Streaming piracy helps cinemas make case for exclusive theatrical ‘window’


Hollywood studio’s experiments with releasing new films on streaming services at the same time as their cinematic debuts have been a hit with investors and locked-down movie fanatics.

But there has been a downside too. Known as “simultaneous release”, the strategy has led to near-instant availability of pristine pirated copies of films such as Disney’s Black Widow and Warner Bros’ Godzilla vs Kong, costing the studios millions per week in lost revenue.

Copying a movie from streaming platforms can take “a couple of minutes or an hour at the most”, said the founder of piracy tracker TorrentFreak. Going by the pseudonym of Ernesto van der Sar, he declined to be named, owing to the nature of his work. “That’s the problem with these simultaneous release strategies.”

Piracy tends to be higher for streaming, the studios acknowledge, since most use “4K” high definition standards — meaning the quality is extremely good.

For struggling cinema owners, the studios’ streaming piracy problems have been a blessing, however. Rampant piracy has helped them press their argument for keeping an exclusive theatrical “window,” which the simultaneous release strategy had threatened to close.

Mark Zoradi, chief executive of Cinemark Holdings, the third largest cinema chain in the US, said that piracy fears had recently persuaded studios to pull back on simultaneous release – at least for now.

The National Association of Theater Owners, the US cinema owners’ lobby group, has criticised what it regards as the studios’ aggressive promotion of their proprietary streaming services — which include Warner Bros’ HBO Max, Disney+ and ViacomCBS’s Paramount+ — at the expense of the box office. But investors have cheered when studios report strong subscription numbers, even if the streaming services aren’t yet profitable.

Two of Disney’s Marvel movies appear to have helped make the case for preserving the theatrical window. After Black Widow was pirated from Disney+ on its opening in July, the family entertainment group tried a more traditional release for its latest Marvel movie, Shang-Chi and the Legend of the Ten Rings, this month.

The film had a strong showing at the box office, and while it has been pirated the quality of the illegal copies — shot by hand with camcorders — is relatively poor.

Following Shang-Chi’s successful release — it has pulled in $196.5m at the US box office and been the top movie in North America for four weeks — Disney announced that the rest of its 2021 film releases would have exclusive runs in cinemas before moving to streaming.

Other studios, including Warner Bros, have made similar commitments into 2022. Disney has not revealed plans for next year.

Zoradi argued that the strong performance by Shang-Chi — and a reduced instance of piracy with that release — had influenced studios’ decisions to allow an exclusive run in the cinemas.

“When you see movies that didn’t go to simultaneous release, they tend to be less high on the pirated list than those that did,” he said at a media conference held by Goldman Sachs last week. “That was a really important factor in all the studios’ decisions.”

Disney did not respond to a request for comment.

Zoradi, who worked in studio distribution at Disney for almost three decades, said he had a “hope and expectation” that Disney would commit to exclusive theatrical runs next year. “I can’t put words in Disney’s mouth, but it was a very positive sign that [Disney chief executive] Bob Chapek decided to take all of the rest of 2021 and put exclusive windows on it.”

The group has taken the hardest-charging approach to streaming among the Hollywood studios, as evidenced by a bitter legal dispute with Black Widow star Scarlett Johansson.

The A-lister alleges the group’s simultaneous release of Black Widow breached her original contract, juicing Disney’s stock price at her expense as her bonus was tied to box-office sales. Disney said there is “no merit whatsoever” to the filing.

Disney is locked in a legal dispute with actress Scarlett Johansson over its decision to stream Black Widow on the same day as its cinematic release © Jay Maidment/Marvel Studios

But Disney+ has grown quickly during the pandemic, reaching more than 115m subscribers globally.

Chapek said at the conference last week that Disney would be flexible with release windows in the future, with some as short as 30 days — a far cry from the 90 days cinema operators have traditionally enjoyed.

Narrowing the exclusive cinematic window has been a goal of the studios for years. Preserving it will not end digital piracy of movies, but it will probably delay the length of time for high-quality copies to become available, argued Van der Sar.

In the past, high-quality pirated copies of films did not begin to circulate until Blu-ray discs were released or they became available on demand. “It’s not clear there’s more piracy, it’s just that the piracy happens sooner than it used to,” he added.

Cinema owners, which have been struggling to regain audiences this year amid the spread of the Delta variant of Covid-19, are celebrating the near-term commitments to preserving their theatrical windows. But they probably have not seen off simultaneous release strategies either, analysts said.

Studios are expected to make some films exclusively for their streaming services, with Warner Bros planning some movies that will go straight to HBO Max.

Chapek stressed “flexibility” in how Disney films will be released in the future, suggesting further experimentation ahead as it promotes its platform.

“We love theatrical exhibition — we’ve seen the power of that over decades — but at the same time we know our service [Disney+] is strategically the most important thing that we are doing,” he said.