“There's something doesn't make sense about this. Doesn't make sense.” – Anthony, “The Father,” Film4, 2020

Our haphazard entertainment budget is a lot like a movie/series budget – time and money – take your pick.

We blew them both late last year.

First on great films that closed out the second half of 2022 – Top Gun: Maverick, Black Panther: Wakanda Forever, Avatar: The Way of Water, Devotion, and a couple of others blew the money budget.

Then streaming folks, the stuff appearing on our streaming services (Netflix, Disney+,  Amazon Prime, Apple TV+, Paramount +) sucked up our time budget.

Sure, the theater guys (AMC’s Aron with 11K screens, Cineworld’s Greidinger with 9,500 screens, IMAX Rich Gelfond with 1,500 screens, and the folks who manage the rest of the 208K screens around the world) were delighted with the overabundance of really great stuff that appealed to folks of all ages.

If we were them, we probably would have been too.

With artificially greased popcorn, sugar drinks and candy, our family of four was easily dropping north of $120 from our entertainment financial budget every time we put our seats in their seats. 

 It also impacted our time budget.

Going/coming to/from the theater takes about an hour each way plus an average of 2.5 hrs. seated in a big black surround sound room with a hundred (+/-) folks we didn’t know and never get together with again means we’ve invested nearly five hours to watch one show.

BAM! that’s it.

Don’t like it? 

Tough schoodle (don’t Google it, we made the word up)!

If we were real conservative (cheap) and patient, we’d wait until those theater packers are released by our streaming services.

To shave our entertainment budget, we converted all of our streaming services to ad-supported (O.K., not Apple TV but they’re the source of music for our daughter and one of our son’s choices for games … a helluva’ deal).

We reduced our financial home entertainment budget to about $50 + a month. 

Yeah But – Theater owners are hyping the fact that streamers are increasingly offering theatrical windows while also complaining they could do so much better with a longer window … maybe. 

Aron, Greidinger and the rest of the theater owners all bragged that even the streamers born out of technology (Netflix, Amazon, Apple) realized the importance of the fact that a real movie had to be shown first in a movie house.

Who’s schooling who?

Award people also cling to the aging idea that a good/great film needs to be seen in movie house first.

So, the streamers give the project a 5–10-day theatrical run and then it will be “considered” for an award next year.

But what they really wanted were the reviewer quotes and vast amount of social media noise of teens/tweens telling others. … you gotta see this!

Yeah, that’s right, the few bucks they make from letting movie houses show them first is nice but having folks tell folks to sign up and watch their stuff is priceless.

That’s why Amazon has committed $1B this year to make 12-15 movies that will first appear in cinemas and then on Prime.

The $1B is a sliver of $13B they’ll probably spend this year on new, original content to keep subscribers and win new subscribers.

 

A Deal is a Deal – It turns out that if streaming folks offer consumers a lower subscription fee and share a few ads with them, they’re there.  Now the ads need to be as good as the content following/leading up to them. 

To preserve the home time budget, we and other folks fell back into the routine of watching a flick plus 4-5 minutes of ads an hour. 

It turns out people think it’s a good deal except for the fact that most of the commercials suck! You know, just like the old pay TV days but thankfully less time wasted on bad spots.

The problem is that marketers focus on selling their schoodle (yeah, that word again) rather than working with the streamers to mine/digest/understand/use the data that’s provided to them to make the commercial’s more inviting, more interesting, more effective.

Overflowing – Streamers know more about you and your entertainment tastes than you probably realize and their analytics allow them to greenlight stuff you want to watch.  They’ll help marketers do a better job of reaching consumers if they only listen. 

Yep, they know more about us than we know about us.

If they used the data accurately and if they showed marketers how/why to make their commercials better/more effective, everyone would be happier … especially the folks paying with their time.

Studios and streamers aren’t afraid to use it when they consider the next project they waffle on greenlighting or the next film/show they consider producing/delivering.

Almost instantly, they know it’s going to be good, how good, how many people it’s going to appeal to and the demographics of the audience.

Check the data, run through the numbers/analysis--done and done.

Oh sure, if they’ve had a tentpole or long-running project that has gained a solid following, you know they’ll lean in and develop a prequel, sequel or spin-off.

Data Box – Studios and streamers use a lot of data to determine if a project will appeal to many or most of those folks in front of the screen.  It’s a lot more reliable than going with your gut feel. 

However, they still like to dig into their data box and run all the analytics against the script, shooting, production and post work just to ensure it will attract eyeballs, keep subscribers and attract more folks to sign up for their service. But that’s so old school.

Don’t worry, it doesn’t mean that the creative process will be taken over by AI/ML driven by CTV measurement or any of the other automated creative production tools folks are developing/advocating.

No, it will still take the delicate touch of writers, cinematographers, actors, producers, editors and hundreds of other experienced professionals to turn a visual story idea into something that will keep people glued to the screen laughing, crying and screaming with programming that is tailored to them.

The information/data helps keep seats in seats and keeps bosses from reaching for the Pepto when their bosses text them that they want to see them … now!

Sure, some egotistic producers, actors and advertisers can blow off the information assistance. You know who they are - but when no one bothers to watch or respond, it sure bruises his/her self-esteem and street cred.

We know Steven Spielberg, Quentin Tarantino, Martin Scorsese, Spike Lee, George Lucas, Kathryn Bigelow, Tim Burton, Jennifer Lawrence, George Clooney, Tom Cruise, Ryan Reynolds, Ryan Gosling, Scarlett Johansson, Brad Pitt, Matt Damon, Will Smith, Samuel L. Jackson, Tyler Perry, Idris Elba, Denzel Washington  and hundreds (1000s) of talented creatives around the world want their stuff in theaters.

Attention Grabber – The creative industry is slowly weening itself away from the idea that a movie is only a movie when it is shown in a big dark room because the real importance is having people watch and respond to the project … regardless of the screen. 

But more than that, they want to get paid for their work.

They also want millions of ordinary folks to see their work and talk to other folks about why they’ve gotta see the project … regardless of the screen.

So, we asked Allan McLennan, Founder & Head of M&E of PADEM Media Group, if the growth of streaming services meant that the cinema will go the way of pay TV.

“Far from it,” he said emphatically, “but it’s in the process of changing … significantly.

“Last year’s tentpoles and major projects showed that audiences really wanted to get back to watching some movies in the theater and they have become more selective,” he added.  “Films that previously would have been considered ‘sure things’ like Disney Animation’s Strange World and DC’s Black Adam showed respectable ticket sales but not what the industry experienced pre-2019.”

According to Bruce Nash, who has been tracking theater attendance since the mid-90s, theater attendance has been trending downward since 2012 and the most ardent attendees have been the Gen Zs and early Millennials.

Options – Movie house owners need to focus on the people who attend a lot of movies – the younger crowd and a heavily male audience.  Millennials and older folks go to movies less frequently and don’t spend as much on concessions. 

“I’m a big believer in theatrical releases,” McLennan said.  “My wife and I enjoy going to the theater and settling in to watch a great film the way the producer created it to be viewed.  It’s a break for us and it has always been special because it’s a communal experience.

“This isn’t going to go away,” he added, “but it has been changed primarily because audiences have learned  there are very good app-based options that enable them to watch the film at home when it is convenient, not having to rely on another schedule or movie house agenda.  People have come to expect that ease and flexibility for the majority of their entertainment.”

At the same time McLennan noted that streaming has even helped revitalize theater attendance.

“There is a very limited number of major projects/tentpoles that studios can afford to produce each year,” he stated.  “Perhaps two – three.  Certainly not enough visual stories to put seats in their seats 365 days a year.

“But studios and streaming service here and abroad can and are producing an increasing number of excellent mid-level projects to win new subscribers and keep existing subscribers through easy viewing,” McLennan noted.  “Giving movie houses an exclusive theatrical window of five – 20 days benefits both parties. It gives movie houses a greater range of titles that appeal to the ‘have to get out and participate crowd’ and provides streamers with modest return to their bottom-line plus word of mouth to attract/retain subscribers.

“It’s a win/win for the entire industry,” he emphasized.

Almost, every industry analyst has noted that not all will survive because there are too many cinemas – 6K in the US, 208K worldwide – all with dwindling attendance. 

Those that survive/thrive in the new entertainment economy are changing dramatically with innovative food/beverage offerings as well as live events like concerts, sports, video game contests, and similar communal activities.

 

“Of course, that doesn’t mean that all of the streamers will grow and prosper,” McLennan warned.  “The market in the Americas has nearly reached saturation and the big five (Netflix, Disney+, Amazon Prime, Paramount + and HBO Max/Discovery as well as Peacock and Apple TV+) have reached the point where they’re all fighting for the same ‘potential’ subscriber’s attention.

More, Longer – Streaming services like to keep increasing their subscription base but they also want to retain subscribers as long as possible. That requires a steady stream of unique content and a global reach. 

 

“Churn (winning new/losing subscribers on a quarterly basis) has become a meaningless and expensive measure,” he lamented

 

 

Seeing the futility of winning/losing the same subscriber over and over, streaming services have turned their attention on global growth.


Netflix, the only truly global producer, has commissioned new content from 44 territories since 2020, increasingly from Central Europe, Middle East and Asia. 

 

The other two tech-founded streamers (Amazon and Apple) have always been global based on the customer base of their other services/products – e-commerce, cloud services, computers, tablets, smartphones

Audience Pleasers – Streamers that have a strong balance of technology and quality commitment increasingly become the first choice when people want to watch something new, different, entertaining.  Today, we increasingly have an embarrassment of good entertainment to choose from. 

 

Before and with his recent return, Disney’s Bob Iger has also placed increased attention on the global entertainment market, especially with about 47M Disney+ Hotstar subscribers and its strong presence in the EU and APAC regions.

 

For this year, Netflix has commissioned 130 new international first-run shows and 62 features, Amazon greenlit 92 new shows and 23 features; Disney+, 45 shows and four feature films.

 

The brutal fact is if platforms are going to find new customers, they are going to have to come from outside the States. 

 

Global platforms need to leverage the advantages the international, non-U.S. production and markets provide – lower total production cost, fewer costly and often meaningless production restrictions, international subsidies and perhaps most important, a broad range of unique, high-quality video stories that draw local and international audience attention … including the Americas. 

 

The other major streaming service policy change we were very interested in taking advantage of was subscription financial options.

 

Reducing all of our monthly service charges – except for Apple TV+ - in exchange for a few minutes of commercials was like a 2023 bonus!

Netflix and Disney’s addition of ad-supported tiers are monetizing a new segment of consumers who choose price rather than a perceived lack of content selections.

 

For Netflix (and probably Disney), the relatively inexpensive viewing option combined with the crackdown on password sharing is increasingly appealing to password “borrowers.”

Balance – With all of the entertainment options, people are trying to achieve a balance on the stuff they really want to watch and their budget.  Value is in the eyes of the beholder. 

 

In addition to helping Netflix, Disney, Paramount, Peacock and possibly WBD, once they figure out what their HBO Max/Discovery service will look like and develop a pricing strategy that focuses on the consumer rather than corporate needs; ad-supported tiers will increase the organization’s ARPU (average revenue per user) and supplemental advertising income. 

 

According to Digital TV Research, global AVoD revenues will reach $91B in 2028, up from $38B this year.

 

Increasing Value – Ad-supported services are becoming important entertainment considerations as people find there isn’t a flood of ads and that the ads are more tailored/interesting to them.  The growing attraction will benefit steaming services, marketers and the consumer. 

 

The top 10 countries will represent 81 percent of the world’s total.

The global availability of hybrid AVoD-SVoD tiers by Netflix, Disney+, Paramount and the possible HBO/Discovery bundle should generate a quarter of the world’s total - $22.6B by 2028.

 

Unlike Anthony in The Father, we’ll still go to the occasional “gotta see it the way it was produced” film and see it in the theater.


Who knows, it might even be a Netflix or Apple project.

 

For the rest of our entertainment, we’ll agree with Anthony when he said, “I'm not going to leave my flat. All I want is for everyone to f*** off. Having said that …. it's been a great pleasure.”

And for the time being, we’ll enjoy our own popcorn, our own beverages, a dynamite selection of films from around the world and focus on making better use of our budget.

Sweet!


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