Future of Film: Studios Will Have to Take Their Cues From TV Networks

Richard Greenfield Headshot - P 2014

Richard Greenfield Headshot - P 2014

Writing for THR, analyst Richard Greenfield argues that streaming could pave the way for film companies looking to capture consumers' dollars

This story first appeared in the Sept. 12 issue of The Hollywood Reporter magazine.

The consumer's media consumption has undergone tremendous change over the past decade. With the dramatic fall in large-screen HDTV prices, a high-quality home-theater experience is now being enjoyed by mainstream consumers. But that is only the beginning of the transformation, as we now have access to all forms of content (video, music, gaming) on devices with stereo sound and HD screens that fit into our pockets. We increasingly pay for "access" to content, forgoing the need to "own" that content. Content no longer needs to be watched live thanks to ever-larger DVRs, a wide array of on-demand offerings tied to cable/satellite subscriptions and the rise of subscription VOD over-the-top video services such as Netflix. Social media creates a nonstop stream of content (text- and video-based) that is far too large to be consumed by any one person.

In the midst of this change in the consumer's media experience, the movie industry remains remarkably similar to what it was a decade ago and even multiple decades ago. If you and your family wanted to watch Disney's Frozen the day it was released, you had no choice but to buy tickets and head out to the local movie theater. While theatrical release windows have shrunk, and continue to do so, the movie industry has focused on using technology to improve the moviegoing experience, with higher-quality sound and projection systems, incredible special effects and 3D technology. The goal has been to ensure that consumers continue to buy ever more expensive movie tickets, helping to mask a slow, secular decline in domestic attendance (albeit, year-to-year, content has created significant volatility). All the movie industry's growth in attendance has come overseas, benefiting from a rapid expansion of the installed exhibition base in markets such as China, Russia and Latin America.

The technology-led transformation in the media industry will continue to accelerate and force the movie business to evolve or suffer the consequences. We are now entering an ultra-high-def TV world; with the click of a button, unlimited content can be binge-viewed without commercial interruption from the comfort of your living room. Spend eight hours watching season one of True Detective back-to-back on HBO GO; you would be hard-pressed to find a movie that is as compelling to watch. Consumers will shift their time, attention and money toward television if the movie business resists change for much longer — meaning attendance declines will accelerate. With technology transforming the industry globally, overseas attendance will also peak and ultimately suffer the same challenges facing the domestic business.

The key factor insulating the movie business from this threat is consumers' desire for a shared movie experience. There is no denying that watching Mr. Chow jump out of the trunk in the original Hangover is so much better in a crowded theater. Yet everywhere we look, we are witnessing a personalization of the consumer's media experience, with shared experiences becoming less important. Virtual reality in the near future is also likely to enable incredible immersive entertainment with the ability to create a shared viewing experience.

By 2024, the concept of a multimonth window between a movie's theatrical and home entertainment release will no longer exist. The initial catalyst will be online distributors (think Netflix) growing large enough to finance movies on their own terms and release them across all platforms, including theaters (offering movie exhibitors a far more robust split in the process). Many consumers will still choose to experience a movie in a theater, while others will prefer to enjoy the film at home with prices varying based on the level of convenience offered. The other catalyst to collapse release windows will be the rising threat of piracy. As movie piracy shifts from sketchy websites to beautiful interfaces (such as Popcorn Time), with one-click streaming to IP-enabled TVs, movie studios will use cross-platform, global day-and-date releasing to capture consumer attention and dollars. By 2024, consumers will be able to pay for and access content whenever they want and wherever they want on a device of their choice.

Look for movie studios to transform themselves into continuous storytelling factories, with the initial "movie" being just one aspect. Think of how online games create new extensions, features and content to maintain consumer interest to capture a steady stream of players' dollars. Consumers will pay to subscribe to a stream of content from a movie studio, whether that be the initial movie, sequels, online video content, interactive games, immersive virtual-reality experiences where you are placed inside the content, etc. Shifting consumers from a la carte movie-ticket and home entertainment purchases to content/franchise subscriptions will also reduce fears around collapsing sequential release windows.

In a sense, movie studios will need to morph into television studios, which tell ongoing stories. This is a logical evolution for a movie industry that is now obsessed with the creation of "franchises," with increasingly little to no interest in midbudget films. How many wannabe Jedis and their families would pay for an everything Star Wars subscription? Avengers? Frozen? Spider-Man? Batman? Avatar? Whereas the movie industry has resisted change in the past decade(s), major change over the next decade feels inevitable.

Read more from The Hollywood Reporter's "Future of Film" special report:

Producers Opt for Foreign Talent, Far-Flung Locations to Boost Box Office

Even Bigger Screens and, Yep, Cinema Selfies

4 Experts Predict How Moviegoing Will Change in 10 Years

VFX Legend Douglas Trumbull's Plan to Save the Movies

Why Oculus Rift Was Worth $2B to Facebook

Richard Greenfield is a media and technology analyst at global broker dealer BTIG.

Twitter: @RichBTIG