THE FUTURE OF FILM & TV: Entertainment as We Know It?

BY VANESSA NIRODE

In 1977, as a 7-year-old, I saw “Star Wars” at a drive-in theater with my Mom and my three brothers. My older brother and I sat in awe, having shifted our way to the very edge of the front seat of our family’s 1975 Ford van. A janky speaker hung from the nearest window. The franchise’s original trilogy defined our childhoods.

Streaming services, video-on-demand platforms and even naturally-occurring events have shifted the viewer experience so much since then. Waiting for a new episode of a favorite show to air at a specific time, on a specific date and on a specific channel is gone. People have grown used to watching an entire season of a series in one go: wherever, whenever.

Major film and TV studios have jumped on the streaming bandwagon. But are they making money and is it a sustainable business model? The film industry alone has undergone an evolution in the past 100 years or so—and the current landscape may be cause for some of the biggest changes. Several experts weigh in on how and why.

‘STREAMING’ ECONOMICS

Media researchers have noted that, by the 1990s, general economic decline in the U.S. led to a decrease in box office revenues. At the same time advances in special effects, soaring celeb salaries and the threat of striking crews raised production costs. See the “Old Hollywood Big Tech” sidebar for an expanded film industry overview.

Streaming services arrived on the scene in the 2000s. Associate Professor of English & Film Studies Gregory Steirer, PhD, at Dickinson College (Carlisle, Pennsylvania) told Digital Unicorn that Universal Pictures released “Trolls World Tour” on digital platforms in March 2020 at a rental price of $19.99 USD.

When the studio did that, he explained, it utilized the same basic profit model used for theatrical distribution. He added, however, that if—as with Disney’s landmark release of the original Broadway production of “Hamilton”—a streaming platform were to release a film title for free to its subscribers, the model used would be completely different.

Producers and others make money from “points” negotiated into their contracts. Those points have entitled them to a percent of box office sales. Without a box office, they get no direct profits. Thus, Steirer explained, producers now have to negotiate for more money upfront. That sort of deal shifts revenue away from a studio’s streaming platform.

Consider Marvel having experienced a series of theater mega hits. Films which are especially expensive to make, said Steirer, have the potential to drag down overall earnings. Subscription-based streaming platforms which don’t utilize ads face the same incomegenerating dilemma.

There will always be a limit to the amount to be made from subscriptions alone. Steirer said, too, that high-quality shows cost more to produce without generating added revenue for studios based on a platform’s existing subscriber base. Those shows could earn them added revenue by attracting new subscribers—if they became extremely popular.

Financial analysts have stated that Netflix has funded much of its newcontent generation with nothing in its pockets but debt.

“I think even major studios will start to take a more film-by-film approach (to) release strategy …. We’ve already witnessed some of it during the pandemic.”

– Kevin Sanson, PhD, Assoc. Professor (Queensland University of Technology)

VOD VS. BOX-OFFICE RELEASE

Video-on-demand features, as laid out by MTC Communications, differ from pay-per-view in that VOD subscription channels offer hundreds

$19.99 USD is what Universal set as digital-rental price of “Trolls World Tour”

SOURCE: GREGORY STEIRER, PHD

$30 USD

is what Disney’s set as its digital rental price of “Mulan”—on top of any Disney+ subscription fees

SOURCE: TRUSTED DISNEY INSIDER

of free TV, film and other titles only available “on demand.” And, unlike one-and-done PPV events, viewers incur an ongoing access fee via their cable packages.

In that way, VOD is similar to services like Netflix, Hulu and Amazon Prime Video. Subscribers can access their provider’s existing content, browse additional free content or rent/buy other fee-based content. Likewise, VOD allows viewers to watch selected titles straight through or pause, play, fast forward, rewind and revisit them later.

Kevin Sanson, PhD, is an associate professor at Queensland University

Debt is what financial analysts say Netflix uses to fund much new content

SOURCE: VARIOUS

of Technology in Australia and a co-founder of the open-access journal “Media Industries.” He said on-demand options have not typically added up the same way revenues from massive, global box office hits have.

Disney, for one, would have needed to attract lots of subscribers and VOD transactions to equal what it made selling theater tickets to “Avengers” (2012). Per IMDB.com, the film’s cumulative gross worldwide earnings were $1.5 Billion. In addition, what constitutes “a good deal” for a large-scale franchise or an indy film differs.

“I think even major studios will start to take a more film-byfilm approach,” Sanson told me, suggesting they might ask, “‘What release strategy makes the most sense for this particular property?’ We’ve already witnessed some of it during the pandemic.”

For a smaller film which may not find distribution otherwise, a directto-streaming release could make sense.

DEFINE ‘BLOCKBUSTER’

Associate Professor Anne Gilbert, PhD, teaches media studies at Grady College of Journalism and Mass Communication for the University of Georgia. In her view, the definition of “blockbuster” is based on the monetary value of box office receipts.

“There is no independent, thirdparty calculation for streaming views,” explained Gilbert, who researches social, technological and industrial factors’ impact on how pop culture is shaped and perceived. “For example, only Netflix knows Netflix’s viewing numbers.”

viewing numbers.”

Is it possible to achieve “blockbuster” status by going online only? Gilbert said that, as for major blockbuster features, distributors prefer a windowed release in theaters followed by at-home rights for streaming and on-demand purchases or rentals.

Projects like 2020’s “Wonder Woman 1984” (WW84) and “Tenet” were initially put on hold for that reason versus planned for straightto-streaming release. Films also released this year which skipped theaters have mostly been lowerbudget (i.e., “The Lovebirds,” which

“There is no independent, third-party calculation for streaming views. For example, only Netflix knows Netflix’s

– Anne Gilbert, PhD, Assoc. Professor (University of Georgia’s Grady College)

was moved to Netflix) or familyoriented (“Trolls World Tour”).

Gilbert said that when Disney moves its costly 2020 dramatic remake of “Mulan” to streaming it

will try to recoup costs by charging audience members $20 USD each (a Disney insider told us $30 USD) to view it online—on top of Disney+ access fees: $6.99/month, $69/year. As of August 4, Disney+ had 60.5 Million subscribers.

Films proven to earn more in theaters, Gilbert added, also command higher streamingdistribution rights.

MORE ON THE BUSINESS SIDE

Prominent streaming and subscription services have utilized business models Sanson shared a few basics of along with brief commentary: • Amazon – Entertainment is secondary. Its streaming platform is a way to redirect consumers to retail offerings. • Apple – Similar model to Amazon. Its main business is still technology. • HBO – Subscription-based. Obtains added revenue by licensing its content in other territories. • Hulu – Reliant on ad support and subscriptions. Originally created to distribute parent corporation broadcast content. (Disney holds majority ownership.) • Netflix – Subscriber-funded model. • Showtime – Same as HBO.

All seem to still be figuring out how to approach streaming content. Due to the relative newness of such platforms, they are also still deciding how to best leverage them. Gilbert said Amazon, for instance, has not been earning money by offering Prime Video content.

Instead? It views its online brand extension as a loss leader. A marketing strategy that allows for pricing below cost is how it has gotten people in the door. Prime subscribers gain access to streaming content which, Amazon has hoped, may encourage them to spend more money on other things.

As for shifting business strategy, Steirer cited HBO as one example. In the past, HBO made money by not only producing shows for its own channel but by producing content for others. Now that the channel was acquired by AT&T, Steirer predicted it will soon end up with a business model indistinguishable from Netflix’s.

Licensing Revenue

Through licensing, a cable TV or streaming network with a market of its own pays a content owner (i.e., ABC, Disney, NBC) for the legal right to host that content on its own platform for a specified time period.

“Licensing has been a pillar to legacy business practices in the entertainment industry,” said Sanson, “and constitutes one of the most prominent sites of change and confusion in the contemporary landscape.”

In general, content rights are bound by legal terms settled long before anyone dreamt up Netflix, etc. Distribution of “The Wonder Years” TV series was hindered by the fact that the music rights for songs heard on the show did not include provisions for use in DVD format or via streaming services.

Residuals

The organizing union Screen Actors Guild-American Federation of TV and Radio Artists represents more than 150,000 performers (i.e., actors, announcers, broadcasters, stunt performers). SAG-AFTRA has been dealing with contracts and terms related to digital and streaming platforms.

In June, a press release from the labor union noted its reps had reached a tentative deal with the Alliance of Motion Picture and TV Producers pursuant to a “lucrative contract package” for SAG-AFTRA members. Among the new terms were residual gains for high-budget subscription streaming and no more “grandfathering” new episodes of existing series into prior agreements.

Following industry patterns, they also said to have “replaced the fixed residual with a 6-percent, revenue-based residual … to secure improvements in high-budget subscription streaming—the fastest growing part” of the film and TV

> 150K

performers is who SAG-AFTRA represents as it DigitalUnicornMag.compursues better | 19 digital content deals

“The industry is still trying to figure out how best to monetize (its offerings).”

– Kevin Sanson, PhD, Assoc. Professor (Queensland University of Technology)

business. Does that mean movie theaters are on their way out? Not necessarily.

“There will always be people who will go to the theaters as long as films are released that way. It provides a collective experience ….”

– Anne Gilbert, PhD, Assoc. Professor (University of Georgia’s Grady College)

IN THEATERS NOW

Movie theaters have held to a business model neither mass audiences nor studios (small-scale distributors in particular) want anymore. That model—based on the time between theatrical release and availability elsewhere—has already changed.

Party, said Swanson, because audiences are increasingly opposed to a distribution strategy designed to produce scarcity. Significant changes in how theaters operate, both industrially and culturally, seemed inevitable to him. Future shifts within the sector, he said, may include: Niche marketing Prioritizing special events Catering to specific demographics (i.e., IFC Midnight distributing horror, thriller and Sci-Fi genre films)

Audiences want to access content “whenever” without paying extra for the privilege of viewing it asap. Yet, is anyone making money from online distribution? Sanson thought not, not even in the case of Netflix: “The industry is still trying to figure out how best to monetize (its offerings).”

The experience of going to a theater, though—especially to see a movie rich in action scenes and special effects—can it be replicated at home? Steirer said he thinks theaters “will bounce back once COVID-19 is no longer an issue.”

“There will always be people who will go to the theaters,” added Gilbert, “as long as films are released that way. It provides a collective experience and (is currently the first stop). It makes movies feel special. (The) size of that audience is shrinking—as people opt for convenience over experience. Still, there’s nothing like going to a theater.”

Only time may tell.

Old

BIG TECH

The U.K.’s National Science & Media Museum and “Film History: An Introduction” co-authors and film critics Kristin Thompson, PhD, and David J. Bordwell, PhD, have credited the Lumiere brothers for showing the first moving-picture film to a paying audience (Paris: December 1895).

Four years prior Thomas A. Edison and William Dickson rolled out the Kinetoscope, a freestanding film-projector forerunner built for one that showed moving pictures via peephole lenses. Read on for a recap of the experts’ take on film history:

1910: D. W. Griffith’s “In Old California” premiered in Hollywood. 1914: Cecile B. DeMille’s “The Squaw Man” was released.

1920s: Harry, Albert, Sam and Jack formed Warner Bros. Pictures. “The Jazz Singer” used synchronized sound, record discs playing in time to film reels.

1930s: The Golden Age of Hollywood? Most features had sound and by mid-decade many had color. Laurence Olivier and Shirley Temple were stars. Studios owned the theaters. Beneath it all and for industry women, the “golden” was debatable. 1940s: The House Un-American Activities Committee arm of the U.S. House of Rep. sniffed out hints of communism. Among the blacklisted: Charlie Chaplin, Orson Welles, Dorothy Parker. The U.S. Supreme Court ruled, in 1948, that studioowned theaters could not restrict showings to only films they produced. 1950s: To compete with TV, tech gadgets like a curved-screen setup with three projectors and multi-track surround emerged. Audiences were shown younger, “hipper” actors: James Dean, Brandon and Monroe. Theater attendance in decline, studios began producing made-for-TV features. 1960s: Studios added music recordings, TV series and TV films to their offerings. 1970s: Partly due to the Vietnam War, the industry was depresed. A rise in counterculture and new attitudes about sex, language and violence impacted subject matter. Special effects in movies like “Jaws” (1975) and “Star Wars” led to a small rebirth for Hollywood. VHS and laser disc technology emerged. 1977: Because? “Star Wars.”

1980s: As use of special effects increased, so did film budgets. Ticket prices dropped, however. The decade’s most memorable films may be “Raiders of the Lost Ark” (1981) “Return of the Jedi” (1983) and “The Terminator” (1984). 1990s: General economic decline decreased box office revenues. Production costs soared due to advanced special effects, salary increases and impending strikes. 2000s: Streaming services emerged.