Top Five Reasons Movie Studios Are Pushing Lucrative Streaming Debuts

Like so many industries laid low by COVID-19, the movie business has absorbed its share of blows over the past nine months. Public health mandates closed the doors of most theaters across the country and shut down film productions. Then, even in areas where theaters and film sets have since begun to open up again, safety and liability concerns have kept many viewers and filmmakers at home.

The irony, of course, is that we’ve never been more starved for entertainment. Since March, over-the-top streaming providers such as Netflix and Prime Video have enjoyed a flood of new subscribers and massive numbers of viewers plugging in, not only for original serials such as “The Queen’s Gambit” and “The Boys,” but also for platform-produced films such as Extraction and Troop Zero.

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George Meek

As for the studios, much of their content currently moving the needle on streaming entertainment platforms was in the can as far back as a year ago or more. Increasingly, though, moviemakers are discovering the benefits of a direct-to-streaming market that could be shaped into a complement, or even an alternative, to the longstanding theater model. What have the studios learned? Here are the biggest takeaways so far:

1) Operating costs won’t pay for themselves. Even the leanest studios have contracts to fulfill, debts to pay, checks to cut for employees. We’re long past the days of Louis B. Mayer sitting atop mountains of cash at MGM. Even the most well-off studios have been hit hard enough that they’re hustling to keep the lights on. Shorting films that would be more profitable in sunnier times, at least in some cases, may be their only choice.

2) The studios can’t hold everything until next year. Some of the biggest blockbusters slated to hit theaters this year saw their release date pushed back to 2021. Studios naturally want to profit from a full box office rake as well as aftermarket sales, such as OTT, especially when investing so heavily in expensive productions such as Dune, or the latest James Bond entry. But filmmakers won’t want to be competing with themselves a year from now, either. Carefully selecting appropriate films to release in the meantime will help avoid poaching paying viewers from one movie just to sell tickets to another.

3) Certain titles are a fit for on-demand OTT. Mulan, a live-action adaptation that arguably had a built-in audience of viewers who had seen the 1998 animated Disney film, was moved to its new streaming service Disney+ and released in September at a surcharge of $30 to subscribers. The debut was a hit, creating additional revenue, driving new subscriptions and prompting Disney’s leadership to declare PPV streaming a viable model for its future.

4) No one knows when, or even if, we’ll return to “normal.” Uncertainty about a post-COVID timeline means it’s all but impossible to know when theaters can resume filling to capacity — or whether most moviegoers will even want to return. The current box office model theoretically favors studios, but because ticket sales are shared with theaters, the tipping point at which filmmakers might come to prefer PPV streaming may be closer than you think. The longer patrons stay away from movie houses, the more likely it is studios will turn to OTT and discover more and better ways to make it profitable.

5) Testing the model makes sense (and, the hope is, dollars). Actor Tom Hanks initially said he was heartbroken over his film Greyhound moving from theaters to Apple TV+, but the movie’s July release reportedly gave the provider its biggest weekend to date, and 30% of the film’s viewers were new to the platform. Apple TV+ was already reading the OTT tea leaves, having spent $200 million on Martin Scorsese’s Killers of the Flower Moon in May. As more marquee films prove they can boost subscribership and command premium surcharges, studios will find they’re able to earn even higher sums for their films.

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George Meek is CEO of InPlayer, a monetization and subscriber management platform with more than 400 customers worldwide. 

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