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We cherish home entertainment, but we do need cinemas
Motion Picture Association's 5 year-spanning report paints a clear picture of Hollywood's present and short-term future
While the pandemic of COVID-19 is still very much active around the world, Hollywood and the show business, in general, are very much looking forward to people's lives returning to some kind of normalcy so that movie theatres and film production can resume operations. The Motion Picture Association is part of that effort and - in preparation for a comeback, of sorts - it published a quite interesting report recently on the state of the film entertainment business as a whole. The report is quite extensive but a few points deserve a closer look, especially in the context of the last five years (2015-2020) which have been transformative for this market on a global scale.
The main takeaway of the report is this, as highlighted by FlatpanelsHD.com: the shift in revenue and market share between theatrical movie entertainment and digital home entertainment has been nothing short of astonishing during the last 5 years. In 2015 movie money made through theatrical releases accounted for 39.1 of about 75 billion dollars worth of revenue, while DVD/Blu-ray accounted for 19.7 and streaming for just 16.6. From 2016 to 2019 these numbers changed to 42.3 billion for the theatrical releases, 8.8 for DVD/Blu-ray/UHD Blu-ray releases and 47.2 (!) for streaming, of more than 97 billion dollars worth of revenue globally.
So while movies made more money than ever before in cinemas overall - especially during banner years such as 2016 or 2019 - home entertainment went from an also-ran to the dominant force of the show business revenue-wise. 2020 was, of course, an anomaly, so there's no point in talking about the jump of home entertainment percentage to almost 70 billion (since almost all movie theatres worldwide were closed during most of that year). It's worth noting that comparisons between streaming services and theatrical movie releases are not exactly apples-to-apples, as the former also include a lot of content other than films (such as TV shows or documentaries or whathaveyou). But still: from 16.6 billion to 47.2 in five film seasons! Streaming is not a "trend" anymore. It's now the cornerstone of modern entertainment.
This is why 2021 will be a truly important year as far as the evolution of modern entertainment is concerned: many movies will premiere at home this year, while a lot of movie theatres will remain closed for many of these 12 months (they've been closed for the first 5 already). The way all of this plays out will definitely affect Hollywood's plans for 2022 and beyond. As the MPA report and many analysts point out, the pandemic of COVID-19 basically accelerated changes that had already started taking place. But it is only now that most of us realize we may not be "getting back" to the way things were in 2019 when movie theatres and film production eventually resume operations.
There is a point, though, worth making of the imbalance created by the swift changes the pandemic brought about: home entertainment may now amount to most of the dollars spent in the modern show business, but that does not make the former capable of sustaining the latter. Low-cost subscriptions to services and high sales of DVDs simply do not make enough money in order to provide sufficient funding for Hollywood's numerous ultra-costly productions every year. This is why the meteoric rise of home entertainment in 2020 was not enough to offset the terrible losses suffered by all studios due to theatrical releases not happening, which led to a reduction of almost 20% in total market revenue.
Changes may be happening fast, in other words, but that does not mean that the motion picture business is ready for a full transition to day-and-date home and theater film releases (let alone for targeting home releases exclusively). Cinemas are very much needed in order to help Hollywood continue doing what it does for almost a century now: produce movies people want to watch. Truth be told, that is how we like it too. We had the best of both worlds in 2019: the great new blockbusters we want to see in a movie theatre in order to enjoy the whole cinematic experience, as well as Netflix or Disney Plus at home, ready to offer everything else on our Smart TV.
There's no reason why this model cannot work again. It's just that, for the first time in the history of entertainment, no one really knows whether consumers will lean toward the cinematic experience or toward the comfort of a couch when the COVID-19 situation is more or less resolved. How could anyone know? We've never been asked before whether we'd like our film premieres to happen in our living room or among dozens of strangers in a movie theatre in a post-pandemic world, have we?