Theaters, Streamers Need to Join Forces

Theaters, Streamers Need to Join Forces

Andy Marken October 19, 2023

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Movies are dreams that you never forget. - Mitzi Fabelman, The Fabelmans, Amblin Entertainment, 2022

Several months ago Barry Diller, former Hollywood studio chief, observed that the industry that grew up telling stories to people was broken.

No kidding?

Everyone recognizes it.

We all know whose fault it is the other guy.

How do we fix it?

They have to change.

Folks, we're not going back to pre-streaming (2007).

We're not even going back to pre-pandemic.

Source promostat

That horse has left the barn.

The video entertainment industry (movies/shows) is a big industry.

Film data researcher Stephen Follows noted that over the two decades prior to the pandemic more than 37,472 feature films were made in the U.S and only about 6 percent of them were released by the Made-in-Hollywood studios.

Roughly 94 percent of the projects were independent films but nine out of ten never saw a theatrical release and probably weren't profitable.

Erring on the side of caution, three times that that number were produced around the globe.

It is true that streaming services may have dealt a fatal blow to pay TV or as FX boss John Landgraf calls it, peak TV.

Source Sustainable

It had a good run while it lasted.

It provided a ton of jobs for writers, actors, backlot and production folks who created mindless and good shows/movies for people to consume at home.

All they had to do was block out a specific day/time to watch the entertainment sandwiched in and around 15-20 minutes of ads per hour.

The cost was a steadily increasing service bundle fee that for us, finally tapped out at $125/mo.

Even though you only watched content on two to four of the channels during the year, they did offer you 800+ channels so it was a helluva deal until it wasn't.

The entertainment establishment likes to say that Netflix and Amazon revolutionized the 100-year-old industry, but they overlook the fact that TV folks were the first to offer internet-based streaming entertainment with Hulu.

The two tech companies were just a little bit more committed to giving folks everywhere reasonably priced access to new, unique shows/movies when they wanted, where they wanted and how they wanted.

Source CJE&M America

Natural Order - Neither streaming nor the pandemic ruined movie house ticket sales. They've been going down for years and the same old ways of doing things won't work anymore.

Theater and Wall Street analysts like to say that streamers, along with an ill-timed pandemic, crippled the movie theater industry but it's bouncing back.

Theaters were in trouble long before the pandemic and comparing the recovery to 2019 ticket sales is ridiculous.

Ticket sales have shown a steady decline since 2002. Growth has come from inflation-driven price increases.

Sure, the success of this year's budget-busting projects can't be denied but massive movies like Avatar: The Way of Water, Top Gun: Maverick, Barbie, Oppenheimer, M:I7, and John Wick 4 aren't the forecast of a great box office recovery. It's more like a reminder of what a healthy movie industry should look like.

We tend to overlook the fact that these tentpoles are built on a major budget.

Source Stephen Follows

Matching Funds - The film industry has long known that the belief that if you make it, they will come doesn't really work. Whether it's a micro-budget or blockbuster project, content owners spend heavily to build interest and an audience.

More importantly, they require a significant marketing investment to build up awareness and whip up excitement to see the Big Movie while it's in the theater.

The result is that studios can only afford to produce a few blockbuster projects, cross their fingers and hope they'll return a decent profit to justify executive salaries.

From the beginning of the subscription rush, Wall Street pressured studios to spend billions of dollars on content as a show of strength while chasing subscribers. But that was okay - up until the strike - because networks and studios had joined the rush to the streaming world while falling all over themselves to find new, different content to monthly/weekly add to their library to make their subscriptions numbers grow like the tech companies.

Fresh, Refresh - Streaming subscription growth at any cost has finally been replaced by folks who realize that it costs less to keep the subscriber you have today rather than simply focusing on increasing your audience numbers. Focused projects can help growth and retention.

The whole idea was to capture a dominant share of the subscription video market which is projected to reach $322B by 2030 according to MIDia Research, an increase of 145 percent over this year.

Wall Street told the studios/networks they wanted to see growth at any cost.

WBD was driven by innovation.

They changed the name of HBO to HBO Max to Max.

They whacked staff and projects.

They moved their entire slate of films to HBO Max. Then, after an expensive period, they decided they would return to the theaters, first building their streaming library around unscripted reality TV, their preexisting library and proven franchises.

With entertainment powerhouse Bob Iger back at the helm, he said the subscription growth at all costs might have been a mistake.

He cut staff, realigned organizational responsibilities, strengthened ties with Hulu and began considering shedding some under-producing, non-core activities.

Tough Calls - Netflix finally admitted that sharing passwords was an expensive marketing cost they weren't willing to spend on. At the same time, they determined a low subscription fee in return for a few ads was a fair trade-off for many households. They also enriched their content library

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