What Does the Future of Cinema Hold?

Before the pandemic pushed everyone indoors, people were already starting to become homebodies. The proliferation of sophisticated TV setups and an ever-expanding selection of streaming services have made it unnecessary to leave the house for at-home entertainment.

The director of New York University's Stern School of Business's Entertainment, Media, and Technology Program, Paul Hardart, claims that before Covid-19, movie theater attendance was already plateauing.

The issue was only made worse by the pandemic. In order to launch their pictures, movie companies turned to streaming services when movie theaters closed due to lockdown orders. These locations were frequently among the last to reopen following the temporary easing of restrictions.

Warner Bros. and HBO Max struck an agreement in December 2020 that called for the simultaneous release of all blockbuster films in theaters and on the streaming service in 2021.

The agreement terminated in 2022 when the firm decided to once again focus on theatrical release.

Warner Bros. has just revealed plans for a new combination streaming service called Max, demonstrating their continued efforts to innovate in the streaming space. This will blend Discovery's collection of unscripted and reality programming, like Fixer Upper, with the written entertainment of HBO Max, like Succession.

This demonstrates while the film business has stabilized, streaming services continue to strive for increased subscriber acquisition: Warner Bros. Discovery continues to set a target of 130 million subscribers by 2025 for its streaming business, up from the current 96.1 million.

The movie business has an uncertain future that presents chances and problems for studios, theaters, media distributors, employees in the business, and moviegoers alike.

The post-pandemic movie theater experience

At this point, movie theaters are not in danger of going extinct. However, in order to endure, they must adjust.

Making a trip to the theater an unforgettable, personalized experience for customers is crucial, according to Danny Ledger, US entertainment subsector head at Deloitte Consulting. "Personalizing experiences can help theater professionals reinvent themselves," he argues. This entails having the option to private a room in addition to having nicer meals and more comfy seating.

That won't always be sufficient, though. It will be hard for movie theaters to persuade you to go out and spend money on pricey popcorn if you've recreated a high-quality film-watching experience at home with a nice sound system and huge screen.

That's the role that blockbusters play. Danny says that what people want to see on a big screen is highly anticipated, expensive movies with world-renowned actors and amazing special effects. Movies that consumers have little need to leave their homes for will increasingly be released exclusively on streaming services, while theaters will increasingly specialize in those kinds of releases.

The only possible exemption would probably be for little independent cinemas whose sole source of revenue isn't blockbusters.

For those who like social interaction, there is still room, maybe in the form of debate or movie clubs. According to Andrea Hershatter (shown above, right), senior associate dean of Emory Goizueta's BBA program, which includes a Film and Media Management specialization, "some theaters can afford to have that niche market."

Is streaming a successful business?

It's likely that more films will be delivered digitally and directly to consumers in the future, as movie theaters are likely to concentrate on either blockbusters or specialized indie experiences. The biggest issue facing studios and streaming services alike is finding out how to continue making money.

"The reason behind this is because your client acquisition expenses are quite high, typically running over $200 per subscriber,” says Danny. "The return on marketing often does not actually match that $200 spent, when you consider the marketing that goes into acquiring those customers."

This is a result of "hit-and-run consumers," or customers who join up for a free trial of a show or movie but never continue on to a paid subscription. Streaming services work to minimize this problem by maintaining an engaging and new content collection that draws in new users. However, creating this material is costly and doesn't always succeed in drawing in new viewers.

Danny continues, "Subscribers don't stick around long enough to recoup those high acquisition costs and high content costs." "With this current model, it's really hard to make a profitable business." Streaming services must employ data-driven insights to understand and influence customer behavior in order to combat this.

"What gets produced is influenced by using consumer data, starting with the creative ideation process and the content, ideas, stories, and narratives we select," adds Danny. "It begins here and continues all the way to the story and consumption, where we obtain more information and insights into watching habits, trends, and preferences.

"That will help us make better decisions about what content to create, how to make it available, and how to price and distribute it," he continues. "I believe that data is important to every part of the supply chain."

What impact will all of this have on the film industry?

For individuals with the necessary abilities, the introduction of new technologies into the film industry will be a positive development. More content and more forms translate into more jobs, as Goizueta's Andrea puts it.

"People with CGI experience working in gaming can suddenly find themselves working on a movie down the road," she continues. This opens up fascinating new avenues for cross-collaboration.

But Paul is concerned about the threat that streaming services, with their "cost-plus" contracts, which pay creatives what they would have made up front plus a bonus, may pose to the creative community. Since every talent receives a slight increase in pay, the cost-plus model is attractive for the time being.

Nevertheless, Paul notes that eventually streamers will inevitably become the primary gatekeepers of content distribution and will therefore have the power to lower the price they pay for it.

In the future, the bonus, which may have begun at 20%, may drop to 19%, 18%, or even 15%. "The majority of content creators will probably start to feel squeezed, but big-name producers and stars will still be able to command larger fees," he continues.

Even though there are still unanswered questions about how to make streaming profitable and guarantee that a portion of the proceeds goes to the creative community, digital distribution could also mean more diverse content, improved access to the market for a variety of voices, and entirely new storytelling formats.

While change is already well underway, ensuring that it benefits everyone is the primary obstacle at hand.