November 12th looms large over the theatrical exhibition business. It is the day Disney launches it’s streaming platform Disney Plus. There is nothing we are going to do about it is simply going to happen. In fact, it has already happened. Disney is on a spending spree, Netflix is re-positioning itself and Amazon is shifting its business model to look more like a portal. It is looking more and more that Amazon is positioning itself as the Google of streaming video.
The business of theatrical exhibition is not changing though. They continue to march lockstep to the tune that Hollywood plays for them. They bicker with themselves and seem to be focused on gluing the blinders on. The latest rift between NCM and AMC illustrates an industry that has ceased to function collectively. With the major circuits, it is every man for himself, and they are pushing each other out of the life raft. As a friend of mine said this week, the big-box theaters are about to enter a period of sharp reduction…they will implode.
In a rather intelligent statement, John Fithian NATO Head made the argument of re-imagining the eco-system by having the streamers incorporate a theatrical release as a global strategy. As much as I shake my head at NATO at times this statement is a mature and thoughtful response to the impact the streamers are having on the business of exhibition. It is imperative that some action is taken, and I applaud Fithian on his statements. It is time that exhibition be brought into this ecosystem and maybe the streamers will begin to understand the impact that a proper release will have for their revenue dollars. The major exhibitors must realize and realize soon that they are no longer big dogs in the scope of things, and when they had the chance to affect a righting of the exhibition boat, they did nothing.
It is also time that NATO realizes that while Regal, AMC, and Cinemark pay most of their bills, to constantly react solely to the wishes of the big three will lead to their doom. While I applaud John Fithian in his thoughtful statements, I have personally seen evidence of the self-satisfied boyars of the second level of leadership at NATO. It is beyond my comprehension that as soon as an exhibitor wraps themselves in the cloak of an association, they find themselves blinded by the deep fog of bureaucracy. Formerly well-meaning and passionate people become hamsters on a wheel, seeking a piece of cheese that is never coming. The door of your cage is open…walk out if you dare guys.
A word of advice to AMC, your inflammatory and knee jerk lash outs do not do this business any good. A call between CEOs would suffice instead of attempting to inflict a night of a thousand cuts by a barrage of tantrumesque press releases. My family has a rule, if you are going argue do it behind closed doors, solidarity should be the appearance to the outside world. The erosion of industry-wide goodwill does no one any good…. or maybe that’s your intent. In Wall Street profit can be gained on almost anything.
One of the key things that I think the exhibition business is not realizing, is that streaming is deeply altering the viewing habits of the gen Z and millennium audiences. I believe in the long run this is the greatest threat to the theatrical experience. Streaming in its many forms: YouTube, Netflix, Amazon, and Disney has for the past decade eroded the cachet of movie-going. Gen Z, the latest generation sliding into something we call adult, is, for the most part, is rejecting the allure around movies, in many ways, it’s abandoning old media altogether.
This emerging generation, the oldest of which is around 22, was raised deeply within the internet, hand-held devices, and social media culture. For the first time, we have a generation that has no knowledge of what movie-going was. Because of that, their consumption habits are radically different. I know members of this generation who will binge watch Anthony Bourdain after Anthony Bourdain show but their movie-loving father (me) must drag them to see a movie, much to their father’s utter disgust. This generation is living on their phone, their tablets, and laptops…movie-going has become foreign. This shift has led content producers to go where Gen Z lives…on planet YouTube. First and foremost, this generation is nothing but the internet, and they are not growing out of it. Specific channels are popping up around various genres and they are being led by horror. Gen Z’s watch daily 3.4 hours of online video.
One horror channel on YouTube has obtained 2.6 million Gen Z subscribers who have watched their content 258 million times. These are significant numbers. A comedy offering on YouTube Love Live Serve, which has 4 million subscribers and more than 627 million video views, and the Dobre Brothers, twin video bloggers with more than 14 million subscribers and more than 3 billion video views.
It is a brave new world and theater must begin to learn how to operate within this demographic. Originally a platform for short-form content, YouTube is increasingly offering up feature-length movies to consumers. Because the nature of the technology there is a much more intimate relationship than with traditional media.
The more fans engage, the more ad revenue creators are given. It’s also how these YouTube channels can create content and not charge consumers to view them. This success is what is giving streaming channels cause to pause and making them strongly consider ad-supported streaming channels. Channels like IMB and TUBI are prime examples of streaming services that are hitting it out of the park with AVOD offerings. What people like Netflix do not realize that Amazon Prime has already been groomed to be totally advertiser supported with its financial modeling, Prime producers may see $.10 a view if they are lucky. That number can easily be overtaken in an ad-supported model.
Theaters must do something, interactive programming, the inclusion of esports, shorter former intense VR experiences and much more. Theaters must liberate themselves, the industry must step up and define itself. Trade organizations should promote evolution and financial self-sufficiency, or they should politely just go away.
It is a time for change within a deep season of change. Maybe play a cartoon or a movie serial before the main feature, it’s worth a try.
If you have any comments or just want to chat please reach out. bill@usadrive-ins.com
Also, I am assisting a new emerging distribution company, The Film Bureau to start a pipeline for independent content…..if you need to fill any programming holes please reach out. Their first release is 47 Hours an old school horror movie.
