What does movie watching mean in the age of streaming? The answer to this question has been the elephant in the (screening) room of the film industry as Netflix has fundamentally shifted how viewers consume entertainment. This tension has typically been easy to break into binaries: old versus new, Silicon Valley versus Hollywood, Godzilla versus King Kong, and so forth. We know these kinds of battles; hell, they’re the kind of stories Hollywood has proven so adept at telling and retelling for decades. But how does that narrative change when there’s an unseen, cataclysmic shift in the rules of engagement?
We’re about to find out.
On Friday, August 7, U.S. District Judge Analisa Torres paved the way for the Justice Department to walk back the Paramount Decree. Established in 1948 as the result of the United States v. Paramount Pictures, Inc. case, the landmark ruling—or the Paramount Decree, as it became known—stopped a practice known as “block booking,” where studios could force theater owners to show their movies (sight unseen!) and then restrict those films from playing in other theaters. This practice allowed studios to essentially purchase theaters to play only their titles. While Paramount was the main defendant in 1948, all of the other major studios at the time—Metro-Goldwyn-Mayer, Warner Bros., 20th Century Fox, RKO Pictures, Universal, and United Artists—were also included and subject to the ruling. Disney wasn’t explicitly named but was nevertheless subject to comply. Block booking, due to the profit-sharing model between theaters and studios, set these big entities to set themselves up to maximize their own profits, so the original 1948 ruling came down in favor of capitalism and competition for all.
Now, 71 years later, only Universal, Warner Bros., and Paramount (although they’re in a dangerous place) remain in operation. At the same time, new tech players like Apple, Amazon, and Netflix continue to make considerable strides in the studio space. Those new companies made the Paramount Decree subject to what’s known as “horse and buggy” policies—a Justice Department tactic that allows for the re-examination of practices to determine whether they still apply the businesses they regulate. These tech companies don’t function in the same way traditional studios like Warner Bros. or Universal do, so it seemed like a matter of time before the decree re-examined. Once you combine that factor with the loosening of antitrust laws, a perfect storm accumulated for the removal of the Decree.
Why does this matter?
Why does this matter? Torres’ ruling last week allows for the return of block booking after a two-year grace period. More critically, the change enables studios even more power than before. COVID-19 has already left theater chains in a vulnerable position—but once you include the shortening of the theatrical windowing period and bold moves on the part of companies like Disney—the ending of the Paramount Decree will make it far easier for studios to purchase entire theater chains and show only their movies.
Is that even possible?
This kind of ownership has already happened on a local level; Disney owns the El Capitan in Los Angeles. Netflix purchased the Egyptian Theatre in 2019, but this was due to a loophole in the original Paramount Decree that let studios own theaters on a city-specific basis. The reversal now means that Disney might be able to purchase the flatlining AMC and Imagineer the chain into the exclusive home of Star Wars and MCU movies. Meanwhile, the studio would then get to forgo the profit-sharing model theater chains are currently operating under and pocket 100% of the profits. Or, suppose an arthouse theater wants to play David Fincher’s upcoming Netflix movie Mank. The streamer could implement block booking and require the theater to commit to playing a lesser film like whatever subpar comedy Adam Sandler is working on next. Big picture, the reversal could give studios more control over what audiences can see, i.e., only films that are guaranteed to turn a profit. Thus, block booking could ultimately box out smaller indie studios like A24, who has found success showing its movies at chains and indies alike. Imagine not being able to see something like Uncut Gems on a big screen—that could become a reality as a result of this decision.
It feels like movie-theater lovers come together every few weeks to shout about how the sky is falling. It might feel like crying wolf to some, but for others, it’s a terrifying possibility. Nervousness like this is partly the nature of change; there are always going to be those resistant to an altered landscape. But 2020 has felt like one hit after another. Once you add COVID-19 complications and now the end of the Paramount Decree, it seems like the end is dangerously near. And for those who genuinely love going to movie theaters, there’s not a damn thing we can do to change what’s coming.