|Streaming has made it big and is now the major way in which many people enjoy their movies. From Netflix to Amazon, to the new Disney+, every platform has a different approach to their content / Photo by: georgejmclittle via 123RF|
Streaming has made it big and is now the major way in which many people enjoy their movies. From Netflix to Amazon, to the new Disney+, every platform has a different approach to their content. Most of these streaming services focus on series they can improve and prolong for maximum profit, or bank on films that were first released only months before. Even then, audiences’ predisposition to view shows and movies on streaming services is at an all-time high.
That mindset is causing trouble in China’s film industry. Here we look at the problems being caused by the advent of streaming and how it’s already affecting the industry.
China’s Theater Industry Threatened by Streaming Deal
Chinese theaters and studios are protesting a deal that the Huanxi Media Group facilitated which will allow its new movie “Lost in Russia” to be streamed for free on Bytedance’s online platforms.
In a report by international news organization Reuters, the complaint stemmed from Huanxi Media Group deciding to show the movie for free online due to the recent virus outbreak that already took out 41 people and infected more than 1,300 people globally.
According to Chinese studios, the move has already rubbed the Chinese cinema industry the wrong way, so in retaliation, the film industry of eastern China’s Zhejiang province released a statement claiming that they will not be supporting any of Huanxi’s endeavors if they push through with the planned free online streaming.
|That mindset is causing trouble in China’s film industry. Here we look at the problems being caused by the advent of streaming and how it’s already affecting the industry / Photo by: Sujittra Chieweiamwattana via 123RF|
This may just be a hard blow for Huanxi considering it will already cost them 630 million yuan ($91.25 million) to pay for new movies and dramas coming onto the Bytedance Network on January 25. If many more film industries follow in the footsteps of the Zhejiang province industry, the project may even tank if the media group doesn’t make its money back.
And it’s already happening. Already, 23 theaters have signed a letter addressed to the China Film Administration that though the free online streaming isn’t breaking any rules, it does upset and might even “break the current industry model.”
Wanda Film Holding, Bona Film Group, and Henan Oscar Theatre Chain were also signed on the latter, which read:
“This goes against the payment and revenue model that the movie industry has cultivated over many years, is trampling and intentionally destroying the movie industry and premiers models, and play a lead role in causing destruction.”
The Streaming Service’s Effect on the Movie Industry
Home entertainment is the current name of the game. More and more people are saying they will choose subscription if given the option, and it’s evident in just how big the services have become since 2018. According to data from the Motion Picture Association of America, home entertainment spending in the US hit $23.3 billion.
The amount of money going into home entertainment is a lot, too, that it’s taking away from North American spending on films and movies theaters. The same survey found that North Americans “only spent a total of $11.9 billion” in movies.
The biggest reason why more moviegoers now prioritize home entertainment via services like Netflix is due to the cost-effectiveness of having a subscription. For example, “moviegoers need to spend as much as $16.49 per person to watch a new film on your chosen cinema. But if you subscribe to Netflix or another streaming service provider, you’d only need to shell out $12.99 for the standard plan every month.”
Aside from cost-effectivity, having a subscription is also economical for a lot of people. Even if only one person in a family or a group avails for a streaming service, it can be of use to at least four more people who can also enjoy the services at an affordable price.
While this is true, there are still areas in the world where streaming is not as popular.
In an article on the Times Square Chronicles, a community paper offering reviews, social news, and information to the Times Square, Chief Attribution Officer at C3 Metrics, Jeff Greenfield said, “Netflix has proven that the American appetite for subscription-based entertainment has only just begun and is actually lagging behind China, Spain, Italy, Singapore, and New Zealand.”
Greenfield added, “Theater chain revenues will soar with subscriptions and also bring the potential to sell analytics data and fulfill the failed MoviePass business plan.”
|Home entertainment is the current name of the game. More and more people are saying they will choose subscription if given the option, and it’s evident in just how big the services have become since 2018 / Photo by: Ponsulak Kunsub via 123RF|
In a report by Forbes, analysts from eMarketer found that in 2018, 53% of respondents from China, when asked if they would be using more subscription services within two years, said they would. In Spain, that number is at 42%, Italy is at 40%, Singapore is at 38%, while 34% of respondents on Stateside agreed.
Because of this, some theater chains have also decided to have a hand in the subscription model. Stephen Paternot, co-founder and CEO of online film finance marketplace Slated, said:
“Everyone is moving to subscriptions in entertainment. It’s a total win-win. For the distributors and theater chains, it’s a much more stable, predictable revenue stream, which in turn, smooths out the revenue bumpiness of big-hit movies versus big bombs. This, in turn, helps reduce risk and subsidizes the riskier, less commercial independent movies. This is a huge win for filmmakers everywhere. Not to mention, it will increase butts in seats and hugely increase concession sales, which is the theaters’ biggest profit center. This leads to better unit economics. MoviePass was loved to death in part because they couldn’t implement additional revenue streams quickly enough to offset their losses on ticket sales.”
Paternot added that the streaming business model is also a good thing because it was getting more and more important for companies to start building relationships with their clientele. Paternot says that this direct relationship is what they feel is important to have in this new shift to the business model.
“It’s hard to overstate how powerful a marketing tool that can be,” says Paternot. “Theater chains will know what movies I’ve seen, and thus be able to anticipate what movies I’ll be likely to see in the future and promote them to me in time to get me out to the theater to see them.”