Paramount Pictures chiseled a crack into the closely guarded theatrical window on Wednesday in an experimental agreement with two leading theater chains that will trim the length of time a handful of movies are restricted to playing only in theaters.
Paramount, along with AMC Theaters and Cineplex Entertainment, announced a deal to shorten the rollout of two low-budget horror films due out in October: Paramount's "Paranormal Activity: The Ghost Dimension" and "Scout's Guide to the Zombie Apocalypse." Seventeen days after each film dips below 300 screens domestically, Paramount can distribute them to home entertainment destinations such as video-on-demand.
The traditional theatrical window is 90 days, during which other platforms — digital and home video — must wait on the sidelines while theaters get exclusivity to new releases. Top exhibitors have fiercely protected their window, refusing to play movies that don't abide by it.
Smaller releases that play in independent theaters often operate under different rules. But Wednesday's agreement is the first of its kind between a major studio and top exhibitors. AMC is the second largest chain in the U.S. Cineplex is the largest in Canada.
Paramount called the plan one that "could potentially redefine home digital distribution."
"Movie-lovers want us to respond and meet their desires," said Brad Grey, chairmen and chief executive of Paramount Pictures. "Our hope and intent is that this initiative offers a degree of innovation that benefits all parties."
The preservation of the theatrical window has been a hot-button issue in the movie industry for several years. In 2011, Universal Pictures attempted to release the Eddie Murphy comedy "Tower Heist" on-demand just three weeks after it was to hit theaters. Exhibitors threatened to boycott the film and Universal relented.
Another test came in December with the Seth Rogan comedy, "The Interview." When the top chains in North American pulled the film following terrorist threats, Sony cobbled together a simultaneous release on digital platforms and in select theaters. The move angered major theater operators and prompted Patrick Corcoran, vice president of the National Association of Theater Owners, to dismiss Sony's gambit as a money-loser.
On Wednesday, Corcoran applauded Paramount for working with theaters.
"For several years we've been asking the studios, distributors to reach out and work with exhibitors on new models and ways to grow the pie, including home entertainment, while at the same time protecting the theatrical exclusive," said Corcoran. "As far as terms of this particular experiment, it's going to be up to individual theater companies whether this works for them or not."
Paramount's announcement was notably lacking the participation of other major chains. Without their cooperation, Paramount could find difficulty at the box office. The last "Paranormal Activity" release, 2014's "The Marked Ones," earned $32.5 million domestically, well below the $107.9 million the 2009 original grossed.
Regal Entertainment Group, the country's largest exhibitor, didn't immediately return messages Wednesday.
In the announcement, which the Wall Street Journal first reported, Paramount said that it would share a percentage of digital revenue from the first three months with exhibitors. That was good enough for AMC and Cineplex.
"Consumers know theatrical movies from their 'gotta see it now' exclusive releases in theaters," said Gerry Lopez, president and chief executive for AMC. "But every movie is different and a one-size-fits-all business model has never made sense."
