Homebound: Home Entertainment Takes Center Stage as Consumers Practice Social Isolation

Never before has home entertainment played such a crucial role in the industry.

With live events such as sports and concerts canceled, movie theaters closed, and other activities outside the home scrubbed, the COVID-19 pandemic has thrust home viewing into the spotlight as consumers across the globe honor stay-at-home orders.

After years of aborted experiments, premium VOD is finally having its moment as studios rush ‘A’-list films into the home market, hurrying titles to digital to follow the audience.
Streaming services and other digital retailers are rolling out promotions to entice captive consumers — and are experiencing an explosion in viewership growth.

Meanwhile, studios are taking a big hit as theatrical revenue dries up. Observers say the growth in home viewing will only make up a fraction of the lost revenue from movie theater exhibition.

The theatrical pipeline, an important source of new content for home entertainment, has slowed to a trickle as studios shut down productions and postpone or scrap release plans for feature films and series. Warner Bros. postponed the theatrical release of perhaps its biggest title of the year, Wonder Woman 1984, to Aug. 14 from June 5.

Other delayed big Hollywood movies include the latest James Bond film, No Time to Die, postponed until November from its original April theatrical date; the Walt Disney Co.’s live-action Mulan, moved from March 27 to July 24, Black Widow, to Nov. 6, The Eternals, to Feb. 12, 2021, and Jungle Cruise, a full year to July 30, 2021; Universal Pictures’ latest “Fast and Furious” film, F9, moved from May 2020 to April 2021; and the Paramount Pictures horror sequel A Quiet Place: Part II, similarly postponed from its previous March 20 theatrical due date.

Such original digital series as the Netflix comedy “Grace and Frankie” and Marvel’s “The Falcon and the Winter Soldier” on Disney+ will likely debut later than expected due to production halts.

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Fast-Tracked to Digital

As theaters began to shutter, studios filled the void with early digital releases for the growing home audience. Disney March 13 announced it would bring its animated mega-hit Frozen II to Disney+ March 15, three months ahead of schedule.

“We are pleased to be able to share this heartwarming story early with our Disney+ subscribers to enjoy at home on any device,” said Bob Chapek, the former Disney home entertainment chief who recently was elevated to CEO of the Walt Disney Co.

The studio later offered Pixar’s animated Onward, which had just premiered in theaters March 6, for early digital purchase March 20, with the film hitting Disney+ April 3, and canceled the planned May 29 theatrical release of Artemis Fowl, directed by Kenneth Branagh, instead signaling it would debut the film on the Disney+ streaming service at some point.

Universal Pictures March 16 announced it would release its current theatrical slate into home entertainment distribution channels. Movies included The Invisible Man, The Hunt and Emma, among others. Universal also called off the theatrical release of the DreamWorks Animation sequel Trolls World Tour and instead released the film through video-on-demand April 10. Titles were offered on digital channels for a 48-hour rental period at $19.99 each.

“We wanted to provide an option for people to view these titles in the home that is both accessible and affordable,” NBCUniversal CEO Jeff Shell said.

Warner subsequently announced the early digital purchase availability of Birds of Prey and the Fantaulous Emancipation of One Harley Quinn (March 24), the Ben Affleck starrer The Way Back (also March 24), and Impractical Jokers: The Movie (April 1) at $19.99.

“With audiences largely unable to view films in theatrical release under current circumstances, we have decided to provide the alternative of early digital ownership of our currently released titles to people looking for great entertainment options,” said Toby Emmerich, chairman of Warner Bros. Pictures Group. “So, while we remain big fans of the theatrical experience and hope audiences are able to return to cinemas in the near future, we understand that these are challenging times, and offering this option simply makes sense.”

Paramount Pictures, meanwhile, scrapped the April 3 theatrical release of The Lovebirds and offloaded it to SVOD service Netflix, and the studio fast-tracked theatrical release Sonic the Hedgehog for digital purchase starting March 31.

The studio also looked to non-new theatrical content to fill the pipeline.

“We are working creatively to ensure that there is a constant flow of fresh content for both consumers and retailers to fill the theatrical void,” said Bob Buchi, president of worldwide home entertainment at Paramount Pictures. “Fortunately, we have a robust schedule of television content from CBS, Showtime, Nickelodeon and Paramount; new theatrical releases from Saban; plus a wealth of catalog initiatives, including our new
Paramount Presents line.”

Sony Pictures, too, pushed a theatrical release — Bloodshot — into the digital market early, less than two weeks after its theatrical debut, though the studio said it wasn’t a long-term change in strategy.

“Due to the unique situation where Bloodshot became inaccessible as a result of theater closures nationwide, the film was made available for digital purchase on March 24, 2020,” read a Sony statement. “Sony Pictures remains committed to traditional theatrical windows.”

Lionsgate rushed I Still Believe, about Christian music star Jeremy Camp, to premium VOD March 27. The film opened March 12 in theaters.

“We’re enormously proud of the movie that the Erwin Brothers created and are grateful to be able to share it with audiences for their home viewing pleasure,” said Joe Drake, chairman of Lionsgate Motion Picture Group.

It’s not just the big studios that shifted release plans.

Independent supplier Mill Creek Entertainment adjusted its schedule as well.

“We are having to make some adjustments to release dates, particularly where interviews, commentaries and other special features were in the process of being produced,” said Barrett Evans, Mill Creek VP of marketing and product development. “Other titles are getting early digital releases to maximize the potential sellthrough in light of reduced store traffic.”

He noted disc sales have increased at mass merchants and other retailers deemed “essential businesses,” especially with Mill Creek’s complete-series television releases and value-priced multi-feature collections.

While there have been some hiccups in disc manufacturing, Paramount, too, has seen continued physical business.

“Although store closures and supply chain challenges have hampered physical opportunities around the world, we continue to see demand for both rental and sellthrough of discs and are committed to servicing those consumers,” Buchi said.

Redbox, its rental kiosks conveniently placed in grocery stores and other high-traffic retailers during the pandemic, told customers via a statement that employees and retailers were cleaning the kiosks regularly and emphasized social distancing advantages.

“Our automated kiosks, by their very nature, eliminate the need for customers to interact with store personnel ‘behind the counter,’” read the statement. “Of course, customers can further minimize time and interaction at our kiosks by renting and reserving their DVD in advance online, or via our app, and then simply ‘pick up and go’ at their favorite retailer. And we have fast tracked the deployment of ‘contactless’ technology at tens of thousands of our locations, so customers can securely pay with a quick ‘tap,’ rather than swiping or using a chip reader.”

Like others, Redbox also pushed its digital options, including its just-launched Redbox Free Live TV.

“Those who would prefer to stream movies from home can also choose Redbox On Demand, where we have a fantastic selection of new-release movies for rental and purchase,” the statement read. “More than 30 channels are also available to stream for free, instantly on your Smart TV or favorite device.”

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Marketing Goes Digital

Indeed, the industry at large turned to marketing digital.

Mill Creek began to aggressively promote its TVOD service movieSpree.com, Evans said, and offered sales on kidvid titles to help stay-at-home parents entertain the little ones.

Other digital retailers, too, rolled out promotions to draw the at-home viewer. FandangoNow touted the embarrassment of theatrical-grade early release riches and offered 20% discounts to first-time users.

“During this stressful time, when most of us cannot attend our beloved local theaters, Hollywood is bringing current movies to the comfort of our homes,” said Fandango managing editor Erik Davis.

The service also mounted promotions for Sonic the Hedgehog (offering an eight-minute clip and family activity sheets) and Trolls World Tour (with discounts on other DreamWorks titles with rental preorder).

Notably, fast-tracked Universal release The Invisible Man topped FandangoNow’s charts as soon as it hit digital.

“As fans continue to look for new content to watch at home, FandangoNow has experienced its biggest weekend ever,” FandangoNow head Cameron Douglas said March 23. “Our top sellers consisted of movies right out of the theaters, as well as other digital releases not yet available on subscription services.”

Also highlighting the early availability of top theatrical titles, Amazon March 22 announced via email the launch of Prime Video|Cinema, a new online hub where “you can watch the latest movies just released in theaters — without leaving home.” The launch featured Disney’s Onward available to buy for $19.99, with Universal’s The Invisible Man, The Hunt and Emma available to rent at the same price.

Walmart’s Vudu digital storefront similarly clustered early access movies under a “Theater at Home” banner.

Digital library service Movies Anywhere rolled out a beta of Screen Pass, which allows consumers to share titles in their collection with friends and family.

The studios, too, put an increased focus on marketing in the digital realm.

“With consumers restricted to their homes, the industry is seeing a significant increase in digital transactional consumption, and we are striving to meet that demand by working closely with digital retailers to offer and promote titles and curated collections at appropriate prices,” said Paramount’s Buchi.

With FandangoNow, Paramount hosted a Sonic “watch party” featuring a live Twitter commentary from the film’s stars, Ben Schwartz (Sonic) and Lee Majdoub (Agent Stone), along with the film’s director, Jeff Fowler.

Warner Bros. has similarly “been working with online media outlets, fan sites and portals to come up with novel and unique ways to entertain people who are passing time at home for the foreseeable future,” stated the studio. “To date, several online ‘watch parties’ have taken place with filmmakers and talent interacting with fans via Skype or Twitter as audiences watch films together in real time, including Birds of Prey with comicbook.com, which featured director Cathy Yan, Jurnee Smollet-Bell, Ella Jay Basco and DC Comics writer Gail Simone; a DC Daily Birds of Prey watch party hosted by the site’s talent; and a Shazam! watch party on comicbook.com which featured director David F. Sandberg and Asher Angel and Jack Dylan Grazer from the film.”

Several other screenings of both new-release and catalog films are currently in development, according to the studio.

Free for All

With an expanded at-home audience — some perhaps venturing into digital entertainment for the first time or expanding their digital repertoire — many online services showered the market with free or discounted content to whet the appetite.

As part of its #StayHomeBoxOffice coronavirus campaign, HBO announced it would stream multiple series, documentaries and movies for free on HBO Now and HBO Go beginning April 3.

Apple TV Channels extended to 30 days free trials to ViacomCBS’s Showtime OTT and MGM-owned Epix (through May 2 with no subscription required), AMC Networks’ Acorn TV and Lifetime Movie Channel, among other channels.

Amazon Prime Video began offering select children’s and family-themed entertainment free to anyone with a free Amazon — not Prime — account.

As part of Dish Network’s pandemic-related “Stay in & Sling” initiative, Sling TV launched several free promotions for news and other content and services.

“With social distancing recommendations extended nationally, we are working find new ways to help serve the public as it continues to shelter in place,” said Warren Schlichting, group president of Sling TV.

Actor Patrick Stewart, star of the CBS All Access series “Star Trek: Picard,” took to Twitter March 24 to announce that fans can enjoy a free month of the SVOD service as they shelter in place. CBS All Access offered a month-long subscription to anyone in the United States through April 23 with the code GIFT.
Comcast March 25 announced that it had made the VOD catalogs from a series of premium networks and SVOD services available to its Xfinity X1 and Flex customers for free for 30 days.

AT&T March 26 announced it would offer DirecTV, U-Verse, AT&T TV and AT&T TV Now subscribers free access to HBO, Starz, Cinemax and Epix into April.

Roku on March 28 announced its streaming media devices would highlight free content on The Roku Channel, via email newsletters and social media through a “Home Together” campaign.

Gold Rush or Fool’s Gold

As the pandemic spread and stay-at-home orders proliferated, research firms and analysts gathered data and opined on the spike in home entertainment consumption.

The vast majority of U.S. respondents to a March TV Time survey said they planned to increase TV content consumption during the crisis. The survey, fielded to 3,126 U.S. users of the TV Time App March 13-15, found among those planning to stay home/isolate or who were considering it (91%), 84% said they intended to increase their TV consumption during this period.
“Streaming services are poised to be among the biggest beneficiaries to capture consumers’ viewership and engagement,” the TV Time report concluded.

Conviva analyzed global streaming data from a 21-day period between March 3 and March 23, comparing the last week with the first two. Streaming skyrocketed on a global scale, increasing more than 20% compared with the previous two-week period, with North America streaming up nearly 27%.

Percentage viewership of VOD apps jumped double digits in a Vizio survey comparing two weekends in March, as more consumers began to stay home due to the coronavirus crisis.

Viewership of ad-supported VOD apps jumped 19% while overall viewership of TV apps grew 9% from the weekend of March 7-8 to the weekend of March 14-15, according to a survey of 9.6 million Vizio SmartCast users. Meanwhile, research firm Inscape found both streaming viewers (OTT) and linear viewers watched 10% more content overall in its survey of 14 million opt-in TVs comparing the same time periods.

Comscore found average in-home data use jumped 18% in early March compared with the previous-year period. OTT streaming significantly increased across connected TVs and streaming boxes/sticks amid the COVID-19 pandemic, according to the research firm. In comparing OTT streaming behavior March 1-16 in 2019 to the same period in 2020, Comscore found notable year-over-year growth in both the number of households and time spent with OTT content on both connected TVs and streaming boxes/sticks. Streaming hours grew 24% on connected TVs and 16% on streaming boxes/sticks.

Streaming services such as Netflix and Disney+ curtailed streaming quality so as not to overload infrastructure.

Strategy Analytics forecast global streaming video subscriptions would increase by 5% in 2020, projecting 949 million paid subscriptions globally by the end of 2020, an increase of 47 million from earlier forecasts.

“One significant factor affecting future SVOD growth is the impact of the coronavirus in both the short and long term,” said Michael Goodman, director of TV & Media Strategies. “In the near term the coronavirus will actually boost SVOD subscriptions, as well as viewing of these services, as an ever-growing number of consumers adopt social distancing or are forced into quarantine.”

Goodman said long-term effects of the virus on SVOD depend on the length of the pandemic and resulting economic damage. As businesses shut down and individuals are laid off, consumers will alter how they spend money on essential and non-essential services.

Indeed, many pundits acknowledged home entertainment viewing was experiencing a surge.

“Yes, they will see increased usage in home entertainment distribution,” Michael Pachter, media analyst with Wedbush Securities, said of the early digital releases, but he questioned long-term profitability.

He said kiosk disc rental/digital service company Redbox “definitely benefits” in the short term.

Richard Greenfield, media analyst with Lightshed Partners, said the elimination of live sports on TV makes SVOD a valuable alternative.

“To the extent consumers are increasingly working from home and refraining from out-of-home activities, without sports to watch on TV, we suspect streaming services such as Netflix will see increased subscriber additions and higher utilization per account (leading to higher ARPU plans that enable more users per household and lower churn),” Greenfield wrote in a March 12 note.

Analyst Laura Martin with Needham, one of the first Wall Street pundits to predict a home entertainment surge as a result of the pandemic, cautioned that with the pandemic exploding in Europe, international Netflix subscriber growth will stall.

“In distressed times, people will give up their Netflix subscriptions,” Martin wrote in a note.

Greenfield disagreed.

“Netflix appears incredibly well-positioned to entertain consumers as [other] entertainment options dry up, especially if more movie theaters close globally,” he wrote.

Studios, Industry Under Pressure

While the growth in home entertainment was a bright spot as the pandemic grew, the entertainment industry at large took major hits. Numerous industry events, including the National Association of Broadcasters show scheduled for Las Vegas in April, were canceled.

The studios warned of leaner times. Comcast, which owns NBCUniversal, and the Walt Disney Co. had to close their respective amusement parks and warned Wall Street of losses
ahead. NBC noted it would suffer the loss of Olympic coverage this summer as the games were postponed to 2021.

The Walt Disney Co. April 3 announced it would start furloughing non-essential U.S. employees April 19.

“With no clear indication of when we can restart our businesses, we’re forced to make the difficult decision to take the next step and furlough employees whose jobs aren’t necessary at this time,” a Disney representative said in a statement.

Disney also announced that executive chairman Bob Iger, who earlier this year stepped down as CEO, would forgo his entire salary, and that Iger’s successor as CEO, Bob Chapek, would have his salary cut in half.

Industry heavyweights set up relief funds for those displaced.

Netflix March 20 disclosed the creation of a $100 million relief fund for people in the entertainment business waylaid by the epidemic. CCO Ted Sarandos, in a blog post, said $15 million would go to third parties and nonprofits providing emergency relief to out-of-work crew, cast, electricians, carpenters and drivers  — many of whom are paid hourly wages and work on a project-to-project basis — in the countries where Netflix has large production facilities.

“This community has supported Netflix through the good times, and we want to help them through these hard times,” Sarandos wrote.

He said most of the money would go toward support for the hardest-hit workers on its own productions. This was in addition to the two week’s pay Netflix had already committed to the crew and cast on productions forced into suspension.

Netflix also announced the donation of $1 million each to the SAG-AFTRA COVID-19 Disaster Fund, the Motion Picture and Television Fund and the Actors Fund Emergency Assistance in the U.S., and $1 million split between the AFC and Fondation des Artistes.

NBCUniversal announced the creation of a $150 million fund for employees, production personnel and amusement staff impacted by the coronavirus pandemic. The announcement by CEO Jeff Shell included the news he had been diagnosed with the coronavirus.

WarnerMedia set up a $100 million fund to assist production workers and others idled by the shutdown in Hollywood.

The National Association of Theatre Owners (NATO) pledged $1 million to a fund to assist laid-off theater workers and decried the fast-tracked move to home entertainment. NATO on March 17 issued a statement blasting the practice of early digital release, citing “speculation in the media that the temporary closure of theaters will lead to accelerated or exclusive releases of theatrical titles to home streaming.”

“Such speculation ignores the underlying financial logic of studio investment in theatrical titles,” the NATO statement read. “To avoid catastrophic losses to the studios, these titles must have the fullest possible theatrical release around the world.

“While one or two releases may forgo theatrical release, it is our understanding from discussions with distributors that the vast majority of deferred releases will be rescheduled for theatrical release as life returns to normal.”

Before life returns to normal, though, it’s clear the focus of entertainment will be in the home — and as a result home entertainment may be a bigger part of the industry’s future after the pandemic subsides.

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