Movies

Why Disney’s Decision to Forgo ‘Strange World’ French Theatrical Release Is Causing Panic

Disney’s strategic decision to forgo the theatrical release of its next big animated feature “Strange World” in France due to windowing regulations threatens to upend the country’s film industry.

That’s because the French box office is increasingly dominated by movies from U.S. studios. With ticket sales in the country already sliding, the prospect of losing the kind of family-friendly release that Disney specializes in producing is a terrifying prospect for the hard-hit industry. And French exhibitors aren’t the only ones who stand to lose if “Strange World” starts a trend of Hollywood projects skirting France’s onerous regulations dictating the length of an exclusive theatrical release in favor of premiering on streaming services. It’s also a burden on distributors and producers, who get funding from taxes levied by the National Film Board (CNC) on theatrical admissions.

For Disney, which revealed that “Strange World” is going to skip its planned November 23 theatrical debut in favor of a launch on Disney+, it’s a sign of the lengths the company is willing to go to bolster subscriptions to its streaming service. But France didn’t leave the company much choice. The studio’s move is in reaction to the country’s windowing rules which were updated in January and set Disney’s pay-VOD window at four months, and subscription-based streaming window at 17 months after films debut in theaters. The only way to bypass those French rules entirely is to forgo a release in cinemas. Right now, Disney is being measured by Wall Street on the number of new sign-ups it receives for Disney+, Hulu and its other in-house streaming services, with theatrical revenues being a much less important measuring stick for investors.

Commenting on its bold move, Disney stated that the “new, cumbersome media chronology is anti-consumer, ignoring how behavior has evolved over the last several years and putting us at increased risk for piracy.” The studio also said it “will continue to make decisions on a film-by-film basis and according to each market’s unique conditions.” Slated for a Nov. 23 rollout, “Strange World” boasts a stars-packed voice cast including Jake Gyllenhaal. The animated film follows the journey of family of explorers across a treacherous land of fantastical creatures.

It’s a major blow for the local business considering Disney tentpoles have been hugely successful in France. Even before the pandemic, in 2019, Hollywood movies broke a 10-year record by accounting for 59% of all theatrical admissions in the country, with Disney alone representing a 23.4% market share of the B.O. with six movies.

Eric Marti at Comscore France says the impact of having streamers skip French theaters on select movies could lead “big losses.” The losses could snowball if the move inspires other companies such as Paramount Global or Warner Bros. Discovery to follow suit. To that end, Paramount + is going to be available in the country later this year and HBO Max is scheduled to launch in France in 2023, which will alter the incentive structure for these companies.

“If Disney decides to offer three or four films per year directly on its platform and is followed by other streamers, notably Warner or Paramount, theaters could miss out on 15 to 20 million admissions per year, and that would represent a loss of €17 million or €18 million that the CNC wouldn’t be able to collect to fund the local industry,” said Marti. The analyst said French distributors would also suffer from this deprived B.O. because exhibitors would be eager to schedule big tentpoles on as many screens as possible, squeezing out the smallest movies.

Ardavan Safaee, president of Pathé Films, which owns the country’s largest multiplex chain, said the timing of Disney’s decision comes at an inflection point when “streaming services have finally understood the value of theatrical to build the profiles of films.” He said he feared platforms which have decided to give their films an exclusive 30 to 45-day theatrical window could well follow Disney’s path.

“Apple has just announced that it will give its Brad Pitt movie ‘Formula One’ a wide release with an exclusive 30-day window, and Netflix recently announced it will also launch Alejandro G. Iñárritu’s new film (‘Bardo, False Chronicle of a Handful of Truths’) first in theaters; and so these films will world premiere in theaters everywhere apart from France because we have these windowing rules,” said Safaee.

France and Portugal are the only countries in Europe where those rules are set by the government. Elsewhere, windows are negotiated contractually by the producer and the distributor of a film, often with the exhibition community.

Besides the lengthy SVOD window, Disney has been clashing with free-to-air channels in France which have also obtained an exclusive window on all films, including those produced in-house by U.S. studio-owned streaming services. Under the current guidelines, platforms have to pull titles from their platform only five months after offering them to their subscribers. In principle, free-to-air channels only have a one-month exclusivity on movies which are produced in-house by streamers with budgets above €25 million. But even then, platforms have to automatically pull those titles from their SVOD services after five months while broadcasters have 14 months to schedule these films.

The measures were imposed on the studio by the French government even though it hadn’t signed the agreement following months of heated debates with other industry players. The French exhibitors organization issued a statement Wednesday asking the National Film Board to step in and mediate discussions between all parties involved ahead of the renegotiation of the current windowing rules, which is set for January 24, 2023. Disney’s decision could scramble these talks, putting pressure on the authorities to dramatically change the length of time that movies must play solely in theaters.

“Only the French government, which the CNC depends on, can change the exclusive windows allocated to theaters and free-to-air channels,” pointed out Marc Missonnier, a producer who was part of the task force which negotiated a deal that mandated streaming services invest a portion of their revenues to support local content.

Missionnier said the issue of free-to-air channels is one of three challenges raised by streamers, along with the four-month exclusive window that is given to exhibitors, and the SVOD window set at 15 months (for Netflix) or 17 months for other services including Disney.

“If you take into consideration the fact that the window being used everywhere between theaters and streaming is 45 to 60 days, it’s easy to imagine the risk of piracy in France where films won’t be available legally online for four months after they come out in cinemas,” said Missonnier.

He thinks that it’s time to revisit windows.

“If we cut it by half and put this window at two months, it would already be a big progress and it would be a good way to get streamers to play ball,” added Missonnier.

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