5 Reasons Going to the Movies is Facing an Irreversible DemiseThursday, July 8, 2021, 12:13 PM ET|Posted by Will Richmond
Yesterday’s news that Universal Pictures will release certain of its 2022 movies on Peacock no more than four months after their theatrical premiere was just the latest move by the owner of both a studio and a streaming service (in this case Comcast) to accelerate the demise of going to a theater to see a movie.
Universal’s move shouldn’t have surprised anyone. Back in April, 2020, in the early days of the pandemic, Universal decided to release “Trolls World Tour” as a digital rental to mitigate the closure of theaters. That touched off a highly public war of words with AMC Theaters’ head Adam Aron, who threatened to no longer carry Universal’s movies. Aron and NBCU head Jeff Shell ultimately buried the hatchet, signing a new deal that compressed the theatrical window from 90 days to 17. Aron may have gotten the last laugh when AMC’s stock unexpectedly got caught up in the meme frenzy and the company raised over $1.2 billion by issuing new shares over the past few months.
Of course, Universal is following a playbook being run by other cross-owned studios/streaming services. Disney has simultaneously released a number of its movies in theaters and on Disney+, experimenting with the premium rental model. ViacomCBS is compressing the theatrical window for Paramount movies to get them onto Paramount+ as quickly as possible. And of course WarnerMedia set off a firestorm back in December, ’20 when it abruptly announced all of its 2021 Warner Bros.’ slate would be simultaneously released on HBO Max (that decision was reversed for the 2022 slate).
Taken together, it’s pretty clear that studios are delicately, yet aggressively, prioritizing their streaming services over theatrical, irrespective of whatever soothing assurances studio executives continue to offer about the importance of the theater experience to assuage chain owners. But in reality, the studios’ moves are just one of at least 5 reasons why going to the movies is facing an irreversible demise as streaming upends every corner of the media and entertainment industry.
Reason #1: Studios are reconditioning consumers’ expectations and guiding them to streaming
For as long as there’s been home video, consumers have been faced with the question “do we want to see the movie in the theater or wait and watch it at home?” But factoring in the wait time, limited DVD inventory, delayed streaming window, opportunity for a night out, etc, the odds were long stacked in favor of going to the theater.
Now though, studios are making consumers’ calculations much more complex. The downsides to watching a current movie at home are not just mitigated, there are real upsides in cost savings and convenience. Here’s my personal example: the only movie my wife and I feel any pull to see right now is “In the Heights” (more on that below). Weeks after its debut we’re still dithering about whether to go (she wants to, but I’d rather just watch it on HBO Max). We each have our preferences, understand the other’s and are at a stalemate (I’ll probably cave if for no other reason than because it’s getting really boring to keep talking about it).
The point is, streaming is now a completely viable, and in some cases, superior alternative to going to the theater…and the studios are helping creating this tossup and recondition viewers.
Reason #2: The quality of streaming TV and movies are going in opposite directions
It’s no secret in the “Peak TV” era, there is more high-quality streaming TV than anyone reasonably has the time to consume. On any given day/night I can immerse myself in “Lupin,” “Fauda,” “Hacks,” “Tehran,” “City on a Hill” or any one of dozens of other originals or library titles on the various streaming services we subscribe to (never mind all the free stuff I sometimes tumble into).
Meanwhile, the quality and selection of movies - for certain consumers - have never been worse. As I said above, currently, there is exactly one movie that holds any appeal, and we can’t even move ourselves to see it. I have no interest in the latest superhero prequel, dystopian retread, CGI-driven action sequel or animated kids’ flick. Forty years ago, back in 1981, I was lining up to see movies like “Raiders of the Lost Ark,” “Ordinary People,” “The Great Santini,” “Coal Miner’s Daughter,” “Private Benjamin,” “Fame,” “Stripes,” “Arthur,” “For Your Eyes Only,” “Fort Apache, the Bronx,” “Body Heat,” “Raging Bull” and more. I would do the same today…if they were available.
Is it any wonder that ratings for the Oscars plummeted 58% this year to just 10.4 million viewers? Just how far have the Oscars fallen? Back in 1981 the telecast pulled in 40-50 million viewers and was a cultural event. (trivia questions: can you name the host and why the telecast was delayed by one day?). It’s simply mind-boggling, and extraordinarily sad to me, what’s happened to the quality and variety of movies over the past 40 years. If you’re like me, your entertainment time is extremely limited and you don’t want to waste it. That means streaming is increasingly my default, and movies are an afterthought.
Reason #3: Going to the movies is expensive; streaming is the world’s biggest bargain
Nothing new here, we all know that taking a family of four to the movies for many Americans is a significant outlay. The tickets alone are expensive and a trip to the concession counter is the ultimate fleece, a throwback to the Stone Age when companies of all stripes held consumers captive and could gouge them at will. Meanwhile, streaming offers unlimited entertainment for one (relatively) low monthly price, with fare for everyone, accessible on the big connected TV screen.
Reason #4: Movies don’t fit many millennials’ and Gen Z-ers’ lifestyles
No question, there are plenty of young people who can’t wait for the next Marvel superhero, “Fast and Furious” or “Halloween” installment; box office results attest to that. And parents will always take their really young kids to see the newest Disney or Pixar movie.
But the bigger picture (no pun) is that movies simply don’t fit many millennials’ and Gen Z-ers’ lifestyles. I observe my 19 and 21 year old kids for clues. They can’t resist looking at their phone for more than 5 minutes (verboten in a movie theater). They are avidly immersed in select YouTubers’ lives and are totally comfortable watching on their laptops and phones. They are glued to certain SVOD originals and classic shows. They haven’t mentioned a new movie they’d like to see in longer than I can remember.
And that’s just the start of the problem. Increasingly many millennials and Gen Z-ers have other activities that are more compelling uses of their free time than watching ANY video, including streaming. They’re gaming, listening to Spotify, thrifting, participating in the legalized cannabis industry, the list goes on. Last Friday night my 21 year old and her 4 friends reserved mystery bags on the app Too Good To Go, drove to the store to pick them up and then spent the evening happily whipping up a delicious meal together. Total cost per person: $2.
Meanwhile, my 19 year old and his best friend have busied themselves for the past couple months writing and recording a dozen original songs they’re going to "release" later this summer on the Internet (on YouTube, SoundCloud and, if they get really lucky, on Spotify). Neither of them is a "musician." My son's studying engineering and his friend is majoring in business; they play the guitar and ukulele, respectively. The friend bought a copy of Logic Pro music editing software and devoted himself to learning it so he could produce the songs. They're totally winging it, and having a blast. It’s the democratization of music, on full display. (As a side note, I find it thrilling to learn about the options young people have today for how to spend their time…it’s truly a different world).
Where does going to the movies fit into my kids’ and many of their friends’ lifestyles? Nowhere.
Reason #5: Pandemic hangover, it’s real
These days, many of us are celebrating the re-opening; we’re going to restaurants, live sports, concerts, theater, etc. We feel “safe” even though we read about the Delta variant, how other countries continue to suffer and what might lurk ahead. I have plenty of friends who still circumscribe their behavior, not yet willing to fully immerse themselves in re-opening.
I suspect there will be a permanent Covid hangover for tens of millions of us, that will manifest itself in careful curtailing of certain perceived “higher-risk” activities. Everyone will make their own decisions. Personally, when the time comes, I will ride the subway again, but I may actually wear gloves. Some will undoubtedly think I’m paranoid. It’s uncharted terrain for all of us.
For many, the movie theater was already a yucky experience; coughy kids, sticky surfaces, filthy floors, etc. No matter how hard theater owners try to sanitize their premises - and they will try very hard - there’s going to be a segment of the population that simply won’t ever re-enter. For an industry with an excessive unit price, underwhelming product, intense competition and numerous alternatives, a shrinking addressable market due to a pandemic hangover is the last thing it needs.
Now maybe I have it all wrong. Maybe movies will experience a renaissance. Or streamers will ultimately find profits elusive and cut back on their quality and quantity of originals. Maybe young viewers’ tastes will change and going to the movies will become cool again. Stranger things have happened.
But if you were to ask me to place a bet on what’s most likely ahead for going to the movies, I’d put my money on an irreversible demise.
Topics: Disney+, Paramount+, Peacock, Universal Pictures