Can Streaming Services Save Hollywood?

Online streaming long ago became popular with millions of subscribers. Netflix led the way, and Amazon, Disney+, HBO Max, and others followed. Initially, streaming services provided a mix of original programming plus home releases of studio productions. Due to the COVID-19 pandemic, things appear poised to change in a significant way. Hollywood blockbusters may bypass theaters altogether and go direct to streaming and on-demand services. Internet services ranging from diverse entities such as the Apple Store or online game guides such as could benefit from an increase in online consumers. Is the film industry able to succeed under the current conditions, though?

An Unavoidable Entertainment Industry Situation

Releasing films to theaters becomes impossible when movie theaters remain closed. For months, movie theaters, both independently owned and corporate-owned ones, stayed shuttered. Theaters are now opening, which is good news for people seeking and selling entertainment. However, restrictions of 25% capacity limit the number of tickets sold each day. The obvious result here is the top studios might not experience the desirable box office figures necessary to cover production and advertising expenses.
Would-be ticket buyers may wish to go to the theater, but ticket availability could keep them home. So, the studios are doing the unthinkable: bypassing a theatrical debut’s exclusivity and opening a movie simultaneous online and in theaters. Some films might not even play in theaters at all.
The process could upend the already lucrative arrangement theaters have with the top streaming services. The current business model sees films hitting online platforms nine months or so after playing in theaters. Top streaming services pay huge rights fees to license the distribution of studio projects. Netflix and Amazon’s competition with one another drive up bids. Reportedly, the studios could see a future where $250 million per year comes from streaming rights.
That model assumes things go back to normal. Right now, streaming services currently enjoy a boom in subscribers, thanks to coronavirus-related shutdowns. The studios find themselves in a tough spot while the streaming giants see their business fortunes rise.

The New Normal for the Studios

The recent “successful” release of Christopher Nolan’s Tenet shows the trouble studios face. The film represents the first large-scale studio blockbuster theatrical releases in the “new normal.” The sci-fi action thriller earned more than $50 million during its inaugural international weekend release. While the studio appreciated the revenue, the dollar figure is far below what Tenet might have earned under normal circumstances. Original expectations had the film pegged as a mega-summer blockbuster. Now, the studio probably hopes to recoup some of its losses.
The studios surely also hoped that Bill and Ted Face the Music would ride the popularity of Keanu Reeves’ John Wick-inspired career resurgence. The film did land in several theaters while also streaming on a pay-per-view basis. Are fans willing to pay $19.95 to watch the movie online “right now” instead of waiting a few months to view it as part of their normal streaming service subscription? Only the studio accountants know the answer. The film’s low budget set this one up for significant profitability had the theatrical landscape remained the same.
Hollywood survived past doldrums caused by economic conditions. It may thrive in the COVID-19 era, but changes may be afoot.

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