Filmgrail Opinion May 28, 2020

The COVID-19 home entertainment boom: What comes next for movie theaters?

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Under the testing conditions of the pandemic and stiff competition from the world of online streaming, exhibitors will have to accelerate efforts once marquee lights start flashing again.

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Figure 1: Interest of time of the query ‘movie streaming’ worldwide. Numbers represent search interest relative to the highest point on the chart for the given region and time. A value of 100 is the peak popularity for the term. A value of 50 means that the term is half as popular. A score of 0 means there was not enough data for this term.
The pandemic is expected to increase global Video-on-Demand (VOD) subscriptions by 5%. Netflix has been among the biggest winners, boasting 15.8 million new paid subscriptions. Meanwhile, Disney+ timely coincided its UK launch with the first day of national lockdown, gaining leverage in its battle for market share against other streaming services — Apple TV+, HBO Max, Hulu, and Amazon Prime among them. Virtual group movie nights, albeit having always existed, are now the new 'must try' social distancing activity — reinforced by the emergence of the likes of the Netflix Party browser extension and the Discord virtual communication app.




With halted productions, online fatigue likely to kick in, and a share of wallet expected to dry up should the pandemic prolong, there are strong signals that the home entertainment surge will soon normalize and subscriber churn will rise.

While it is true that the rise in entertainment engagement is likely to be a temporary deviance, some media insiders warn the resulting shifts in consumer behavior could have far-reaching effects.

One may argue that there are few forms of home entertainment that provide the same level of value and convenience as a good video streaming service. Netflix boasts that their average subscriber watches around two hours per day, which works out to less than $0.25 per hour of engagement. When faced with the need to tighten their budget, it is likely many consumers would axe more niche or more costly streaming subscriptions. However, it is also highly plausible that they may keep at least one mainstream service — if only as an attempt to curb their ‘fear of missing out’.

Case in point, although the extent to which consumers will hold on to their new at-home routines is uncharted waters for everyone, there has never been more competition for the attention of audiences. The relative impact on the movie industry will be determined by a combination of secular consumer trends and proactive strategic responses by the film industry as a whole, and movie theaters specifically.


A window of opportunity amid crisis


With halted productions, online fatigue likely to kick in, and a share of wallet expected to dry up should the pandemic prolong, there are strong signals that the home entertainment surge will soon normalize and subscriber churn will rise.

While it is true that the rise in entertainment engagement is likely to be a temporary deviance, some media insiders warn the resulting shifts in consumer behavior could have far-reaching effects.

One may argue that there are few forms of home entertainment that provide the same level of value and convenience as a good video streaming service. Netflix boasts that their average subscriber watches around two hours per day, which works out to less than $0.25 per hour of engagement. When faced with the need to tighten their budget, it is likely many consumers would axe more niche or more costly streaming subscriptions. However, it is also highly plausible that they may keep at least one mainstream service — if only as an attempt to curb their ‘fear of missing out’.

Case in point, although the extent to which consumers will hold on to their new at-home routines is uncharted waters for everyone, there has never been more competition for the attention of audiences. The relative impact on the movie industry will be determined by a combination of secular consumer trends and proactive strategic responses by the film industry as a whole, and movie theaters specifically.

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