IPG Media Lab
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IPG Media Lab

The Future of Movie-Going

How the theatrical experience is evolving in response to digital disruption

Photo by Felix Mooneeram on Unsplash

The Challenges Movie Theaters Face

Movie attendance in the U.S. has been trending down for the past decade, with last year being a particular low. Suffering from a weak summer season, the number of tickets sold in 2017 dropped 6% from 2016, leading to a 2% year-over-year decrease in total U.S./Canada box office, according to a new report by the Motion Picture Association of America (MPAA).

Source: Matthew Ball’s Twitter

Two Paths Forward for Movie Theaters

In the age of abundance, there is far more value in controlling demand over controlling supply. As distributors, the business model of movie theaters hinges on controlling supply, as they decide which movies to show and how many screens it will be on. Content streaming platforms, on the other hand, are all about controlling demand by going directly to the customers and owning that customer relationship with a superior user experience. In order to battle this structural disadvantage, movie theaters need to up their game and start improving the customer experience they offer.

MoviePass now carry a banner ad atop its app’s home screen and a selection of upcoming movies . Credit: MoviePass

The Shortening Window

Windowing refers to the strategy of releasing a media product (movie; TV shows, etc.) through various distribution channels with certain intervals to ensure maximum profit. For example, traditionally, movies start with a theatrical window where it only plays in cinemas before they move down the funnel, one by one, to other ad-supported channels, such as in-flight viewing, SVOD, premium cable, DVDs, and basic cable.

Source: Nato Online

The New Tastemakers

The shortening theatrical window as viewers turn to online channels is also giving rise to an increasing disconnection between critics and viewer reception. For theatrical releases, bad reviews used to be able to doom their box office performances, as Justice League and Geostorm can testify. In fact, it is common practice that studios and distributors would shield certain movies from early reviews so as to not let the critics and word-of-mouth ruin the opening weekend. Studio executives complained when popular showtime and ticket-booking site Fandango integrated Rotten Tomatoes scores, worrying that bad scores would instantly dissuade movie-goers from taking a chance on a movie that they would have been otherwise interested in.

Netflix movies seem to be immune to bad reviews. Credit: Rotten Tomatoes

Further Brand Implications

The changes in theater attendance could impact a wide range of industries. Fewer people going out to movies could logically result in fewer people dining out, therefore putting a damper on the business of adjacent restaurants and bars. Moreover, a decline in movie attendance could also lead to a decline in concession stand sales, therefore hurting the top line of beverage and confectionery brands.

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Richard Yao

Richard Yao

Manager of Strategy & Content, IPG Media Lab