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In line with many other businesses, 2020 was a year like no other for the movie distribution sector. The huge drop in movie theater attendance due to social distancing and other COVID-19 restrictions, coupled with a shortfall in new movie releases because of production and other delays, resulted in one of the worst years in global box office history.

With a swift recovery not currently in sight, the movie industry has been looking for ways to address the revenue shortfall. The most talked-about response came from media giant Warner Bros. which in December said that its entire slate of 2021 movie productions would receive simultaneous release both in cinemas and on its streaming platform HBO Max, The eliminate the traditional 90-day window of exclusivity for movie theaters.

For some, the Warner Bros. move is a short-term fix to an unprecedented global crisis, as well as a reasonable if somewhat unconventional way to drum up more interest for the newly-launched HBO Max platform. The thinking here is that the lure of box office revenue will ultimately encourage the studios to revert to the old ways of doing business.

For others, it is a much-needed disruption to a movie distribution model that had scarcely changed in almost a century. Ian McKee, founder and CEO of online content marketplace Vuulr, is among those who believe the hybrid model and the related acceleration of digital distribution channels is long overdue, and that same day and date release will increasingly become standard.

“It will put more money in the pocket of the people who make the content,” he says. “They will be able to reach the people who want to watch the content, will pay for it, but wouldn’t have gone to the theater to watch it. They’re accessing a different market. As the economics get better understood, I think we’ll see more and more content will go straight into home entertainment.”

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As McKee suggests, the key to broader industry adoption of this hybrid approach – whether by Warner Bros. or other studios – is revenue. In 2019, Warner Bros. movies generated some US$1.6 billion box office revenue in the US alone, At US$14.99 a month, HBO Max would need to entice a large number of new subscribers to make up the shortfall.

McKee, though, doesn’t see box office revenue as an issue. “The numbers comparing box office receipts with subscription revenue are wrong. They forget about the theater owners’ cut, which is as much as 60% in the US and even more overseas, and they forget about the lifetime value of the subscriber that you acquire to watch that film on a streaming platform.”

Ultimately, says McKee, the studios will follow the money.

“Generally if you look at any other industry, if you are the maker of something and you can find a cheaper way of getting it into the market you will always bypass a third party that makes a cut on the way,” he says. “Even if you are selling at a lower price, since you are not …read more

Source:: Business Insider


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