Its stock price on a year-long nosedive, Viacom's Paramount Pictures struck a deal with a pair of movie theater chains to shorten the time between a theatrical release and when some of its films can be streamed into homes and on mobile devices. Viacom has lost 30% over the past year, closing on Wednesday at $61.17.
Paramount was able to convince two national chains, AMC Theatres(AMC) - Get Report and Cineplex Entertainment (CGX) , to allow the films Paranormal Activity: the Ghost Dimension and Scouts Guide to the Zombie Apocalypse to be made available on streaming platforms17 days after the number of theaters nationwide showing the films dips below 300 theaters.
The arrangement breaks with Hollywood's long-held model of giving theater owners as much as 90 days to show a film before they're made available on streaming platforms.
"Some films generate 99% of their gross in the first four to six weeks of release, followed by a two-month window where they are completely unavailable in the legitimate marketplace," said Megan Colligan, president of worldwide distribution and marketing at Paramount, in an emailed statement.
The new strategy, Colligan said, will allow the studio push its movies to viewers when they want to see them and possibly cut down on piracy. Paramount and Viacom did not immediately respond to further requests for comment on this strategy.
The deal covers just those two movies, but analyst Eric Wold, with B. Riley, said audiences shouldn't expect big budget titles to get similar treatment.
"Given that this agreement covers two smaller titles that are unlikely to generate any significant level of box office revenue, I do not believe AMC is risking much on this and will receive a portion of digital revenue in return," he said.
There is some rationale behind this little experiment, he said, as Paramount and AMC try to gauge how changing up distribution affects box office revenue at a time when more young people are streaming videos and gradually moving away from visiting theaters. "It is a smart way for AMC to tap into how that demographic increasingly prefers to view movies, while also allowing Paramount to benefit from theatrical marketing dollars with the digital release date moved forward," Wold said.
This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.