Second to baseball, the cinema is one of America’s national pastime. It is a place where people from all age groups, cultures, and backgrounds gather together to immerse themselves in a visual story on the big screen. With the invention of new technologies, the movie-going experience has been heightened to unparalleled levels never thought to have been conceived by filmmakers of the early 1900s. But has the quality of content caused a shift in market attendance? Has the film industry recovered since the 2019 pandemic? Here’s how the trend of both revenue sources and audience behavior comes into play.
Are movies still profitable?
According to The Numbers, for the long-term, theatrical sales have been bullish domestically up until the Covid-19 pandemic. Due to the economic slowdown, movie ticket sales have dropped by an estimated 9 billion dollars. This shift in the market led to new cinematic releases to be shown through online streaming platforms to satisfy audience demand for entertainment while at home, hoping to generate a profit.
Since the end of the pandemic, the cinemas have not met their previous highs in 2019 as of yet and have currently entered a bearish trend for the short term. As of September 2024, the ticket sales for the cinema sit at around 8.3 Billion dollars, which is about $600 Million below in the previous year. Many would claim that the shift into streaming was due to low ticket sales, but this may not be the case. According to The Digital Entertainment Group, there has been an increased usage of streaming platforms and home entertainment in 2023 at about 20% from the year prior. The real question to ask is, what are the users of these platforms watching?
What is the future of streaming in 2024?
Companies such as Nielsen provide some insight into what people are watching and for how long. The most common occurrence you will see in their data is that people are watching reruns of either old TV shows and movies, with a mix of newer content either made to be released to streaming or that came after the distribution of the theatrical release. Statista claims that by the end of 2024, that streaming platforms are expected to reach $108 Billion in revenue. If this trend is to continue, then we have to look at the product itself as to why people are no longer watching.
A drop in sales of either film or media consumption is usually due to the content. Since 2019, there has been an increase in the change of traditional intellectual properties to fit the scope of DEI (diversity, equity, and inclusion). When doing this, the product tends to take a drastic shift from its original intent, and most consumers are not fond of those changes. This is because it alters the story, changing it from being authentic to becoming a propaganda piece, usually driven by special interest groups in associated with DEI.
In most cases, the sales trends and watch time of these products tend to suffer, which is why the hope for the recovery of profits lies in streaming content through SVOD platforms and the like. However, without understanding how to craft a film, you may have to play the “waiting game” for quite some time.
The Film Industry and The Streaming Market
Before streaming, companies would hope to recover any losses from their theatrical productions through home video distributions. With the addition of streaming, it becomes another avenue for generating long-term profits. This shift is marked by certain entertainment retailers, such as Best Buy, no longer selling DVDs and Blurays of movies. This change in home distribution is marked by these factors, as disclosed by Global Market Insights:
- Increased use of the Internet
- Growth in the use of smart devices
- Upward demand for flexibility of technological services across platforms
- Increased innovations in streaming platform website and app development
The shift of the theatrical market to the streaming and home box office becomes more apparent that the tech companies, service providers, and the film industry are pushing everything to streaming despite low returns in ticket sales. With SVOD platforms expected to increase in users and income, it allows the movie industry to display its content on a platform for the long term while profiting through licensing agreements to maintain a sizable catalog of media.
