Rashida
A big bucket of salty popcorn drenched in movie-theater butter accompanied by a side of your favorite candy and a soft drink. The jumbo screen, comfy seats, and impeccable surround-sound.
Ah, there’s nothing quite like a night at the movie theater.
Or is there?
Perhaps, the future of entertainment is Premium Video on Demand (PVOD).
The coronavirus has changed many facets of our daily lives. As more people are now working, studying, and working out from home, they have also been forced to find entertainment at home. Since movie theaters are closed, companies have been forced to change their approach.
Trolls World Tour is the Case Study
In response to the shuttered movie theaters, Trolls World Tour released directly to rental platforms with the goal of “delivering entertainment to people who are sheltering at home, while movie theaters and other forms of outside entertainment are unavailable.” Universal Studios released the movie on digital rental platforms like Apple Tv, Amazon Prime, and Vudu. The results far exceeded expectations. Trolls World Tour was forecasted to make between $17 and $25 million on its opening weekend. Instead, the PVOD release of the Trolls World Tour brought in nearly $100 million in rentals! The sequel generated more in rentals than the original movie did in five months at theaters.
What does this mean when theaters open back up?
According to the CEO of NBC Universal, Jeff Shell, they plan to “release movies on both platforms” once theaters open up. There’s quite a good reason for this – up to 80% of PVOD revenue goes directly to the studio – but studios are not ready to give up box office revenue. Releasing on both platforms is a way for studios to get the best of both worlds.
How Theaters are Responding
As you might have guessed, movie theaters are NOT on board with Universal’s plans. Universal Pictures decided to no longer give movie theaters the 90-day exclusive period to play new movies, without consulting the theaters. It’s only a matter of time before other competing studios follow, and theaters are certainly recognizing this.
AMC Entertainment, one of the largest theater companies in the world, expressed their discontent for Universal’s decision. How did they respond? By saying they will no longer play Universal’s movies in Europe, the Middle East, or the U.S. AMC Entertainment CEO Adam Aron also stated they would enact a similar plan for any other studios who tried to do the same.
AMC may think their response will hurt Universal’s sales, but if Universal is still able to release PVOD and to other theaters, who will actually be more affected by this policy in the long run?
The Shift Started Before COVID-19
While the Trolls World Tour PVOD release was certainly pushed by current shelter-in-place conditions, the Universal CEO stated that PVOD was something “he’d wanted to try for some time.”
Streaming giant, Netflix, has already demonstrated the power of on-demand content. Netflix is now a global phenomenon with users who watch an average of two hours a day. The key has been their differentiator — original content. According to the Business of Apps, Netflix has been behind some of the biggest and most highly-acclaimed films in the world in recent years.
What is the Future of Hollywood?
The future of the classic movie theater experience is uncertain. In a recent Morning Consult poll, NATO discovered that consumers are more price-sensitive about at-home entertainment. This means that there is still a financial benefit to the exclusive theatrical release. Additionally, researchers at Universal found 51% of people who rented the sequel said they would have “definitely” seen the movie in theaters.
The optimal market for PVOD appears to be midtier films that do not really require a 90-day exclusive theatrical release. Other top studios like WarnerBros and Disney are also following similar strategies to make more midlevel budget films and release them simultaneously to PVOD and theaters.
The future of the movie industry is still unclear. For now, there still seems to be something unique about the movie theater experience that consumers are willing to pay for, especially when it comes to huge releases. But will PVOD soon dominate mid-tier movies?
Will movie theatres soon be like drive-in movies, more nostalgia than the norm?
