Streaming services find unlikely outlet: Big-screen movie theaters

As streaming services grew and the pandemic kept people at home, the future of the movie theater industry was unclear. But Amazon and Apple are increasingly leaning into big-screen releases, and moviegoing is approaching pre-pandemic levels.

First Look

After Ben Affleck and Matt Damon test screened their Nike drama “Air,” the film executives at Amazon Studios threw them a curveball.

“They said, ‘What do you guys think about a theatrical release?’” Mr. Damon says. “It wasn’t what we expected when we first made the deal.”

“Air,” about Nike’s pursuit of a shoe deal with Michael Jordan, went over so well with early audiences that Amazon, despite acquiring the film for its Prime Video streaming service, wanted to launch it in theaters. And in its first two weeks in theaters, “Air” has been a hit.

After a strong five-day debut of $20.2 million – especially good for an adult-skewing drama – “Air” dipped only 47% in its second weekend. Reviews have been stellar. When “Air” does arrive on Prime Video, the studio and its filmmakers expect an even better showing than if they hadn’t launched in theaters.

“It should function as free advertising to create this halo effect which in turn creates more viewers on the service,” says Mr. Affleck, who directed and co-stars in “Air.” “If that’s the case, I think the business will really expand and go back to a broader theatrical model.”

Not long ago, some were predicting more and more films would be diverted from theaters and sent straight into homes. Moviegoing was destined to die, they said. Not only has that forecast fallen flat, the opposite is happening in some cases. Companies like Amazon and Apple are sprinting into multiplexes, taking a distinctly different approach to the staunchly streaming-focused Netflix. Launched on 3,507 screens, “Air” was the biggest release ever by a streamer – and it’s just the start. Amazon Studios, led by Jennifer Salke, is planning to release 12-15 movies theatrically every year. Apple is set to spend $1 billion a year on movies that will land in cinemas before streaming.

Movie theaters and (most) streaming services are turning out to be fast friends, after all.

“We truly think that by putting it into theaters, you just can’t otherwise get that kind of word of mouth and press around it,” says Kevin Wilson, Amazon Studios and MGM theatrical distribution executive. “No matter how much you spend, that’s a hard thing to replace.”

That “halo effect” isn’t quite free. It takes a robust marketing blitz to raise awareness for a film. But whether a movie is headed to a streaming platform or video on demand, the splash of a theatrical run can cascade through every subsequent window. A film dropped straight into a vast digital expanse might go viral or quickly fade into one of a million things you can click on.

Moviegoing still hasn’t yet reached pre-pandemic levels, but it’s getting close. Movie after movie has overperformed at the box office lately, including “Creed III” (released by MGM, which Amazon owns) and Lionsgate’s “John Wick: Chapter 4.” With more than $600 million in two weeks, Universal Pictures’ “Super Mario Bros.” is breaking records for animated films.

“It’s springtime in the theatrical business,” exclaims John Fithian, the soon-departing president and chief executive of the National Association of Theater Owners.

Last year, Hollywood’s theatrical pipeline fell well short of the pre-pandemic rate of releases. With 63% of 2019’s wide releases, the box office reached 64% of 2019’s box office. The problem, exhibitors argued, was not enough supply. This year, around three dozen more wide releases are on the schedule.

“Both Amazon and Apple have signaled that they have $1 billion-plus in forward budgeting for the production and marketing of movies to be released theatrically,” Fithian says. “We’re going to get to a point in a year or so where we have more movies distributed theatrically than we did pre-pandemic.”

Movie theaters aren’t totally out of the woods. During the pandemic, the number of screens operating in the United States and Canada dropped from 44,283 in 2019 to 40,263, according to NATO. Though those losses are far less than many anticipated, the balance sheets for some theater chains remain strained. Regal’s parent company, Cineworld, declared Chapter 11 bankruptcy last year.

Streaming, though, may be departing the role of archrival. During the pandemic, studios took different roads in trying out new methods of release. But while large numbers of films, like Apple’s starry action-adventure “Ghosted” this Friday, are still going straight to streaming, some of the biggest movie suppliers have turned away from those pandemic-era experiments.

“Direct-to-streaming movies were providing really no value to us,” David Zaslav, chief executive of Warner Bros. Discovery, said earlier this year.

But Netflix, the streaming pioneer, has remained resistant to embracing theaters. Increasingly, Netflix looks like the lone holdout.

“Driving folks to a theater is just not our business,” Ted Sarandos, Netflix chief executive, said in an earnings call Tuesday. Netflix’s scale and reach, he said, make the company different than other streaming services. A recent popular release like “Murder Mystery 2,” with Adam Sandler and Jennifer Aniston, has been watched for 82 million hours in three weeks, according to Netflix.

Later this year, Apple will release wide in theaters two anticipated epics: Martin Scorsese’s “Killers of the Flower Moon” and Ridley Scott’s “Napoleon.” They’ll have help. Paramount is distributing “Killers of the Flower Moon” while Sony is handling “Napoleon.”

“The Apples of the world and maybe even the Netflixes of the world are seeing: It doesn’t have to be every movie, and it doesn’t have to completely flip our business model upside down,” says Amazon’s Wilson.

The movie business always looks better when the hits are rolling in; a few big bombs and all the doubts will start over again. Strategies can shift. But right now, theaters and (most) streamers are finding plenty of common ground. And business is booming again.

This story was reported by The Associated Press.