Movie Theaters vs Streaming Content

By now we’ve all heard about how Netflix has snagged up the rights to distribute ‘War Machine’ which is set to star Brad Pitt, if you haven’t heard about it then you can read it here. This is sure to be an important issue for movie theater chains across the country and around the world because movie theaters make most of their revenue from the Popcorn, snacks, and over priced drinks that can cost you about $2 cheaper outside. Sure they also make money from ticket sales but it’s also costing them money to show the movies, I mean they have to score a deal to show it in their theaters at all, then they have to pay their employees also, which is important because nobody wants to walk into a dirty theater room with someone else’s left over coke and a floor that has popcorn all over the place, and of course who’s going to make sure that the ads and short little movie quizzes don’t suddenly shut off while you’re sitting there probably staring at the screen of your phone or talking to the people next to you? Last year Netflix partnered with IMAX to release in 3D the sequel to 2000's Crouching Tiger, Hidden Dragon. Needless to say, movie theater chains were not too happy with that.

Netflix has also struck a deal to produce and distribute 4 Adam Sandler films. They have assured us that all of these films will have the same budget as any big studio would have given them. What else is Netflix doing? Well, they are also expanding into more territories world wide and while you may not be able watch every movie that’s available on Netflix in the U.S. everywhere else in the world and vice versa (due to distribution rights), everyone will have the availability of watching the same Brad Pitt and Adam Sandler films because of Netflix holding those exclusive distributor rights. Unfortunately, that means we won’t all have the opportunity to watch these films in theaters. Some people would prefer to not even bother going to the movie theater because of the possibility that it could turn into an expensive endeavor. According to the National Association of Theatre Owners, the average movie ticket cost is now $8.17. That doesn’t include 3D and IMAX showings, so let’s assume that you wanted to go see a comedy with your boyfriend-husband, or girlfriend-wife, but the film is rated R and you have 2 kids, you now have to find a baby sitter. You could ask if your family members can watch them but not everyone has relatives living close by, you will most likely end up paying for a baby sitter, you will pay your 2 ticket prices, more than likely buy that popcorn, drink and maybe some snacks; how much did going to the movies just cost you? More than what you’re paying for your monthly Netflix subscription that’s for sure.

Sony did something that was a bit surprising to everyone after they had been hacked and a few of their movies were leaked onto the internet late last year. They had originally canceled their plans to show The Interview a political satire comedy starring James Franco and Seth Rogen in theaters due to terrorist threats. After a lot of controversy they decided that the film would have a limited theater release and would also be available online through Google Play, iTunes, and other digital streaming services. Was it a successful and profitable decision? Sony reported back in January that The Interview had made over $40 million in digital sales but only $6.9 million in box office sales. $40 million sounds like a decent amount of money, but the film had a reported budget of $44 million and none of that includes the amount that they spent on marketing and advertising.

Could there actually be an alternative to where it’s possible to make a profit from digital sales? Nobody has come up with an idea that would accomplish this…yet. If it were up to me I would set up screening times on the studio’s website just the way movie theaters do, I would charge about the average movie ticket price, and depending on what movie the movie goer chose to watch, they would buy the time that they thought would be convenient for them to watch the movie at. After completing their purchase they would receive a code that they could enter 10 minutes prior to the movie show time and this would allow the purchaser to enjoy a few trailers before the movie started, and all in the comfort of their home or wherever else they chose. It would be available on their television’s phones, tablets, and computers. Once the film finished they’d get a thank you for watching notice and that’s it, they could search for more movie show times.

What about the movie theaters? Well that would open them up for upgrading and turning more of their rooms into IMAX screenings or be able to show more movies in 3D. This idea doesn’t get rid of movie theaters it just gives us more options about how we can enjoy a film, it would probably also cut back on people trying to pirate newly released movies. If this idea was really implemented then movie theater chains would not be happy because it would cut into their profits, but going and watching a film in a movie theater is an experience, and some movies were truly meant to be seen at the movies, movie theaters would lose money but they’d still be around. How would you as a movie studio try and compete against a company like Netflix that will allow their subscribers to watch movies via online streaming?