When was the last time you went to a movie theatre? How about the movie you streamed last?
Movies are a massive value creator. In 2019 alone, global box office revenues hit an all-time high, totaling $42 billion.
Since the global coronavirus pandemic started, the film industry was one of the hardest hit. In the UK alone, ticket sales fell by 93% as the pandemic upended the content pipeline and global film industry, halting movie production and closing theatres.
The crisis disrupted the entire chain, from production and distribution to consumption of content as consumers’ confidence in physical venues dwindled.
While all this was happening, players in the over-the-top (OTT) space took to releasing new content on their platforms to increase the stickiness of their consumers.
Streaming video on demand (SVOD) was already impacting the film industry before the pandemic hit. A new report by Juniper Research on the trends, future strategies, and market forecasts in the OTT TV and video streaming projects that by 2025, there will be nearly two billion active subscriptions to on-demand video services.
The question that arises is whether OTT will take over the theater experience or they’ll peacefully coexist.
OTT Platform vs. Theatres
There’s a huge debate over whether OTT platforms will take over from theatres to be the future of the film industry.
As traditional avenues of entertainment -- such as theatre and mainstream television channels -- struggle to return to normalcy, streaming apps like Netflix, Amazon Prime Video, and Disney+ continue to surge.
However, there’s a a cohort of viewers that still prefers the theatre experience over watching content on mobile devices. For this group, the cinema offers a larger-than-life experience as they create memories with loved ones.
Over the Memorial Day weekend, movie theaters in America roared back to life as some consumers returned to their pre-pandemic rituals. ComScore believes the North American box office climbed $97 million over the holiday weekend.
However, theaters still face a stark question: Is there a future for the box office or was the weekend rebound just a blip?
OTT platforms, on the other hand, caters to the big consumer base that’s present online and seeks easily accessible content. Unlike theaters, which are limited by stringent revenue models such as licensing or advertising fees, OTT platforms are flexible and don’t incur huge content production costs.
This speaks volumes about the future of the entertainment industry, especially for theater lovers. There’s definitely an interest in finding the new normal after COVID-19, but theaters have been on a rocky financial road, which may have a lasting effect.
OTT platforms witnessed a flux of new paid subscribers. In India, the OTT sector witnessed a 30% rise between March and July 2020, from $22 million to $29 million. This lockdown-led push is expected to carry on into 2021, proving that OTT and the streaming revolution isn’t just a glitch forced by COVID-19.
OTT vs. Theatre: Adapt to the Shifting Landscape
Before COVID-19, you’d have 1,600 more cinemas open at this time of year. Going forward, the major challenges for theaters will be capacity and availability, especially as consumers grow even more accustomed to streaming movies from their living rooms, enticed by the flexibility of on-demand viewing.
For theaters to keep business humming, they’ll need to create an irresistible proposition for the big-picture experience in a bid to adapt to the shifting landscape.
Perhaps a coexistence of both OTT platforms and theaters would be a win-win: for owners to benefit from both arrangements and consumers getting the freedom to watch what they want, anytime and anywhere.