Independent cinemas and distributors are teaming up to release new films online, but is the virtual push a wolf in sheep’s clothing?
Faced with the prospect of no theatrical releases for the unforeseeable future, independent movie theatres and distributors across the United States have joined forces to release films digitally and keep afloat amid the global health crisis. In a matter of weeks, “virtual cinemas” offerings have skyrocketed (over at IndieWire, Kate Erbland has compiled a constantly-updated list), as distribution labels like Kino Lorber, Magnolia, Oscilloscope, and Film Movement—among many others—are offering cinephiles a whole array of unreleased festival darlings to stream from the comforts of home, with the revenue split between cinemas and distributors.
It’s an on-demand entertainment model exhibitors have staunchly resisted for years, evidence that unprecedented times require unprecedented measures. But while virtual cinemas are being touted as an extraordinary safety plan, questions remain over the long-term consequences they may have on the industry in the post-COVID-19 scenario. Will virtual cinemas only disincentivize viewers from returning to theatres once the pandemic subsides? If so, is the tactic essentially a Trojan horse?
Speaking with Ryan Faughnder at the L.A. Times, Kino Lorber’s CEO Richard Lorber contends that virtual cinemas are a means “[to put] the power back in the hands of the theater owners,” and “capture revenues that they otherwise would’ve lost.” Logistically, the virtual push is requiring distributors to integrate and expand on another set of technologies. As reported by Vadim Rizov over at Filmmaker Magazine—in one of the most comprehensive takes on the debate—these have proved to be for the most part relatively sturdy. Some labels like Oscilloscope were working with Vimeo OTT for direct-to-consumer TVOD sales already, while Lorber’s on-demand new platform, Kino Marquee, has built upon Kino Now, the à la carte TVOD system they launched last year. It has now grown to about 200 theatres across the United States.
As the argument goes, virtual cinemas will help films to screen in many more theatres than theatrical releases would afford them, and theatres to host many more titles than their brick-and-mortar would physically be able to, and for longer runs. Speaking with Ann Hornaday over at The Washington Post, Lorber elaborates:
The scourge of [arthouse theatres] is the limitation of the number of screens (…) very few have more than two or three screens, some even only have one. Distributors like ourselves often have films that open strongly but get bumped in a week because the theaters have calendars and commitments to other companies to play their films at a particular time. (…) We’ve moved from a screen-scarcity environment to screen plenitude. It’s almost a world of infinite screens.
But just how profitable is that world, exactly? Ann Hornaday goes on to report that Oscilloscope’s Saint Frances, which had just opened in theaters when they were forced to shutter, “has made around $100,000 as a virtual release, reaching a much wider audience than would have been able to see it on the big screen.” And the same goes for Kleber Mendonça Filho’s and Juliano Dornelles’s Bacurau, which—as noted by Filmmaker Magazine—by May 18 “[had] sold over 8,000 virtual tickets spread out across 223 US screens, far more than the 30 co-director Kleber Mendonça Filho’s previous Aquarius played at the peak of its release.”
But as far as theatres are concerned, the results are hardly uniform across the board. Over at the L.A. Times, Ryan Faughnder paints a sobering picture. Speaking with Film Movement’s President Michael Rosenberg, whose virtual cinema program has let theatres screen films including Poland’s Oscar-nominee Corpus Christi, he reports that “the sales pale in comparison to actual box office receipts,” for cinemas “aren’t just missing out on box office but also on popcorn and soda sales.” And while every little helps, and costs are generally lower to distribute online, Rosenberg himself remarks that this is still “not enough revenue to offset what the theaters lost by being closed.”
Arguably the most crucial concern for exhibitors—should the model outlive the pandemic—is that virtual cinema releases may only exacerbate the shrinking of theatrical windows, drawing “offline” customers (and vital revenues) from cinemas. And just how exactly should one price online releases? Kino Marquee charges a $12 flat fee for a 5-day rental period, considerably higher than other TVOD platforms. “We are competing with lower cost online streaming options,” Wendy Lidell, Kino Lorber’s senior VP of distribution and acquisitions, is reported by IndieWire’s Tom Brueggemann as saying, “but I believe we need to maintain the premium price of a premiere theatrical window, and we on the distribution side are endeavoring to promote films as such.”
That may be good in theory, but higher prices may only discourage cinemagoers, all the more so if they’ll be asked to patronize many more platforms of varying ease of access than they normally would, just to “attend” a screening. Not to mention another serious burden this would carry for cinemas, considering their newsletters and reviews will no longer simply have to point to a film and the theatre’s physical location, but the several different platforms on which new titles are rentable that week.
At the same time, virtual screenings may offer theatres an opportunity to attract new quarantined patrons who may not have a local theatre to support, and will have to choose which online cinema to give their money to. This is itself a mixed blessing. For while theatres could, theoretically, acquire new patrons through the ether, virtual cinemas are not geo-targeted, which means the reverse is also true, and cinemagoers may defect their local theatres and choose to support others. As per its FAQs, Kino Marquee can only ask streamers to rent the film through their habitual cinemas, but cannot enforce this. Over at Decider, Evan Davis talks about the subject to Jordan Cronk, head of Los Angeles art film series Acropolis Cinema, and Ashley Clark, director of programming at BAM:
“People outside of LA could be watching [these movies],” Cronk notes. “There are so many platforms, and people make a decision about who they want to support, which is a different experience. They may support us, or they may support another theater because they got an exclusive first-run booking, and didn’t want to wait.” Clark is slightly more optimistic. “One interesting question is how we build from that and look to communicate BAM’s curation to wider audiences in the virtual space; audiences who don’t live anywhere near Brooklyn!” You can’t help but wonder if a lot of these theaters could transition from a physical space to that curse word of the 2010s, a brand.
But how can a theatre foster a sense of brand awareness in pandemic times, when so much of its identity is often predicated on real-life exchanges between cinemagoers? At Variety, Rebecca Rubin chats with Sarah Pitre, programming director of the Austin, Texas-based indie chain Alamo Drafthouse, which is working to adopt its Terror Tuesday and Weird Wednesday repertory series to the new digital reality, and encouraging its virtual attendees to continue post-screening chats on the theatre’s website Birth.Movies.Death. In Rubin’s own words, “that’s as close as we can get to the Alamo experience without having doors open.”
Still, some things have proved impossible to recreate. At The Wrap, Brian Welk takes a closer look at BAM, which was forced to cancel two months of film programming, as well as its flagship June festival, BAMcinemaFest. And director of programming Clark makes clear that the pivot to digital, as far as repertory is concerned, is an arduous shift:
We can do certain standalone events, but the question of repertory programs, which include prints imported from different parts of the world, screening on film, screening on 16 or 35mm film, which is still an important part of what we do, that’s something you cannot replicate online.
None of this is to chastise independent theatres for trying to survive an unprecedented cataclysm that could wipe them off the map altogether. It’s the long-term repercussions virtual cinemas may bear on the industry beyond the pandemic that are particularly concerning. And it is crucial to understand that the backlash could affect both exhibitors and distributors.
For theatres, the risk is that the new online model will play into the giant streamers’ hands. In the words of Oscilloscope’s director of theatrical distribution Andrew Carlin, speaking with Vadim Rizov at Filmmaker:
Over the past decade, giant SVOD streamers have spent an incredible amount of money training audiences to stay home. To not go to the theater. Any arthouse that keeps a slate of virtual titles available after they’ve reopened their doors is—consciously or not—ultimately reinforcing that behavior.
As for distributors, Carlin explains to The Washington Post’s Ann Hornaday, the fear is that the strategy will only deepen the gap between smaller and bigger labels. For theatres would be in a position to create a two-tiered system:
…whereby they save their main auditoriums for the Sony Classics, A24s, Searchlight Pictures and Focus Features of the world, and send films from smaller companies like his into the virtual ether. “It’s already a struggle getting on screens in some of these markets,” Carlin says. “So if there’s effectively no need to get these smaller companies on screen, it would make what is already a challenging business even more challenging.
After all, what incentive would cinemas have to book smaller titles theatrically, if they can simply shuttle them off to a virtual space? In an eye-opening analysis of the impact of the 1918 influenza pandemic on the movie industry, over at The New Yorker Richard Brody observes that the flu gave rise to the mega-Hollywood that’s being duplicated today: smaller production companies went out of business, and the big ones got bigger, “creating the studios that became the masters of production, distribution, and exhibition together.” Whether or not the virtual cinema model will exacerbate the dominion of today’s streaming giants remains to be seen. People rushed back to the cinemas after the 1918 pandemic, and audience numbers only increased in post-WWI decades, observes Kaleem Aftab at BBC Culture. But to argue that the same will happen again over a hundred years later is to gloss over the seismic changes that viewing habits have undergone in recent times.
Which is why the virtual push is ultimately a double-edged sword. As per Richard Lorber’s comments to Filmmaker, the new model is here to stay. But if that’s the case, distributors and theatres will have to carefully negotiate just far it will go. In the words of Lorber:
We think of it as kind of a ‘Goldilocks model’: we want the virtual screening model to be successful, but not too successful. We want it to be an important piece of revenue—but not too important, because we don’t want the theaters to feel this is supplanting their investment in brick and mortar.
These negotiations will be vital to ensure the “duplex model” will provide the relief independent cinema needs, and not a potentially fatal blow.