The COVID-19 pandemic has affected the Hollywood film sector. Theaters are closed, films are delayed and video streaming has significantly impacted the industry. Last year alone, more than $42 billion was made at the box office. More than 400,000 businesses and two million jobs are dependent on Hollywood. Numerous changes in the film industry began before the pandemic.
Fewer Americans are attending films and ticket sales have declined despite the investments in cinemas, audiovisual technology and comfort. The exclusive rights of theaters to films are challenged by streaming, downloading and sales available shortly after the initial release. Cinemas now have exclusivity for approximately two months less than during the past.
The reason is consumers now prefer streaming videos and SVoD services. The result is a decline in incentives for running movies in theaters for long periods of time. Studios are releasing movies exclusively for the services they provide, further decreasing the availability of films in theaters. In the past, between 20 and 25 films were released by the six major studios including Walt Disney, Universal and Paramount.
Today, the same studios are releasing fewer films. This signifies a shift in power. Films are being released and shown to the consumers by Amazon and Netflix. Hollywood can no longer rely on box office revenue due to digital content. Profits have become dependant on advertising revenue and subscriptions as opposed to releasing television series and movies.
Optimizing new releases for specific schedules, holiday weekends or primetime slots has become a thing of the past. Increased engagement is the current goal. Lost earnings have resulted in bundled subscriptions created to increase revenue. Nearly half of all tickets sold are at cinemas. With films released right to the consumers, the profit margin is threatened.
Theatrical releases have been bypassed leading to boycotts and disputes. The biggest impact is expected to hit independent theaters. The exclusive rights to movies are generally given to the major chains. Some people believe the cinema operators are consolidating to survive. Others are targeting consumers with loyalty programs based on important consumer data.
Technology is being used for the integration of communications systems to effectively target consumers attending the theater on a regular basis. The benefits are only available to the largest movie studios. Fewer films are now available, with the impact questioning the future of Hollywood. Disney has become important for the growth of the industry.
Despite the key six franchises only achieving revenue growth of 10 percent since 2000, Disney has more than doubled its share during the last 10 years. Financing movies has increased in risk due to COVI-19 due to the increased cost of insurance and health security. Raising capital is more difficult for smaller studios. This might result in a decrease in film diversity.
Distribution has been affected due to theater consolidation. Smaller studios may have to rely on alternative options for the promotion and funding of new films. Gaming companies and SVoD services are now enjoying a slice of the revenue once provided for Hollywood. Whether or not Hollywood will recover remains to be seen