The end of movie theaters?
COVID-19 might cause the demise of cinemas all over the world
In 2019, global box office receipts surpassed $42 billion. The movie industry was having its best year ever when COVID-19 hit the world in January 2020. This year, they will be lucky to make $16 billion in revenue. The impact of the COVID pandemic on worldwide box office revenues has put a big strain on movie theaters, big and small.
To compound the problem, Warner Bros, one of the largest Hollywood Studios, just announced last week that ALL their movies over the next 12 months will be available on HBO Max, their streaming service, on the same day as they hit cinemas! This means customers in the United States will be able to watch big hits such as Wonder Woman 1984, Suicide Squad, and Matrix 4 simultaneously with their movie theater debuts, at no extra cost for subscribers.
This move, if not reverted by 2022, will have a profound impact on the entertainment industry. Actors may have a big pay cut and it could be the end of expensive super productions ($200M+). Up to 2020, Hollywood was able to make money when movies were released in theaters and then, a few months later, in Blue Rays and digital releases. They took a long time to reach streaming services.
Why should I care about this?
It may signal the demise of movie theaters worldwide and a migration to a business model focused on streaming services where tech companies such as Apple, Netflix, and Amazon have the upper edge over content makers, as money and distribution are not a problem for them. It may also accelerate the adoption of Virtual Reality and Augmented reality. The center of power in entertainment is moving from Hollywood to Silicon Valley.
This is another disruption being caused by technology and accelerated by COVID. Even centenarian industries are not safe. It will be tough in the next decades to survive as a 100% offline company. If you decide to build a startup in the next years, make sure it is an online company.
What do you think will happen to movie theaters? What can they do to survive an omnipresent online world?