| Richard Lorber shifted his movie business to the internet as soon as movie theaters closed across the United States. Lorber runs Kino Lorber, one of the leading distributors of independent and foreign films. Sales surged at first, prompting most of his competitors and partners to join the movement. Everyone from independent distributors to the biggest movie studios in the world has tried what's called premium video-on-demand, releasing a new movie at home for a higher price than your average iTunes rental. Examples include "Trolls: World Tour," "Bacurau" and, most recently, "Mulan." But like so many activities that seemed so great at the beginning of the pandemic – baking bread, virtual concerts and Zoom meetings – the novelty has worn off. Kino Lorber's sales have slipped at least 30% since the beginning of the pandemic. "Digital box office revenues are lower than they were in the early stages," Lorber told me. "And also certainly lower than they were with physical releasing." Larger studios are seeing similar trends. While Universal touted the early success of "Trolls," that may prove to be more the exception than the rule. You don't hear AT&T bragging about the performance of "Scoob," nor has Disney said it will try the "Mulan" model with other movies. Some analysts and executives have concluded this means premium video-on-demand doesn't work. Rich Gelfond, the CEO of Imax, called it a "failed experiment." Rich Greenfield, an analyst with LightShed Partners, says the only viable solution is subscription video-on-demand (aka Netflix). Both Rich Gs are a little off. Many of the new hobbies and behaviors picked up during the pandemic are going to stick around, but that doesn't mean they will replace whatever came before them. My uncle is not going to bake every piece of bread he eats for the rest of his life, but he might think twice about buying a new loaf every week. Similarly, this new movement toward "virtual cinema" is here to stay. Many of the theater chains have told Lorber they want to continue to expand their programs when their physical locations reopen because it allows them to offer more movies. But the choice isn't between only offering movies in theaters or only offering movies at home. When theaters are back open, you are going to see more flexible models closer to what AMC and Universal agreed upon earlier this year. Universal will release movies exclusively in theaters for at least 17 days, and then make that movie available at home. That way you can still go to see the movie in theaters if you are looking for a night out, or wait a few weeks (instead of a few months) to rent it at home. The real reason many of the major studio movies aren't performing well at home is pretty simple: They aren't that good! People have a lot of entertainment options at home, from playing video games to watching live sports to watching lots of movies available at no extra cost (beyond a subscription). So while people will pay to go see a movie in theaters, they won't pay theater prices to watch just any movie at home. "Nobody is kidding anyone," Lorber says. " You're watching a movie on a screen at home, and that's up against everything else available on your home screen." While Lorber doesn't release movies that are ever going to attract tens of millions of people at the same time, it's safe to assume that millions of people would pay to watch the new James Bond or Wonder Woman at home. Studios haven't been willing to take that risk. Forgive a brief digression on the economics of the movie business, but all movies make money in stages. They make money in theaters, then they make money from people who rent them at home or buy them, and make even more money licensing the title to TV networks and streaming services. How much money a studio makes from rentals, sales and licensing depends on how it does in theaters. This formula is how a movie like the most recent Avengers generated close to $1 billion in profit. (That's a lot more money than a streaming service makes off a single movie.) By releasing movies at home, the studios have compressed those windows. People buying the movie now are people who won't buy it later. So not only are studios making less money now than they might have in theaters, but they are surrendering some of the long-term earnings. That's why you are seeing a bunch of lesser titles released at home. And that's why people aren't paying for them. Studios are stuck right now. They can't make money releasing movies in theaters because not enough people will go. They also aren't prepared to risk releasing a top-flight movie online-only, be it for rental to drive subscriptions to a streaming service. For now, they are stuck waiting — just like the rest of us. – Lucas Shaw The best of Screentime (and other stuff) | 
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