The shifting economics of theatrical cinema and what it means for the film business

Theatrical cinema is evolving. Shrinking windows, hybrid releases, premium formats, event films, Gen Z trends, and AI-driven strategies are reshaping the big-screen business.

This article is part of my 'Big Ideas' series, in which I explore major shifts in the film industry and how they could shape the next decade. These pieces combine research, analysis, and forward-thinking insights for film professionals.

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Cinema is still recovering from the turbulence of recent years.

Industry-wide revenue remains below pre-pandemic levels, partly due to the lingering effects of the Hollywood strikes. Yet theatre chains are adapting; investing in premium formats, rethinking scheduling, and enhancing the in-theatre experience to drive attendance.

North American cinemas alone have committed $2.2 billion to upgrading auditoriums with better seating, projection, and ambience. AMC’s CEO Adam Aron recently predicted a major rebound in cinema attendance by 2025 and 2026.

At the same time, audience habits are evolving. Streaming continues to shape expectations, with nearly half of UK viewers preferring to wait for digital releases over a trip to the cinema.

But while casual attendance has declined, the appeal of the big screen remains strong for key films. For many, cinema has become a premium event - something worth leaving the house for when the film demands it.

Against this backdrop, studios and exhibitors are experimenting with new models. Shrinking theatrical windows, hybrid releases, dynamic pricing, and viral marketing are all playing a role in shaping the future of cinema.

In this article I will go through the biggest changes in the theatrical sector and what they mean for the future of cinema.

Here are the TD;DR:

1. Theatrical windows have (permanently?) shrunk – The traditional 90-day exclusivity window is now typically 30-45 days, with flexible release strategies becoming the norm.

2. Streaming is a primary release strategy – Major films are increasingly launching directly on streaming platforms, bypassing theatres while still reaching massive audiences.

3. Hybrid releases are the new normal – Many films now combine theatrical and streaming launches, maximising both box office revenue and digital engagement.

4. Oscars rule change will affect release strategies – The Academy’s stricter theatrical requirements for Best Picture eligibility may challenge smaller distributors while pushing streamers to embrace wider releases.

5. Streaming services are finding uses for a theatrical release – Platforms like Netflix and Apple are selectively using cinemas to build buzz, qualify for awards, or maximise revenue before a digital debut.

6. Gen Z is putting their stamp on cinema attendance – Younger audiences are highly selective but turn out in force for event films with strong social media appeal.

7. Early access and pricing strategies are driving revenue – Premium-priced early rentals, tiered ticketing, and event-based pricing are helping studios and exhibitors boost profits.

8. ‘Word of Mouth’ for the ‘Working From Home’ generation – Viral marketing and community-driven campaigns are proving essential in generating buzz and sustaining box office runs.

9. Event cinema is booming – Concert films, anime screenings, and other special event programming are drawing new audiences and expanding cinema’s role beyond traditional film releases.

10. A movie either needs to be very big… – Large-format screens and premium theatrical experiences are driving strong attendance for tentpole films.

11. …or very niche – With fewer wide releases, smaller films are thriving by targeting specific audiences with strategic marketing and unique theatrical rollouts.

12. Technology is providing new opportunities for cinemas – AI-driven scheduling, interactive screenings, and immersive experiences are helping cinemas innovate and differentiate themselves from home viewing.

And now to go into a little more detail on each…

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1. Theatrical windows have (permanently?) shrunk

The traditional 90-day theatrical exclusivity window has dramatically shortened in recent years. Many films now shift from cinemas to digital platforms within 30 to 45 days, and some even bypass theatres entirely.

Early access rentals and variable pricing tiers allow studios to monetise home-viewing demand immediately following a theatrical run. This approach enables them to recoup production and marketing costs more rapidly, enhancing overall profitability.

Universal pioneered flexible windows with its 2020 deal allowing films to move to premium video-on-demand (PVOD) after just 17 days if they open below $50 million, or 31 days if they surpass that threshold.

Some distributors, such as Curzon in the UK, have moved away from default day-and-date releases, choosing instead to assess the ideal window on a film-by-film basis. Curzon’s CEO Ed Fletcher said that while some films may benefit from an extended theatrical presence, others might thrive with a shorter exclusive cinema run before moving to digital platforms.

As the industry adapts, flexible release strategies will likely become the norm, with each film’s window determined by its audience demand, genre, and box office trajectory.

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2. Streaming is a primary release strategy

Streaming platforms increasingly serve as key launch pads for major projects.

Star Trek: Section 31 skipped theatres to premiere on Paramount+, highlighting how franchises can utilise established streaming audiences. The film was originally conceived as a TV series but was reworked as a streaming-exclusive movie due to scheduling constraints and shifting industry priorities. Despite Star Trek’s cinematic legacy, Paramount chose to keep the project within its streaming ecosystem, reflecting the evolving role of digital platforms in franchise expansion.

An analysis of US streaming viewership shows that major straight-to-streaming releases can achieve equal or even greater audience reach than theatrical films in their initial streaming window. On platforms like Netflix, Amazon Prime, and Hulu, original streaming films consistently outperform theatrical releases in viewership within the first 14 days of availability. For instance, Amazon’s Road House remake, despite bypassing cinemas, became one of the platform’s biggest hits, reinforcing the notion that high-profile releases can succeed without a box office run.