Red Carpet Releases Are Coming to Your Living Room

Innovative release strategies intensify the battle between streamers and theatres.

Photo by Jens Kreuter on Unsplash

On Christmas Day, something weird happened. A mega-blockbuster movie with an A-list cast hit theatres, per usual, and also dropped simultaneously on a digital service that allowed viewers to watch it from the comfort of their homes. In a move that some called “bad for everyone,” Warner Bros. chose to release “Wonder Woman 1984” straight-to-consumers via HBO Max.

The controversial decision drew questions and comments from every region of the entertainment ecosystem. Is this just a temporary strategy to stave off the challenges of COVID-19? Or will we see more deals like this? Is this the beginning of the end for movie theatres? How will it affect film financing? The answers aren’t clear. What we do know, however, is that “WW84” won’t be the only film to release day-and-date: simultaneously in theaters and on streamers.

Let’s take a look at the major trends that played a factor in this decision and try to answer the most important question of all: What will this mean for the average consumer?

Streaming Continues to Climb

Generally speaking, crises like the coronavirus pandemic accelerate trends that are already underway. The entertainment industry is no exception. In 2020, 15% of cable subscribers reported cutting the cord. By the end of 2021, 27% of US cable TV subscribers plan to cut their subscriptions — nearly double that of last year. This comes on top of cable TV’s significant decline over the past decade: falling from 100M subscribers in 2013 to 82M in 2020.

Via Benedict Evans

While the shift to digital seems inevitable, traditional TV companies had been slow to embrace OTT, even after launching streaming platforms of their own. Using what Bob Bakish called an “arms dealer” strategy, legacy media companies licensed their best content to streamers like Netflix, Amazon, and Apple. These licensing deals are just one example of the old guard’s reticence to seriously compete in the streaming arena.

But coronavirus sent a clear message to legacy TV companies: streaming is the future. In just the last 18 months we’ve seen the launch of Disney+, HBO Max, Peacock, Discovery+, and Apple TV+ . Those new entrants must compete with incumbent OTT services like Netflix, Roku Channel, Starz, CBS All Access, Showtime, and Prime Video.

via James Ostrowski

In a sharp turn from the “arms dealer’ strategy, legacy TV firms have recently begun siphoning audiences away from their cable offerings and toward their streaming platforms. As CBS aired the Super Bowl — the highest rated show on television — on its cable channel, it ran ads telling viewers to get on CBS All Access. Discovery’s cable channel has embedded chyrons promoting Discovery+. It’s no secret what the future will look like.

More telling, legacy TV is pushing its best content to OTT. Honestly, can you even name a scripted cable show you’re looking forward to watching?

Theatre Struggle to Survive

Prior to COVID-19, theatrical releases were facing a mixed future. The popularity of streaming services appeared to be eating into the moviegoing audience. Domestic box office revenue did continue its slow climb despite declining yearly ticket sales. High ticket prices seemed to be keeping an industry afloat that was facing its worst sales numbers since 1995.

The saving grace came from overseas: tantalizing growth of foreign markets — especially China — offered to boom to powerful franchises like Marvel, whose tentpole film “Avengers: Infinity War” grossed over $2 billion globally in 2018.

Once the pandemic hit, the existing trends leapt into hyperspeed. Total US sales in 2020 fell 80% to $2.28 billion as theaters shut down entirely or were forced to operate at limited capacity. Many studios pushed back their planned release schedules until 2021.

As the United States failed to control the pandemic, other countries found more success and their theater chains have reaped the rewards. China overtook the US in 2020 to become the top movie market internationally. In 2021, Chinese theaters are on pace for a record-breaking year due to high capacity, increased ticket prices, and a larger share of Chinese-produced films.

There are few silver linings for America’s theatrical industry. The National Association of Theatre Owners launched CinemaSafe: a program designed to reduce contamination and boost consumer confidence. AMC Entertainment staved off bankruptcy thanks to a $550 million loan from an investment firm. Health experts have recently declared moviegoing a relatively low-risk activity.

With dismal sales, government restrictions, and streamers hot on their heels, theaters are facing an existential crisis. Meanwhile, streaming services have been gifted yet another boost in their fight against traditional platforms. Innovative strategies may hold the key to balanced success in the future… or they may be the nuclear option that ends the streaming war.

It all funnels down to us: the consumers. We reap the benefits. We suffer the inconveniences. Ultimately, it’s our economic choices that will decide what entertainment looks like.

This is the first part of a series exploring the impact of digital releases on the entertainment industry. Check back next week for a case study of “Wonder Woman 1984”: its successes, its failures, and the lasting implications of its innovative release strategy.

By James Ostrowski and Alec Winshel

man!!! boy!!! / @winshelalec on twitter

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store