Will COVID-19 Crush Movie Theaters and Crash Hollywood?
Is Hollywood about to crash? Will COVID-19 not only change the way the world does business but also upend Hollywood? For the first time since 1975 Hollywood will NOT have a summer blockbuster season. With movie theaters closed down around the world, no one knows what will happen next. I mean Jaws and Jurassic Park are fighting for the number one spot at the only box-office that exists at the moment — drive-in theaters.
Are we in an alternative universe?
The eye of the storm of this crash more than likely will be movie theaters. If movie theaters do not figure a way to bring people back to the silver screen Hollywood will have a major shift in the way it does business. The stress of COVID-19 is starting to expose the weakness in the traditional Hollywood studio system. Not all the majors will be in trouble but some most definitely fall or get acquired by the cash-rich Amazon, Google, Facebook, or Apples of the world. If the film industry continues to do business in the same way they did pre-COVID-19 and thinks that the revenue streams will be the same they are terribly wrong.
People’s buying and viewing habits have changed dramatically over the last decade and due to COVID-19, I believe permanently. The public generally doesn’t buy a full album to listen to a hot single anymore instead, they stream their favorite songs on Spotify or Apple Music. Eventually, people will stop going to the movies, which have become too expensive, inconvenient, just a general hassle, and now could be deadly due to COVID-19. Instead, the movies will be delivered directly to the consumer via services like Netflix, Hulu, Disney+, HBO Max and Amazon. This is the Hollywood Crash.
Legendary filmmaker Steven Speilberg said
“That’s a big danger … there’s eventually going to be an implosion – or a big meltdown. There’s going to be an implosion where three or four or maybe even a half-dozen megabudget movies are going to go crashing into the ground, and that’s going to change the paradigm.”
The thing Mr. Speilberg didn’t see was a pandemic that would shut down the world’s movie theaters and the revenue they brought into Hollywood. He didn’t see that even when the movie theaters come back that the box-office numbers will probably not return the same pre-COVID 19 tallies for some time if they ever come back at all. The way the public consumes its entertainment has been forever altered by the Coronavirus.
Can a movie studio really spend $20o million+ on the budget of a tentpole film and toss in another $200 million for marketing without a theatrical revenue stream? I’m not only speaking about US (domestic) theatrical, I’m talking about worldwide theatrical. COVID-19 has essentially shut down the theatrical business for Hollywood, at home and abroad.
Disney has postponed Mulan, Sony pushed the latest James Bond film No Time to Die and Warner Brothers is still figuring out when to release Wonder Woman 84 and Chris Nolan’s new epic Tenet. This is all due to COVID-19 but there are other attacks upon the Hollywood system.
In the year 2018, movies playing in theaters were downloaded illegally over 53 billion times. There’s just too much competition for the public’s attention. The consumer can easily choose entertainment like Netflix, YouTube, and video games, or simply turn to Facebook or Instagram.
Theater attendance has been slowly going down for decades. In 2019 the US Box-office was $5,360,037,597 down from $5,948,634,492 in 2018, which had two breakout hits of Avengers: Infinity War and Black Panther. The issue has been that the numbers don’t tell the entire truth.
Individual ticket sales have been going down for decades but ticket prices have been going up. The bottom line fewer people are going to the movies, and this was before the shutdown due to COVID-19.
Will people go back to the movie theaters in the same declining numbers as before COVID, probably not. If they do it will take at least a year or longer for people to be comfortable in a dark windowless room with hundreds of other strangers for two hours.
Even without the pressure of the Coronavirus, some similar happened to the music industry years ago when Napster came on the scene and changed the game forever. New consumer habits were created and the music establishment was resistant to change. The one thing that Hollywood can learn for the mistakes of the music business is that you need to change with the times or you’re a goner!
From shut down movie theaters to the streaming wars, Hollywood is in the middle of a huge shift in what the audience wants and how it consumes media, and if it doesn’t adjust quickly it will follow the failed music and publishing blueprint. When you ask studio executives if they are afraid of an all-out collapse of the Hollywood system, their response is defiant and dismissive.
Hollywood, is completely dependent on franchises and established IPs and has given up all the original and “riskier” properties and stories to premium networks and top streaming services like Netflix, Amazon, Hulu, Showtime, and HBO. This is why those companies have been flourishing in a COVID-19 world.
The growth in other markets like China could help take off some strain from the decline of the US box office but as you have seen when COVID hit that market shutdown and along with it the revenue from those theaters. The Chinese market doesn’t need Hollywood, just like Bollywood is doing fine with the studios. The truth is Hollywood NEEDS the international theatrical marketplace to survive. Those markets have been keeping the studios in the money for years.
in 2019 Avengers: Endgame made on 30.7% of its theatrical box-office at home or $858,373,000. Internationally it made $2,797,800,564. Can Disney justify the $500 million+ they spent on the budget and marketing for Avenger: Endgame without a robust domestic and international theatrical component? Many experts believe that the glorious box office reign of the Hollywood studios could be gone for good.
“I’m not ready yet to be Chicken Little, but if the movies coming in 2018 can’t reverse this trend, then it is better we re-evaluate our expectations,”
this is according to Paul Dergarabedian, the Hollywood.com analyst.
“We are living in a very different world today unlike we did in the mid-90s pertaining the kind of technology available to save the media. This may finally be having a significant impact.”
So what will happen once the Hollywood Crash happens only time will tell.
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