A Guide to Content Windowing in the Post-COVID Era
BlogAug 10, 2023
The world has emerged from COVID, but the way we consume and engage with video content has been undeniably transformed by the pandemic. In the post-COVID era, content sellers have adapted to our changed viewing preferences by adjusting their content windowing strategies.
In this blog, we’re taking a closer look at content windowing in the post-COVID era and how content sellers have shifted their strategies to optimize release sequencing and maximize revenue throughout the content distribution process.
What is content windowing?
Content windowing is a media distribution strategy that seeks to maximize revenue by creating exclusive windows of availability across multiple distribution channels and platforms.
An effective content windowing strategy tries to capitalize on the high initial demand for new video content by first distributing the content exclusively on high revenue-per-view platforms (e.g. theaters, PVOD) for a set time period.
Once that initial demand is satisfied, content sellers can continue to monetize the content and connect with new audiences by releasing the content on lower revenue-per-viewer platforms like SVOD, Pay TV, AVOD, and FAST channels.
Content windowing vs. content distribution – what’s the difference?
Content windowing (defined above) is just one aspect of content distribution, which encompasses the entire process of licensing video content and making it available to audiences through various channels.
While content windowing focuses narrowly on release sequencing and windows of availability, an overall content distribution strategy involves complex decision-making about channel/distributor selection, negotiating content licensing and revenue sharing arrangements, digital rights management, marketing and promotion, pricing strategy, and other factors that impact overall distribution success.
The evolution of content windowing in media distribution
Content windowing strategies have shifted significantly over the years, driven primarily by the introduction and growth of new distribution channels, changes in audience viewing habits and preferences, and business interruptions like the COVID-19 pandemic.
To better understand these changes, let’s explore the history of content windowing strategies in the United States film industry from the pre-TV era, through COVID-19, and up to the present day.
Content windowing in the pre-TV era (pre-1946)
Before 1946, very few Americans owned televisions and new films were exclusively distributed in theaters. With just one distribution channel available, content windowing as we know it today simply didn’t exist.
Instead, content producers would monetize a film by selling its local/territorial distribution rights to many different theaters across the country. After paying for the distribution rights, theaters were entitled to play the film as many times as they wanted in order to recoup costs and generate a profit – but the content producer only made money on the initial sales. Some content producers took their films on tour, partnering with large-scale and famous theaters to promote screenings and earn revenue from ticket sales.
Content windowing in the TV era (1946-1970s)
In 1946, just 8,000 U.S. homes had a television. But the first Cable TV service was introduced just two years later, and by 1951, more than 12 million Americans had televisions in the home. By 1960, more than 45 million home television sets had been sold in the United States.
As TV market penetration increased and Pay TV grew in popularity, content producers started licensing film content for Pay TV distribution – often years or decades after its initial release. King Kong (1933) and Wizard of Oz (1939) both aired on network television for the first time in 1956. Popular films could have multiple theater runs, like Gone With the Wind (1939), which had six theatrical runs between 1939 and 1967.
While Pay TV represented a new distribution channel for content sellers, this licensing usually happened years after a film’s initial release, and theaters were still the main source of revenue.
Content windowing in the home video era (1970s-2000s)
In the mid-1970s, two important factors played a role in reshaping American film distribution. First was the exploding popularity of Pay TV, which reached more than 10 million households for the first time in 1975. Second was the invention of BetaMax, LaserDisc, and most significantly VHS VCRs, which opened up home video sales and rentals as a new distribution channel for video content.
Content sellers wanted to take advantage of all distribution channels available, but quickly realized that licensing a film to cable or broadcast television would cannibalize box office and VHS sales. This led to widespread adoption of the “standard release” business model that used content windowing to maximize revenue and avoid cannibalizing sales.
The standard release included a 4-6 month (or longer) theatrical release window, followed by a short window of Pay TV distribution. If the movie was popular, it could be re-released in theaters. After one or more distribution cycles in theaters and on Pay TV, the film would be released on VHS, and later DVD and Blu-ray, to capitalize on home video sales and store rentals. Eventually, the film would be made available on free-to-air television.
The standard release proved to be a highly effective business model for film distribution. By sequencing the release of new content – first in theaters, then on Pay TV, then on home video, and finally on free-to-air television – content sellers could reach the widest audience and maximize revenue generation without cannibalizing sales in any distribution channel.
Content sellers experiment with simultaneous releases (early 2000s)
A simultaneous release is when content sellers release a piece of film content across multiple distribution channels at the same time. Some content sellers experimented with simultaneous releases in the early 2000s. One example is Bubble (2006), which was released in theaters, on cable/satellite television, and on DVD in January 2006.
Simultaneous releases gave consumers immediate access to new film content and the freedom to watch it however they wanted, but theater owners still wanted an exclusive distribution window for blockbusters and simultaneous releases never came close to displacing the standard release content windowing strategy.
The rise of OTT and the shortening theatrical window (2000s- 2010s)
The mid-2000s brought in huge changes in video media distribution, with the arrival of Over-the-Top (OTT) video streaming platforms. The AVOD market segment appeared with the foundation of YouTube in 2005, Netflix and Hulu pioneered the SVOD market in 2006, and Apple’s iTunes started distributing movies using a TVOD business model in 2007.
The arrival of OTT streaming platforms created new distribution opportunities for content sellers that started to shift content windowing strategies away from the standard release model. With DVD sales having peaked in 2004, theater attendance in steady decline, and growing competition for audiences, content sellers wanted to shorten the theater exclusivity window and get their assets onto TVOD and SVOD platforms as soon as possible after the initial release. A newly released film would run exclusively in theaters for 3-4 months, then have a 3-4 week exclusive period for transactional (TVOD) sales, then be released on home video, digital download, and other streaming platforms.
One successful release during this period was Iron Man 3, which was released in theaters in the United States on May 3rd of 2013. After a successful theatrical run which lasted 19 weeks, Disney released the film for digital download on September 3rd of the same year. The film was made available on SVOD, Blu-ray, and DVD just three weeks later on September 24th.
Content windowing in the post-COVID era (2020 and beyond)
By 2019, most theater chains had negotiated an exclusive theatrical release window of ~75 days before TVOD release and at least ~90 days before home video/SVOD release with major studios – but that was about to change.
Theater attendance dropped significantly during COVID-19 and has not recovered to pre-pandemic levels. Source
When the COVID-19 pandemic hit, a mix of government-mandated theater closures and fears about gathering in public spaces significantly reduced theater attendance. With theaters no longer producing revenue at the same level, content sellers needed to adapt their content windowing strategies to maximize revenue in the new environment. This meant negotiating an even shorter exclusivity window for theaters and creating a new business model known as Premium Video-on-Demand (PVOD).
PVOD gives audiences early access to stream newly-released video content on TVOD or SVOD services for a premium price. Disney pioneered PVOD when it skipped theaters and generated more than $270 million in sales by releasing Mulan directly onto its Disney Plus platform for a $29.99 rental fee. Following in Disney’s footsteps, distributors like Universal and Sony have negotiated shorter theatrical windows for their films since 2019 and accelerated the release of those assets on OTT streaming platforms.
Data from 3Vision Movie Tracker confirms new approach to content windowing strategy. OTT video streaming platforms are increasingly premiering films on their platforms within one year of a film’s theatrical release. Source
Data from the National Association of Theater Owners indicates that the average theatrical exclusivity window for nationally released films in 2022 was just over 40 days. From there, most films are released on TVOD platforms (or integrated SVOD/TVOD platforms like Amazon Prime Video) for Electronic Sell Through (EST) or Download to Rent (DTR). After a short TVOD window of 3-4 weeks, the film will be released next on home video formats (Blu-ray, DVD, etc.), then on SVOD platforms, and eventually even on AVOD or FAST platforms.
A good example is Bullet Train (2022). The film premiered on July 18th of that year, ran exclusively in theaters for 53 days, was released on TVOD on September 27th, then to DVD/Blu-ray on October 18th, and finally to SVOD platforms on December 3rd.
Data from 3Vision Movie Tracker reveals that Global and Studio SVODs are squeezing out Pay TV when it comes to purchasing first-window rights for major studio films. Source
Benefits of a data-driven content windowing strategy
Content sellers in 2023 can leverage content performance and engagement data to optimize their content windowing strategies and maximize revenue from their content distribution efforts. With the right data, content sellers can start to answer critical questions like:
- How much demand is there for a specific piece of content?
- Which distribution channels might be the most profitable for this content?
- Which OTT streaming platform(s) has the best audience for this content?
- How much revenue could this content generate in a theatrical run?
- How long should the theatrical exclusivity window be for a specific piece of content?
- How far into a theatrical release should we expect to see revenue drop-off for this title?
- How much revenue could this content generate in a PVOD release?
- How much revenue could this content generate in a TVOD release after a theatrical exclusivity window?
- How much revenue could this content generate in home video sales or SVOD revenue sharing?
- …and more.
Analyzing content performance data can help content sellers predict revenue drop-off in active distribution channels, or forecast revenue performance for a specific film in an untapped distribution channel. Content sellers can also use audience demographic data to determine which distribution channel(s) have the most valuable, engaged audience for a specific piece of content.
Going forward, the most data-driven content sellers will use content performance and engagement data to plan content windowing strategies for major releases and make critical decisions like whether to release a film on PVOD or in theaters, the optimal length for PVOD/TVOD/theater exclusivity, which OTT streaming services to release on, and even how to price their content.
Craft your content windowing strategy with Revedia
Revedia is a data intelligence platform that helps content sellers manage, optimize, and predict revenue across linear and digital distribution channels.
With Revedia, content sellers can ingest, normalize, and analyze content performance, engagement, and financial data to craft data-driven content windowing strategies that maximize distribution revenue from valuable video assets.
Schedule an interactive demo of Revedia Digital to see how our powerful data intelligence platform can help content sellers optimize their content windowing strategies and revenue from content distribution.