Indie filmmakers see profit in straight-to-streaming releases

Director Emerald Fennell relished witnessing the audience’s reaction to her revenge thriller Promising Young Woman when it was first shown at the Sundance Film Festival at the start of 2020.

“You’re applying pressure and then you release it, and people in the room are [understanding] things at different times,” said Fennell, whose take on sexual politics netted her an Oscar win for best original screenplay. “A lot of the filmmaking techniques . . . they’re there to make it like a ride. You make a movie because it’s a communal experience.”

But as it turned out, few people ended up watching the film in cinemas. A planned US theatrical debut on April 17 last year was cancelled as Covid-19 forced venue closures. Promising Young Woman eventually opened in cinemas on Christmas Day 2020, and has made $13.3m, a paltry sum but one that still made it the highest grossing of all the films nominated for best picture at the Academy Awards this year.

A few weeks later on January 15, the movie was made available to rent at home through premium video-on-demand (PVOD), a format that has been available for a decade but gained newfound relevance last year as the pandemic halted cinemagoing. In addition to any regular monthly fee, subscribers to platforms such as Amazon Prime, Sky’s Now player and Apple’s iTunes could rent Promising Young Woman for about $20.

As the $40bn US box office faces an uncertain future, the journey for Promising Young Woman’s release could serve as a template for independent film in a post-pandemic world, said executives at Focus Features, the art house studio housed within conglomerate Comcast’s NBCUniversal and the film’s distributor.

“Donna [Langley, chair of Universal Pictures] decided we were going to go PVOD literally on day one of the shutdown of this pandemic and one week later we were there on the services,” said Peter Kujawski, chair of Focus Features, referring to the slew of other films that were released this way over the past year.

“There had been a desire to find out [if it] was a viable [strategy] and Donna . . . felt strongly: now is not only a good time to do it for the movies, but also for the business as a whole.”

Early at-home rentals were a necessary experiment during the pandemic. But as the US reopens after a year of empty cinemas, executives across the entertainment industry are questioning whether the industry has changed forever.

Most agree that big-budget blockbusters will be shown in cinemas once the crisis eases, albeit with shorter theatrical windows. Yet smaller-budget films, which don’t need to earn hundreds of millions of dollars in ticket sales to break even, may increasingly become an at-home experience, perhaps being released to living rooms through PVOD only days after being rolled out in cinemas.

“You’re going to see a world where everyone is going to be more thoughtful about what is going into movie theatres,” said Kujawski. “The key determination of theatricality will be size and budget.”

Universal spearheaded the shift, offering rentals of films such as The Invisible Man and Emma as soon as cinemas closed.

Jeff Bock, box office analyst at Exhibitor Relations, said PVOD became “a lifeline for the studios” last year, particularly for indie films that could get “lost in the ether [of streaming]”.

However, he cautions that without revenue numbers, which the studios have largely withheld, it’s hard to gauge how successful the strategy is. “All we can really do is monitor what distributors do in the future as actions speak much louder than words.”

Universal’s move to shatter the traditional “window” between a movie’s debut in cinemas and online was met with disdain by cinema owners who have spent years fiercely protecting their line-up of new releases from the incursion of streaming platforms such as Netflix.

But two of the largest chains, AMC and Cinemark, struck agreements with Universal, allowing the studio to release their films over PVOD only a few weeks after debuting in theatres in exchange for a cut of at-home sales.

Meanwhile, indie cinema chain Alamo Drafthouse, which in March filed for Chapter 11 bankruptcy protection, has taken things a step further by launching its own PVOD platform last year.

Even as Focus was putting other films online via PVOD, there was an internal debate about whether Promising Young Woman, a film intended to stir emotions around gender relations, could generate cultural buzz through a largely online release. 

“We really did want a traditional theatrical release,” said Fennell. “Of course when you make something that’s designed for one purpose and then it’s going to be watched in a different way . . . it’s going to take a minute to readjust.”

Focus executives decided to wait and see how other Universal films performed, postponing the release until Christmas. 

A year later, the company calls the rollout a success, both financially and culturally. With a $10m budget, Promising Young Woman had already turned a profit from its box office returns. The PVOD release made the film even more profitable, making up for reduced ticket revenue, said people close to the company.

Focus declined to say how many PVOD sales the movie made. However, its multiple, measured as the total gross revenue compared to opening week sales, is the highest of all Universal’s PVOD releases last year, said a person familiar with the matter. 

“You have metrics you want every movie to hit, dollars and cents and transactions for us,” said Kujawski. “But everyone has an eye on the softer metric of cultural impact. And seeing that [PVOD] could launch a movie in that way was a key thing because it wasn’t obvious that would be the case.”

A higher rental price sets films apart that otherwise could be lost in a sea of streaming, he added. “There’s a preciousness when you’ve decided you are going to pay $20 to watch something rather than being fed something through the algorithm.”

The main drawback to the PVOD model is simple economics: for big movies, it does not make as much money as the theatre. Rich Gelfond, chief executive of Imax, told a conference last year that PVOD was a “failed experiment”.

“The numbers haven’t worked in a pandemic, so how would they work in a non-pandemic?”, he said, pointing to studios’ reluctance to share revenue numbers.

But there are signs that PVOD is here to stay, even for blockbusters. Disney, which charged $30 to watch films such as Mulan on its streaming platform at the same time as they were released theatrically, is set to make two of its biggest summer films, Black Widow and Cruella, available for rental on the same day they hit cinemas.

For creative talent, the streaming battle among the world’s largest entertainment companies has been largely welcome news as it means an endless demand for content, regardless of where people end up watching.

Fennell, who said she had a subscription to “probably every single streaming service”, is working on projects across mediums, from a West End stage show to a television programme and a cinematic film. 

“For me going forward, what I would love to do is write the thing first and then work out where it lives,” she said. “Sometimes you want to make something epic in the theatre. Sometimes you want to make something bingeable. The really great thing right now is, it’s whatever makes sense.”