Chances are you either have a streaming service or you know someone who does. Companies like Netflix, Hulu, Disney+, and Amazon Prime Video have revolutionized how entertainment is produced, consumed, and advertised. More people than ever are “cutting the cord” on satellite TV and finding their entertainment needs met by these seemingly all-inclusive streaming services.
But how have their growing subscribers influenced the film industry? Are movie theaters dying out? Are the bidding wars between streaming services causing consumers more money on entertainment in the long run? This article aims to answer these questions.
How Streaming Services Started
Netflix was not the first company to attempt the idea of entertainment streaming, however, they were the first to succeed. In 1995, RealPlayer attempted to provide users with streamed audio and video content but with low quality and slow internet speeds, it quickly died out. Netflix started out a decade later in 2007. It introduced its own streaming service that found similar problems with poor quality but gained consumer traction through its better selection of movies and TV shows.
As a kid, I still remember Netflix in its early days as an online version of Blockbuster. My family would rent movies and they would come in the mail. In the early 2000s, Netflix had two services, either you could rent newer movies after they went out of theaters, or you could sign up for their streaming service that granted you access to older films and TV shows 24/7. In my family, paying for both was out of the question, so it took considerable convincing to switch from the renting service to the streaming service. Since then the renting service has died completely.
Where Streaming Services Are Currently
Since Netflix’s success, other companies have emerged as competitors in the market, each with its own features and limitations. This has led companies such as Netflix, Hulu, Disney+, Amazon Prime Video, Apple TV+, and HBO Max to create bidding wars over content to gain consumers’ attention. In fact, the movie Suicide Squad, starring Margot Robbie, is said to have flopped in theaters because it was opened on HBO Max at the same time.
Then COVID-19 hit our world and the pandemic pushed everyone indoors. Movie theaters were shut down and streaming services and satellite TV became the entirety of the entertainment industry for over a year. Many movie theaters across the United States had to either close their doors or renegotiate the terms of their rental contract.
And even three years after the pandemic, movie theaters have yet to return to their former position in the film industry, and many question if they ever will. Commercials for new and upcoming movies used to advertise “in theaters only” and have now changed to “in theaters and on streaming services.” Similarly, cable, which is in about 80 million households, is expected to drop to 60 million in just a few years because of costs.
Furthermore, streaming services themselves are revolutionizing to compete in the now over-saturated market. For example, companies such as Hulu and Apple TV+ are implementing live television options with an upgraded cost. And many, if not all of these services are creating their own content for more consumer attraction. So now that these streaming services provide new media, fan favorites, and live television, what does this mean for the rest of the film industry?
Where Streaming Services Are Going
Regarding this question, Michael Nathanson, a senior executive and Chairman of four major motion picture companies, says, “Unfortunately, that means other types of entertainment are hurt. We go to the movies less, we go to the theater less, and we don’t buy DVDs. Overall consumer spending on entertainment is now going to grow more slowly.”
This shift away from movie theaters does not just affect the businesses with showtimes but also affects the very process of movie-making. Matt Damon, a world-renowned actor, producer, and screenwriter, explains why “cinema is dead.” He says, “The DVD was a huge part of our business [and] of our revenue stream. Technology has made that obsolete. With the movies we used to make, we could afford to not make all of our money when it played in the theaters because we knew you had the DVD coming behind the release with extra revenue. When that went away, it changed the type of movies we could make…because [the market] became much riskier.”
And with more insight into what could happen in the future for film, Nathanson predicts that streaming service companies will combine leaving consumers with only 3 or 4 options instead of the current 8 or 10 in order to capitalize on revenue returns.
The film industry is certainly shifting. But is it shifting backward toward a revamp in movie theaters or forward toward a new type of entertainment industry? The evidence points towards the latter, and we will just have to wait and see which businesses survive, which evolve, and which emerge out of this shift.
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