Why “Top Gun: Maverick” Is a Victory for Old Hollywood

It’s official: Old Hollywood is back. Top Gun: Maverick, a product of Old Hollywood studios, has broken a Memorial Day weekend box office record with an estimated four-day opening of $156 million. According to Variety, approximately 55 percent of the movie’s audiences are 35 years or older. This is important because that demographic has been most reluctant to return to theaters since the COVID-19 pandemic hit.

People are definitely returning to theaters. Entertainment analysts believe that ticket sales for 2022 won’t approach the $11.4 billion generated in 2019, but even so, sales should almost double the $4.4 billion collected in 2021. With movie theater attendance picking up, we’re seeing a change in the contentious relationship between the New Hollywood streaming companies and the Old Hollywood movie distribution system.

Streaming companies — Netflix in particular — have long been at odds with movie theaters over film distribution. In the pre-pandemic days, theaters insisted on exhibiting films for 75-to-90 days before they were distributed via video and streaming. Old Hollywood studios played ball. But this model didn’t quite work for New Hollywood streaming companies such as Netflix, which believed that giving movie theaters exclusive access to Netflix productions would cannibalize potential streaming subscribers. Why give away audiences? So, Netflix quarreled with movie theaters over the distribution of Netflix titles such as The Irishman.

The pandemic tilted the balance of power to New Hollywood. When movie attendance virtually disappeared, suddenly New Hollywood was holding all the cards. Exclusive streaming windows for theaters seemed pointless. Old Hollywood studios, saddled with enormous sunken costs for movies they’d created already, negotiated with streaming companies to distribute their films, bypassing theaters completely. Disney, an Old Hollywood studio with a New Hollywood distribution platform (Disney+), controversially released movies simultaneously in theaters and through streaming. This approach is known as a day-and-date release.

Top Gun: Maverick was originally slated for a 2020 release, but the pandemic changed that. Tom Cruise, one of the movie’s producers and its marquee attraction, said at the Cannes film festival that he never considered distributing the movie to a streaming service. He held out for a movie theater release, and it looks like his strategy is working.

Top Gun: Maverick isn’t the only blockbuster movie to crush it in movie theaters, too. Spider-Man: No Way Home is one of the sixth highest grossing movies ever (globally) with all of that money coming from in-theater tickets sales. The big-summer blockbuster movies such as Doctor Strange in the Multiverse of Madness and The Batman enjoyed strong showings in theaters. More potential theater-friendly hits such as Jurassic World Dominion and Thor: Love and Thunder are waiting in the wings. And, movie theaters appear to be more flexible about insisting on a 75-to-90-day exhibition window: 45 days is the new standard.

Meanwhile, Netflix’s fortunes have fallen. Netflix recently announced that it had lost 200,000 subscribers during its first quarter — the first time that had happened in 10 years. To put that numbers in perspective: Netflix had predicted an increase of 2.5 million subscribers for the first quarter. Netflix also predicted the loss of 2 million subscribers over the second quarter. The company’s stock value plummeted. The news also led to an outpouring of existential angst about the future of streaming — especially as the post-pandemic, stay-at-home economy experienced a slowdown.

But even still, the times remain uncertain for everyone, movie theaters included. Theaters are still on shaky financial ground. Another COVID-19 surge could drive moviegoers away from theaters.

I believe that:

  • Netflix will become more flexible about allowing theaters to distribute its movies during the 45-day-window. This will happen for a number of reasons. First, Netflix’s previous strategy of living and dying by subscriber growth alone will change with the introduction of an ad-supported tier. Generating revenue from ads will lessen the need to grow through sheer subscriber volume. Second, Netflix needs to recoup the cost of movies. The most popular Netflix movie ever, Red Notice, cost $200 million — but it captured none of the buzz and staying power of Netflix’s limited series such as Stranger Things. Third, distributing films in theaters will help Netflix attract more Old Hollywood artists who prefer having their movies appear on the big screen.
  • New Hollywood will expand its presence through the Old Hollywood distribution system, too. A few New Hollywood companies actually own theaters: Netflix owns the Egyptian Theater in Hollywood, and the Paris Theater in New York. Disney owns the El Capitan Hollywood theater, where it plays its own movies. Owning a limited number of brick-and-mortar theaters gives New Hollywood a means to hold special events and build buzz for major releases without competing with chains. But would it make sense for a streaming company to expand even further? One fascinating possibility is for Amazon to scoop up some cash-strapped theaters, as has been speculated. I could see movie theaters becoming cash cows for Amazon to hustle its private label brands in the lobbies and offer special rewards for Prime members. The time may or may not be right for Amazon. The company suffered a rare loss in its most recent earnings announcement. But then again, theater chains are still hurting financially. And Amazon is clearly moving into brick-and-mortar industries such as retailing (most notably via the acquisition of Whole Foods a few years ago). Will Amazon make a move now?

Flexibility is the theme of 2022. Studios are increasingly comfortable distributing films — especially blockbusters — through movie theaters first under the new 45-day window. The Batman was closing in on $800 million worldwide before it became available to stream — which raises an intriguing question: might a shorter 45-day window actually create buzz in advance of its streaming release?

It will be a big summer for blockbusters that play well in theaters. But studios may take a different approach for quieter, “serious” fall and winter releases especially as the pandemic rears its head with occasional spikes as it will.

Buckle up, everyone. It’s going to be a bumpy but exciting ride.

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