The End Of An Era? Part 1

Melvin Twigg Mason

It is no surprise that Hollywood is facing a major inhibitor to their mission of getting new entertainment to the masses. In the midst of this global pandemic, most states (if not all) have instituted stay-at-home orders and business shutdowns, which include movie theaters. So how is the movie industry to reap the benefit of our hard-earned dollars if they can’t entice us into our local movie houses?

In response to the Shelter-in-Place orders, movie-makers have quickly moved their visual fare to digital streaming services (Hulu, Netflix, Amazon Prime, etc.) and other video-on-demand (VOD) providers.

Unfortunately, on-demand pricing is 2-3 times higher than seeing films in a theater! Who wants to pay that? Evidently a growing number of consumers do. In 2019, digital consumption ($48.7 billion) surpassed theatrical ($42.2 billion) as the leading global revenue source for the entertainment industry. In the U.S./Canada, revenue from digital surpassed theatrical in 2016.* Date night may have just gotten a lot more expensive.

Think of it as buying the DVD early. Except that $19.99 is usually the RENTAL price these days, not the purchase price. In 2019, consumer ownership of hardcopy entertainment (DVDs & Blu-Ray) only reaped about $10 billion in sales, a 50% decline since 2015.*

So how desperate are we for digital entertainment? Hollywood is hoping that we’re very desperate, as are they. Right now, instead of reaping the benefit of cinema sales AND streaming services AND consumer ownership, movie-makers are losing what was their first and foremost source of income — theater revenue. In fact, by most estimates, the industry is bracing to lose a whopping $17 billion in screening income worldwide by May due to the COVID-19 pandemic. Hollywood has lost millions in the U.S. market alone since the March theater closings. And the 1st quarter of the year is traditionally the slowest!

This may become the “new normal” in the movie-going experience. Can’t you see it?  No need to get dressed in anything more than your comfy sweats to see Marvel’s latest action piece. You’ve already got the big screen (50” or better); and you’ve rigged your home entertainment system with Surround Sound. Hollywood saves even more money (and gains more profit!) by NOT having to produce and distribute thousands of those premiere movie flash drives to send to theaters. It’s a win-win. You just pop up some of Orville’s finest and boot up your app for an evening of first-run, sci-fi or Disney fun.

But what if one doesn’t have on-demand equipment or a subscription? How do you get new movie releases into your home if you don’t have access to VOD services? Let’s explore that, and the future of theatrical entertainment, in my next report. . .

*Adgate, Brad. “Will Movie Theaters Fill Up Again After
COVID-19?” Forbes.com, Forbes Magazine, 24 Mar. 2020,
www.forbes.com/sites/bradadgate/2020/03/24/covid-19-
will-movie-theaters-fill-up-again/#7d9200d669ef.

#twiggworks

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