Can Hollywood Write Its Own Happy Ending?

 NAB Amplify

https://amplify.nabshow.com/articles/can-hollywood-write-its-own-happy-ending/

Hollywood loves a triumphant comeback but rarely are the studios cast as the underdog. Yet the most recent annual health check from the Motion Picture Association (MPA) makes grim reading for almost all involved from production through distribution. 

In 2020 the entire global theatrical and home/mobile entertainment market banked $80.8 billion, the lowest figure in four years and a decline of 18% from 2019. The pandemic was to blame.

Along with their 2020 drop in revenues, studios spent much less on production, released fewer films, saw reduced marketing expenses, and put staff on furlough or layoffs.

Theatrical was by far the hardest hit. With cinemas closed for lengthy periods worldwide box office receipts plummeted 72% on 2019 and comprised just 15% of all entertainment revenue. Global ticket sales reached just $12 billion compared to the $42.3 billion a year earlier. In the US, the lowly $2.2 billion in receipts marked a 40-year low.

Matters would have been catastrophic had the studios not had streaming outlets in place. With freedom restricted we all sought solace in digital entertainment to a degree which saw global online video subs pass one billion for the first time — up 26% from 2019. The time spent viewing with subscription OTT also grew by 34% in 2020, passing one hour (71.8 minutes) for the first time.

Digital Media Rockets

Indeed, digital media accounted for over three-quarters of total entertainment revenue, climbing to $61.8 billion.

The rapid take up of new streaming services such as Disney and Warner Bros/HBO Max sucked more life from physical sales. In 2020, sales of Blu-ray, DVD and disc rental halved from $14.9 billion in 2016 and accounted for just 9% of total revenue globally. This segment is in terminal decline.

What is not clear is quite what the impact of the suspension of the movie-going habit and the studio’s pivot to new premium digital windows will have on exhibition. Premium VOD (PVOD) either drastically shortens the theatre window for films to 17 days before becoming available for home video viewing or make a film available digitally day and date with theatrical — or bypasses theatrical completely.

Studios justified this as the only ways to begin to break even let alone grow revenue on their IP, but theatrical exhibition, with its wide publicity and word of mouth value, is still considered integral to the ability to maximize a film’s potential downstream.

The Warner Bros. and Legendary Pictures movie Godzilla vs. Kong probably points the way forward. The movie grossed more than $350 million globally and $69.5 million domestically in its first two weekends since its release on March 31 — making it the highest grossing movie in over one year and already profitable. The movie was simultaneously released on HBO Max.

“In the aftermath of the pandemic, this will be the new model in the years to come,” suggests Forbes. “It will however, take several years to fully recover.”

In Asian countries, particularly in China, the box office has already returned to pre-pandemic levels but European and North American markets will take more time to get off the canvas.

MPA chairman Charles Rivkin wanted to paint an optimistic note but concluded, “Most of us anticipate that things are unlikely to return to what is ‘normal’ anytime soon.”

Original Productions Down

While streaming services, Netflix included, had enough content in the can that they could get over the line in 2020, they may be forced to market a more limited amount of fresh content in 2021 to the hilt. That’s because the number of original scripted TV programs across broadcast, cable, premium pay and streaming dropped last year for the first time since the number was tracked over a decade ago. In the early months of 2021, the number original shows on Netflix have dropped year-over-year by 12%.

The report also found there were only 338 theatrically released movies in 2020, a year-over-year decline of 66% from 987 movies in 2019.

All this means that when cinemas begin to open en mass this summer, exhibitors could — just could — be in for a bumper time as consumers eager for new content and a new experience head back to the big screen.

Perhaps that’s why Universal is rolling out the red carpet for James Bond title No Time To Die, with a staggering $15 million premiere in October.