Everyone in the M&E Industry is Evaluating Their Options

Content Insider #701 – The Way

“When you have access to the vastness of space, you realize there’s only one resource worth fighting over… even killing for: More time. Time is the single most precious commodity in the universe.” – Kalique Abrasax, “Jupiter Ascending,” Warner Bros, 2015

Several weeks ago, on one of our forums, one of the participants was lamenting how streaming media was messing up the entire industry by showing all of the best content D2C, limiting options to filmmakers and leaving nothing but crumbs for movie theater owners and audiences.

Wrong dude–just plain wrong!

At least with streaming services, studios, content owners, filmmakers and content consumers have an option.

The good thing is that the people who did all of the work got paid.

Future projects depend on the studios/project investors getting an ROI on that investment so they can create more visual stories that people want to pay to watch – ticket, subscription, watch ads.

Yes, right now, we’re suffering a little because people aren’t able to go to the theater

But for us, the one we miss the most is live theater, not a movie theater.

Every time we go to NYC, we block out one or two evenings to see a show – Phantom, Hamilton, Hadestown, Dear Evan, Wicked, you name it.

Before the shutdown, we were looking forward to spending an evening watching another performance of Tina because it’s exciting, electrifying – and yes, we respect/adore Tina Turner.

But Broadway’s and off Broadway’s lights are off.

And they won’t come back on until at least mid-year, hurting thousands of people and disappointing tens of thousands of folks who really like/love the excitement and occasional missed cues of a live performance.

But a completed movie is simply sitting in a digital can.

If we don’t see it now, it will still be new if we watch it six months or a year from now.

Clean But… – While theaters have haltingly opened and owners follow stringent health care rules, only the most ardent movie-goers have returned to seats in the theaters. Infrequent cinema attendees are still and will continue to be hesitant to return for a long time, even though they know The Blob was only a movie…right?

It’s nice to see cinemas open but we’ll wait “awhile” before we trot back in because …

Besides … we have options.

Thanks to the stimulus by Amazon’s Prime Days, BestBuy one-upped them and offered up huge OLED 4K HDR ultra screen and dynamite Dolby Atmos surround sound we couldn’t refuse.

Content – especially breathtaking, interesting movies – are great on the new inexpensive screens they’re offering, and you know the folks in the dark room with you.

We and folks who need to recover something on their film investments now have some great options.

Consumers get the diversion and the content.

Whether it’s from our regular subscription or premium, films like Da 5 Bloods, Mulan, Artemis Fowl, The Way Back, Witches, Bad Boys, Wilderpeople, The Banker, Soul, and more are simply good/great films people need to enjoy.

And we consumed them without any remorse or guilt.

Sure, some of the tentpole projects have been pushed into the future in hopes things will get better and maybe they will … eventually. But they won’t be any better in 2022 than they are in the second half of 2020. They aren’t fine wine that gets better with age.

Ups, Downs – Despite the fact that movie theater attendance has declined for years, owners have continued to slowly reopen with even fewer people attending, partially because of new in-home options.

How long can they afford to sit on those $100M plus investments until people do what they quit doing years ago … packing the theaters.

According to Statista, there are over 1,895 thousand screens worldwide, compared to 1.67B TV sets.

In the US, there are more than 600 streaming services and 4 to 5 times that many globally–all jockeying to be the people who fill those screens with content.

And thanks to the lockdown, home screen viewing has become a convenient habit that’s going to be hard to break.

All of those services are bidding on getting the international, regional rights to the new, unique, special content; and that’s great because when studios and content owners run out of new stuff, they’ll order more which means more work for film-making teams.

The temporary slow down of new content production (it is beginning to improve) has been a good thing for streaming viewers because rather than only being exposed to locally produced content, we’re getting exposed to rich international fare.

Sure, the US is the biggest producer/consumer in the world followed by China and India; but good/great stuff is created in all of the 195 countries around the world that was seldom shown in theaters in other countries except possibly in struggling art cinemas.

Suddenly, thanks to home viewers’ lust for different/new content and a dirth of new home-grown content,– we’re getting a global smorgasbord of video entertainment options.

Netflix has introduced excellent shows from Nollywood (Nigeria). Disney’s Hotstar has served up some of the best of Bollywood. And great visual stories are finally available to viewers in every corner of the globe.

Global Talent – As D2C streaming increases in popularity, the largest streaming services are expanding their opportunities globally. That also requires that a percentage (usually 30 percent) of the content be produced locally to stimulate more regional content production. With the global expansion, firms are finding people are interested in good content regardless of its home of origin.

An update of the European Audiovisual Observatory’s LUMIERE VoD film directory showed that 41,550 European titles were available from 367 different streaming services.

What is really neat is how well great storylines and creative production travels around the world.

Genre Varies – Folks may like great content from everywhere but more importantly, the types of films they like most varies from area to area.

Sure, we hope/expect theater chains to return to a new normal so people everywhere can escape their homes and enjoy a new, different movie, but we won’t hold our breath until the wife feels she’ll be comfortable in one of their seats.

And until then, it’s nice to know that the big 10 global streaming services – and other VOD folks – are focused on investing in new, different content that will keep current subscribers and attract new subscribers.

Big 5 Investments – The “Big 5” streamers (Netflix, Disney, Amazon, Apple, Comcast) lead the industry in the development/acquisition of content for their services. And they are constantly looking over their shoulder and around the landscape for new video stories that will capture and keep their growing viewer base.

If the past six months of entertainment rolling out around the globe is an example of tomorrow’s entertainment shift (and we think it is), we believe AMC’s president Aron has a much clearer view of tomorrow’s entertainment distribution than Imax’s Gelfond.

Aron sees in-theater and VOD services as being separate but complementary ways people will be enjoying their content and has laid the groundwork for a coopetive (cooperative/competitive) relationship with studios/content owners to give consumers a choice of how/where they watch their films and how their company shares revenue.

Gelfond, on the other hand, believes streaming is “okay” for mid- to low-budget films that people wouldn’t leave their homes to see in a cinema house. But for the blockbusters, the only way is for consumers to pay to watch them in a theater (such as Imax).

That’s a little like Darryl Zanuck, of 20^th Century Fox, saying “Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”

Or DEC’s Ken Olson observing, “There is no reason anyone would want a computer in their home.”

Then there is the accountant’s view of the options.

Warner’s/Nolan’s Tenet brought in an estimated $350M in ticket sales during its run while Disney’s Mulan earned an estimated $200M plus a big jump in global subscribers.

Warner had to share the revenue with theater owners (receiving no part of the concession sales) while Disney owned its distribution channels so shared costs were minimal and viewers brought their own popcorn, drinks, pizza, candy.

Research firm NRG reported that 50 percent of regular theater goers won’t return to their seats for several months while Comstock’s Jeff Bock reported the primary audience of educated people is staying away from theaters in force.

Certainly, a lot of the return projections depend on the severity of a second/third wave of Covid-19 and a strong roster of “gotta see” films that are shown first in the theater.

Tentpole projects are broadly (and tentatively) planned for the second half of 2021 and 2022.

Consumer Demand – Rather than appointment TV, consumers increasingly want to enjoy their entertainment when, where and how they want, and they’re willing to pay for it either by subscription or viewing ads.

Already the most mature streaming market in the world, Digital TV Research projects that the country’s subscription service will grow from 203M last year to 317M by 2025.

The research firm also projects that SVOD revenues will reach $100B for 138 countries in 2025, double what it was in 2019.

The longer the pandemic drags on, the more streaming becomes the easy option to heading out to the movie theater for the consumer.

After all, there’s something special about watching the latest tentpole flick on our huge HDR Ultra HDTV with Dolby Atmos even if you have to drop $30 for the premium service. It’s a better deal compared to packing the family in the car, paying $50 plus for tickets for everyone and buying stuff at the overpriced concession stand.

And the longer the uncertainty reigns, the easier it is for studios, content owners and consumers to view the theater as a place for really, really special projects and really, really special occasions.

You know, a little like going to NYC for business and immersing yourself in the Broadway experience a few times a year.

To be brutally honest, it’s a lot like Box Office Pro’s Shawn Robbins observed, “Everyone is writing a new rule book as this all unfolds.”

And as Jupiter Ascending’s Jupiter Jones added, “Yeah, because a dream is the only way any of this makes sense.”

Andy Marken – andy@markencom.com – is an author of more than 700 articles on management, marketing, communications, industry trends in media & entertainment, consumer electronics, software and applications. Internationally recognized marketing/communications consultant with a broad range of technical and industry expertise especially in storage, storage management and film/video production fields. Extended range of relationships with business, industry trade press, online media and industry analysts/consultants.