Great Films are Great No Matter Where They Appear

Content Insider #909 – New Movies

By Andy Maken – andy@markencom.com

“It gets harder each time, to remember that you still deserve… to exist! That this part of yourself is still worth something! That you still matter! – Man in Diner, “The Substance,” Working Title Films, 2024

Despite the fact that the movie theater industry missed its ticket sales goal in the Americas, it didn’t stop the players from being overly optimistic about the fact that films have been putting seats in seats. During last month’s CinemaCon in Las Vegas; Mike O’Leary, president/CEO of NATO (National Association of Theatre Owners), reported what everyone there already knew … box office sales hit about $8.75B last year or about a three percent drop over the previous year.  

But he and industry analysts were upbeat that theater attendance is going to pick up this year with ticket sales of at least $9.2B and will grow to nearly $10B next year.  

Maybe.

After all, the pandemic is a distant memory, the dual strikes are in the rearview mirror and studios (new and old) know they have to spend money to make money.

The big difference this year and going forward is that the industry has “options,” and they need to acknowledge and address the evolving entertainment environment.  

NATO members – account for about 200,000 movie screens globally (33,000 in the Americas, 90,968 in China – the two largest markets) have invested more than $3B this past year to welcome young and old moviegoers and maintained pretty steady ticket prices (about $10 in the Americas).

Of course, they – and studios – made up the revenue shortfalls with higher-cost concessions.

They also added an unbelievable selection of marketing efforts including toys, special popcorn containers, events/activities and other promotional tie-ins that regularly cost north of $20M per project.

They did good but…

Dedicated Options – There is only a certain percent of the population here and abroad that simply must see a movie the way the creative team envisioned it – on a large screen. The majority of people will sometimes, occasionally, periodically and never see it there, preferring to wait until they can watch on their own home large screen.  

They continued to focus their marketing efforts on the same key market segments with predictable results.

Yeah, the same folks put their seats in movie house seats for the same flavor of projects – sequels and franchises dominated the top 10 movies of the year as they have for the past 15 years.

However, there was a refreshing uptick in a surprising set of projects that caught theater owners and studio executives by surprise.

Taylor Swift’s Eras racked up record box office sales of over $267M worldwide, opening just behind two heavy hitter films – Barbie and Super Mario Bros. Movie and breaking all kinds of records that completely bypassed studios.

It paved the way for other artists to reach a much larger audience without the challenges and difficulties of being on the road for months at a time.

Studios and streamers were quick to respond to the pent-up audience demand with new and rereleased projects like Beyonce’s Homecoming, Katy Perry’s Part of Me, Elton John’s Never Too Late, Bruce Springsteen’s Road Diary, and others proving that movies can stretch beyond feature films.

They showed that perhaps – just perhaps – it’s time for Hollywood and the entire entertainment industry to tear up the old script that has served it so well in the past and consider the fact that the world – and the industry – has moved beyond scripts that have worked so well (profit) in the past.  

First, studios in the Americas can no longer count on China – the largest movie market outside the Americas – as their opportunity to make significant profits.

Stanley Rosen, USC (University of Southern California) political science professor, has observed that the country’s studios have learned everything they could from Hollywood – animation, FX, single/multiple camera techniques and post production. And even though overall ticket sales are down, they are more than equal to the task of meeting the out-of-home entertainment needs of their 1.5B population.

Home Grown – Theatrical ticket sales were down in China as they were around the globe but more of the films that appear in theaters in the country are created by and for the Chinese people.

With the obvious support of the Chinese government, the studios are tapping into the audience’s interest in stories that resonate with them–stories that reflect on their past and the world they live in today.

Because of the growing Sino-US tensions and the two economies decoupling, movie goers have also been increasingly attracted to movies that highlight nationalistic and patriotic subjects.  

In addition to being culturally relevant and relatable to the Chinese market, nationalistic and patriotic movies have also drawn large young and old audiences.  

The population has grown tired of Hollywood’s repetitive storylines==especially since they have been bringing in films from non-Hollywood sources such as India and other Southeast Asia countries.  

AI-enabled localization makes it easy and economic for them to bring in films from everywhere as well as show their own movies and enjoy the best from around the world.

There are still opportunities for American films in China’s theaters, but the market has become much more insular as local audiences find homegrown projects more interesting, relatable and entertaining. 

A page from their script

Perhaps it’s time for NATO and American theater owners/studios to “borrow” an entertainment idea from China.

Every year, China’s movie/theater organizations get together and hold what is called the National Day holiday season featuring a wide array of movie genres – fantasy action, animation, patriotic, you name it.  

This past year, they held 474,000 screenings on more than 86,000 movie screens across the country.

We know you’re going to say, “Yeah, but they have the country’s government supporting the effort and ‘encouraging’ folks to go to the movies during the holiday season.”

Big Deal…

Theater owners, studios, streamers and the guilds/unions across the Americas are just as smart, just as creative and just as goals-oriented that they could produce the same – we’ll bet even better – results if they reverse- engineered the idea.

Getting the government to agree/support anything is impossible and the industry doesn’t need them to establish a special industry holiday period and promote getting seats into seats.

Or, to paraphrase Gold Hat in The Treasure of Sierra Madre, “The industry don’t need no stinking endorsement to get folks excited about going to the movies.”

All NATO’s O’Leary and the heads of studios/streamers have to do is get together and make it happen!

It’s not copying … it’s creative thinking.

How tough can it be?

But what will be difficult is getting creative content bosses and some creatives – producers, directors, showrunners, actors – to think more about the viewing public.

Differences – Some people can’t wait to rush to a theater to watch a new movie and other folks just like to collapse at home and enjoy some solid film on their home screen.  

As we pointed out earlier, some folks love to see a movie first in the theater, some occasionally, some (like us) don’t mind waiting until the studio/streamer gets around to making it available on our home screen.

No matter where people watch it, it’s a movie and people should be able to enjoy it where they want to enjoy it.  

Please don’t give us that hackneyed phrase that when you are doing a real film, people “have to” see it in a theater to get the full experience.

Movie folks first looked down on people who “stooped” to appear on TV shows, and it was even worse if they were seen in TV commercials.

Today, that work is often deemed professional/creative and what’s more, it broadens their experience/exposure while also providing a nice income.

As the pandemic was winding down, people in the industry were “discussing” how long the theatrical window should be and the consensus was there was no consensus.

Agreement – Depending on where people sit in the motion picture/theatrical hierarchy, they have a different opinion of how long a theatrical window should be.  In other words, just long enough.  

Last year, Netflix co-CEO Ted Sarandos defended his company’s stance on theatrical releases emphasized that the company was in the streaming business. With 283M subscribers worldwide and record revenues of about $39B, they are obviously doing something right.

But could he/they do better by considering the complete entertainment public while also stimulating more subscribers and financial growth?

We think they could with measured early releases of projects in theaters followed by addition to their viewer content inventory.  

In a way, they’ve already proven there’s an entertainment market out there for films, even after they’ve appeared in theaters.

A few years ago, the company made a deal with Sony that gave them the right to stream 32 films after they appeared in theaters.

They followed this up with a deal with Universal Pictures that allowed them to carry a series of animated and live-action films.

They all appeared in Netflix’s top 10 list, showing that the earlier theatrical window didn’t hurt and probably actually added to subscriber interest, including possibly adding more subscribers.

In fact, we contend that the one-two release schedule actually helps the total streaming service.

Before Godzilla Minus One was available on our streaming service, we watched almost a dozen Godzilla films just to relive some of the excitement.

Prior to Kingdom of the Planet of the Apes coming to Disney’s Hulu streaming inventory, we rewatched a bunch of sequels, tie-ins and derivative works at home.

Since a John Wick 5 is iffy but since Ballerina was a good way to watch the adrenalin action, we sat on the couch and watched the first four in the series along with both of his Matrix films.

Frankly, we could give a rat’s behind if you saw any of the films in the theater before we saw them at home.

They were new to us and – like lots of other people – we enjoyed revisiting the projects even as we knew what was going to happen before it happened.

And we don’t feel we were alone in reminding ourselves how great sequels, prequels and franchise projects are.

Okay, that’s selfish from the viewer’s perspective.

Let’s talk about something that’s near and dear to the hearts of theater, studio and streamer bosses … money.

Streaming doesn’t cannibalize theatrical. In fact, theatrical can actually improve streaming results…

Honest, Ted.

But it isn’t for every project because it isn’t cheap.

Marketing/promoting films have become as creative and as expensive as the projects themselves, and we believe that if a motion picture is scheduled for streaming release a modest/realistic theatrical release promotional budget is a smart investment.

Whether it’s word-of-mouth and/or grassroots marketing or multi-lingual social media and trailer promotion, costs can range from a few million to, 20-25 million or even north of 100M dollars.

And depending on the studio/streamer/showrunner objectives, the noise surrounding the box office and viewer/reviewer response and later streaming appearance may not produce a red carpet award but it can resonate on the bottom line.

Because it returns a modest sum for the studio/streamer (yeah, you’ve got to split the gate 50/50 with the theater) while retaining present subscribers and adding new subscribers to the service.

For example, at the end of last year, Amazon released Red One which cost an estimated $250M to produce in theaters first and invested countless millions to market it.

The film produced about $100M at the box office which would cause most studio executives to refresh their resume and begin cleaning out their desk.

But the film captured more than 50M viewers worldwide and became one of the service’s most widely watched films … ever.

So, everyone – theater owners, studio, Amazon and especially the movie goers and streaming subscribers – were happy.

And when it comes to films, that’s what matters.

As Elisabeth Sparkle said in The Substance, “The balance must be respected.”

Andy Marken – andy@markencom.com – is an author of more than 800 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