Jones Newswires

March 16, 2020 19:31 ET (23:31 GMT)

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