Netflix and HBO will crash the box office

In the near future, streaming media giants will show their original content in movie theaters.

by Sterling Scott

This is the first article in the Sterling Stance series of blog posts

Sterling Stance: a sometimes bold and always debatable prediction on the future of technology and human behavior.

Trend: Movie Theaters Adapt to Streaming

Movie theaters are rapidly iterating and evolving to maintain and grow their customer base. While prices and sales are higher than ever and continuing to increase, viewership is trending down as more people opt to wait for the release on digital media.

We are seeing movie theaters add subscription services where customers can pay monthly for (somewhat) unlimited access to movie screenings. This means customers can pay for unlimited movies at theaters the same way they pay for unlimited movies online. AMC Stubs A-List enables subscribers to see up to three movies every week for $19.95 per month + tax. Regal Unlimited offers unlimited movies for $18 to $23.50 per month + tax.

We are also seeing movie theaters add on-demand streaming services where customers can rent or buy movies. AMC On-Demand enables people (subscribers and non-subscribers) to rent or buy movies to watch on their personal devices.

In addition, movie theaters are also offering the same comforts that customers have when streaming movies at home: comfortable leather reclining seats, hot meals (sometimes delivered), alcoholic beverages.

Customers can also create watchlists and set reminders for upcoming movies the same they would with online streaming.

Movie theaters are innovating to thrive and that trend will continue. 

Trend: Streaming Services Produce Original Content

This has been a trend for years now as streaming services produce original movies and shows – sometimes with high budgets, including marketing budgets. Netflix spent $12 billion on original content in 2018; Hulu spent $2.5 billion; Disney is spending $1 billion on original content for Disney+; and Apple is spending $1 billion on original content. For comparison, HBO spent $2 billion.

More productions and higher budgets mean more marketing dollars. These platforms are spending money promoting their content the same way that movie studios and distributors and even major network cable providers do. Billboards, video ads. television spots, and yes, pre-preview promotions in movie theaters.

As streaming media providers begin to resemble movie studios and distributors, they are using many of the same tactics of those businesses.

Trend: Movie Theaters Show Live Events

Your favorite bar isn’t the only place in town to catch the game on Sundays. You can now watch NFL games at your favorite movie theater (select theaters). This pilot program from AMC enables customers to watch games on a massive screen with access to all of the comforts and concessions they expect from a movie theater experience. They even let customers prepay for $10 in event food and beverage credit.

Theaters also show concerts and rent out their venues for worship services and other events. Theaters are more than places to watch movies – they are pillar event spaces in the community where people have and share experiences.

Trend: Streaming Services Experience Heightening Competition

Competition is great for customers. It means more options. It’s even great for businesses. It pushes companies to innovate and adapt – which also benefits customers. However, it does mean a more segmented market. There are many options for streaming services. Netflix, Hulu. Amazon Prime, HBO, Starz, and Showtime are some of the big players in the space. They are about to be joined by Disney and Apple. Others will soon follow. While many customers are subscribed to more than one platform (sometimes even bundled), some of the more established streaming services will experience a dropoff in subscriptions.

This is going to force them to innovate and find ways to be disruptive within the streaming space.

Trend: Experience Market Growth

The experience economy is booming and it’s being ushered in by millennials and Gen Zers. This can be evidenced by the growth of music festivals, the travel industry expanding from ticket and hotel sales to experience sales, massive pop-up events across interest groups, and increased ticket sales across all categories: music concerts, sporting events, dance, opera, theater, etc. 

As a part of this growth, we are seeing live events pop up for shows such as Friends and Stranger Things. The Walking Dead has been doing this successfully for years as well. In the movie space, entire amusement parks have been built for fans of Harry Potter and Star Wars. 

People have demonstrated an appetite for bringing their show and movie experiences out of the living room and into the world by attending themed events with other fans.

This trend will continue, especially as fanbases of streamed original content grows.

Prediction: Movie Theaters and Streaming Services Team Up

I believe that these trends will converge in a way that benefits movie theaters and streaming service providers. Movie theaters will capitalize on the rise of streaming media by partnering to host box office openings of their original content. Streaming service providers will capitalize on the opportunity to expose new audiences to their content as well as make additional revenue by raising subscription costs, selling add-ons, or earning money on ticket sales.

I predict that we will see partnerships between theaters and subscription services that will either lead to increased subscription costs or add-on services. As customers we’ll have access to a variety of new events: Opening nights for movies and weekends of screenings. Series marathons for shows that release all episodes at once. Weekly screenings of new episodes for shows that release weekly.

This will also unlock new opportunities for content producers and independent filmmakers as it will create a direct-to-theater model. They will benefit from box office events and the greater exposure without bearing the cost of marketing and distribution.

There was the golden age of movies in the mid-1900s and the golden age of television in the 1990s and 2000s. Now we are in the golden age of streaming – online movies and television. Growth is going to peak with the launch of other large streaming services such as Disney and Apple and plateau with a new norm, which will be streaming media delivered in in-person experiences.

So what?

So, if this is the direction in which movie theaters and streaming service providers are headed, now what?

Movie theaters need to conduct research into their own customer bases to identify the most popular shows and movies that they watch online and which subscriptions they have. They will also need to research the customer bases of streaming service providers to understand how, when, and where they spend money at the box office.

Streaming service providers need to conduct research into their customer bases to identify the segments that spend the most at the box office and the content that these segments like to stream. They will also need to conduct research into the customer bases of movie theaters to identify markets where their target segments are concentrated.

Technology and media companies need to build new platforms and tools that power or augment these new digital experiences. This starts with customer research to uncover actionable insights but also includes standing up innovation teams to take action on those insights.

If you’re interested in discussing this topic with me, send me a message – I would love to chat.