Movies and Technology in a Post-COVID-19 World
I have spent the last 6 years working in the entertainment business — first in marketing & advertising, then celebrity management and most recently TV development and production. In this short period, I have witnessed the industry undergo disruption due to technological advances. Today, the COVID-19 pandemic is highlighting how critical of a role technology now plays in the industry and how important it is for companies to quickly adapt. This rings especially true for the movie industry.
One of the biggest challenges facing movie studios in recent years is the decreased theatrical foot traffic. Consumers have more entertainment choices than ever before and it is harder to lure audiences to the theatre. We have seen major movie studios place greater emphasis on blockbusters and franchise hits such as Marvel and DC Entertainment to attract more moviegoers. While studios such as Disney and Universal have been able to compete in this new world, smaller studios such as Lionsgate and Paramount have struggled. 2019’s domestic box office brought in $11 billion and Disney comprised 40% of that number. Last year’s highest-grossing films were largely remakes and blockbusters: The Avengers, Toy Story 4, The Lion King, Captain Marvel, Joker. In addition, film merchandising deals have become increasingly popular among major studios as a further attempt to increase probability. If theatre traffic has been low in recent years, why have studios not begun to dramatically diversify distribution platforms for their films especially in this new technological age? The answer to that question is due to the release window which was established in the 1980s and prohibits movie studios from releasing their films anywhere other than the theatre for three months. Although critics have campaigned for a shorter release window throughout the years, it has remained a longtime honored pact between movie studios and theater operators.
Since the onset of COVID-19, theaters across the country have had to shut their doors and for the first time in the U.S., the box office has recorded zero revenue. This has, in effect, disrupted the theatrical-window model. Movie studios such as Disney and NBCUniversal decided to break the theatrical release window domestically and internationally and released films on their own online and VOD platforms. Universal released Invisible Man 21 days after release, Warner Bros’ The Way Back was available 18 days after release and Disney’s Onward was made available 15 days after release. “Rather than delaying these films or releasing them into a challenged distribution landscape,” said NBCUniversal CEO Jeff Shell, who recently tested positive for coronavirus, “we wanted to provide an option for people to view these titles in the home that is both accessible and affordable”.
Just five years ago, breaking the theatrical window would be a complicated matter with the likes of Disney having to decide which platform to release their films. However, with the recent launch of Disney+ and the acquisition of Comcast’s acquisition of NBCUniversal, for example, the two studios have a technological safety net as they ride out COVID-19. Technology is playing a critical role for movie studios and fortunately, many began to build infrastructure for a streaming platform before COVID-19. It was a smart move. Since the onset of the pandemic, at-home entertainment streaming has increased so considerably that companies have had to decrease internet speed amid increased demand. With movies now available direct-to-consumer, this could permanently reduce movie theaters’ leverage with studios and change consumer behavior.
In the coming years after COVID-19, I predict less distinction between digital and theatrical film releases, excluding superhero movies and other blockbusters, as studios begin to rely more heavily on technology and at-home viewing. Theatrical releases of blockbusters such as Star Wars are profitable so, therefore, they are likely to continue to exist in a big screen and streaming environment simultaneously. The impact on non-blockbuster films, however, could be profound and positive. Smaller films struggle to get made because of the pressure of wide-scale appeal and profitability. In my past jobs, I have spoken to many screenwriters about their pitching process and the general rule is if you have a non-blockbuster, original film, target a streamer or an arthouse studio. Don’t even bother approaching the major studios. With the current model, I cannot imagine the major studios today ever making gems such as Pretty Woman, Sixteen Candles or School Daze. A profitable direct to consumer model, however, would incentivize studios to place focus on films other than blockbusters and merchandise-laden franchises. If these smaller films were released online at the same time as their theatrical debut (or without), perhaps there would be less pressure for these films to perform well during opening weekend and bigger studios would be more open to including them on their development slates. Of course, movie studios moving into the direct-to-consumer space would have profound implications for Netflix and other streaming giants, but that is to expected.
COVID-19 has hit the entertainment hard but in this new recovery phase, an opportunity presents itself to remake the industry before the dust settles and tech will play a critical role.
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