In 2019 the global theatrical market was worth 42 billion US dollars, but as the true force of COVID hit, revenues tumbled by 43% YoY to just 12 billion in 2020. Blockbusters and smaller movie productions were suspended, cinemas were forced to close their doors, and consumers found themselves confined to their homes, with an increased level of disposable leisure time.
Video on demand (VOD), streaming, subscription services, pay-per-view, and of course digital movie piracy took centre stage as movie fans sought alternate ways to view their favourite productions.
In this article we examine old and new trends, as we ponder whether recent changes could be here to stay, setting a new scene for movie accessibility and consumption as we know it.
Historic blockbuster trends
Perhaps you´ve heard the term “summer blockbuster?” Well, this phrase was coined in the early 1900´s as movie theatres in the US were one of the first commercial businesses to introduce air conditioning. Prior to this movie theatres were a place to avoid in the summer months as rising temperatures made such establishments unbearable. Suddenly they were the place to be as they were one of the few “cool” places. This introduction transformed peak times for the industry, and suddenly the most popular and highest budget movies premiered during the summer months.
The agreement between movie theatres and producers was set in stone. Contracts to premier blockbusters on the big screen, before being made available through other platforms developed over the coming decades. Smaller movie producers, with lesser budgets opted for alternate seasons to release their motion pictures to avoid competing with highly anticipated productions, whilst guaranteeing that new releases were available all year round.
Ticket sales may not have delivered huge revenues for movie theatres, however, the sale of confectionaries and refreshments to vast numbers of movie fans meant that the business model was incredibly successful for all parties. In fact, it has been so fruitful that the model still exists today, attracting not only those seeking refuge from the summer sun, but also children who are enjoying school vacations. Yet, after all these years, things could be about to change…
New blockbuster trends for movie releases
During the global pandemic, movie producers sought new ways to ensure that their latest releases were made accessible to consumers, whilst theatres were closed, or severely limited in terms of the numbers they could accommodate. This resulted in traditional agreements being pushed to one side, and movies which would otherwise have premiered on the big screen went straight to the small screen. The rise of the internet, OTT platforms, and streaming services over recent years has facilitated this new model.
Trolls: World Tour broke streaming records as one of the first direct to paid video on demand (PVOD). The sequel raked in almost 100 million US dollars within the first three weeks. Universal pocketed more through this model than they had from the original Trolls movie during its five-month theatrical run four years prior. Consumers are now able to access some of the very latest movies from the comfort of their own home.
The Walt Disney Company released “Black Widow” in July 2021, premiering simultaneously in movie theatres and on its Disney Plus streaming channel. It has been claimed that whilst Disney retain around 60% of movie theatre ticket sales, they claim a far greater share of the $30 PVOD ticket price which consumers paid to stream the movie at home.
Covid also interrupted movie production which resulted in lengthy delays for highly anticipated movies, shifting from one release date to the next. As multi-million-dollar productions were halted, some OTT providers including Netflix saw flocks of consumers sign-up for new accounts in search of entertainment in the form of VoD. In fact, 16 million new Netflix accounts were created in the first quarter of 2020, which was almost double the amount they had gained in the final three months of 2019.
Considering that Studios and Distribution companies usually retain a far greater percentage of PVOD sales it´s easy to see how successful this new model has been. However, this new release method has been marred with controversy as Scarlet Johansson accused Disney of a breach of contract, believing that the more home viewers, the less she would receive in bonuses and royalties.
Are these new blockbuster trends here to stay
Could we be about to see a change in the exclusive contracts which movie theatres have enjoyed up until now?
Well, it certainly seems that there is a case, specifically in the US where there are no laws to ensure that the traditional model is respected. In Europe we may see laws change to accommodate new movie release schedules. But one thing is for sure, as digital platforms such as Netflix, Amazon Prime, and Apple TV evolve, so will their power to complete financially for either exclusivity, or shared access to the latest Blockbuster movies, and if consumers demand this after receiving a taste of what could be, it may be challenging or perhaps even nonsensical to return to the existing model.
Media chronology, also known as the release window, certainly leaves gaps in the chain in terms of availability. Movies may appear in theatres for a three-month period, during which time they may be dropped depending on ticket sales or viewing times may be cut back as demand decreases. After this period there is a delay before movies are released on VOD, are streamed online, or make their small screen debuts. These delays contribute to the demand of pirate content. If movies are simply unavailable through legitimate sources, either due to the release window, or country restrictions then consumer are left with piracy as their only option.
Huge resources are also assigned to above the line (ATL) advertising campaigns, and once hype is generated it´s important that the content is readily available if we are to see the gains through viewership and revenue. If the content is inaccessible for several weeks or months after the theatre release, then some of the value obtained through such campaigns is lost. It seems that these new trends could be here to stay, the benefits of which are there for all to see. However, these shifting trends have heaped pressure on the majors, and other production companies to consider the details of contracts with contracted movie stars which also puts pressure on talent agencies who rely on commission-based models.
Does this spell the end for movie theatres?
Absolutely not. Movie theatres are a big part of movie culture, and after 125 years of the big screen, the industry will not simply fade away. Nevertheless, it has clearly been wounded, not only by COVID and the new release window, but also by improvements in home entertainment systems, technology, and the internet.
In 2019 it was reported that 14% of US adults visited a movie theatre one or more times per month and it appears that younger generations are more likely to attend. 43% of Gen Z had seen one movie in the past month, and 34% of Gen Xers. Sure, numbers have dipped, but box offices have seen a recent rebound.
Blockbuster movies are made for the big screen, not for smaller devices, and particularly action movie fans will want to watch new releases in all their glory, whether that’s in 3D at the IMAX,
Whilst a lot has been made of the negative impact of Covid, it has also acted as a reminder in terms of what we have missed whilst we have shielded from this virus. As we return to some form of normality, demand for trips to the movie theatre will once again feel like an exciting event for friends, families, and couples alike.
It´s clear that whilst a rise in the popularity of streaming platforms is evident, movie theatres and in-home viewing must co-exist, whatever that may look like in the future. Movie theatres are here to stay.
Could new distribution models facilitate a rise in digital piracy?
A change to the traditional release schedule of both blockbuster movies and lower budget productions, which sees movies either skip the big screen, or premier on big and small screens simultaneously could indeed facilitate digital piracy.
It is notoriously difficult for pirates to obtain high quality copies of movies which are only playing exclusively in movie theatres, but once they hit the small screen, or are released on VOD the process is considerably easier. Changes to the traditional release window could result in a spike in those opting to stream or download pirate copies, especially if consumers are expected to pay significant fees to view the latest releases, are required to pay for numerous subscriptions as content fragmentation remains a concern, or if higher quality pirate copies become available.
On the contrary, improving accessibility and choice for consumers may also have the opposite effect. Providing consumers with more flexibility in how they can consume the latest movies could help steer some back to official channels and sources. Price and access will be two fundamental factors.
Whilst there are a handful of consumers who will opt for pirate content if a pirate copy is available, regardless of other factors, that isn´t the case with all movie fans that view pirate content. Today’s consumers demand choice and flexibility, and if they don´t have it then they will find alternate ways to access the content that they wish to consume.
Digital providers who are dealing with high value content must recognize the role and importance of anti-piracy technology and implement a high level of protection to ensure that they defend their huge investments. Fighting movie piracy is a task which all parties must play a part in with a joined-up approach to this illicit activity.
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