How Will the Theater Industry Regain Market Share in an Online, Digital Streaming/Release World

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Theatres are closing all around the world. No one knows when projectors will be turned on again. Cinema is not the only industry under threat in the time of the pandemic. However, there is some irony in the fact that many people have turned to streaming platforms to get entertainment to fill the long hours of social isolation, often watching content that was made initially for theatres. Audiences have been consuming more and more films at home anyway. The pandemic has made staying at home a fact of life, and many wonder if the cinema-going culture will resume in the same way when the pandemic ends.

Video streaming’s increasing popularity probably indicates that people have a strong need for video content, especially movies. So, why are some theaters and studios unable to capitalize? Maybe consumers want changes in the way movies are promoted, priced, or shown.

Change often leads to new business models — and we can already see some changes from movie theaters. One example is monthly subscription services that allow consumers to watch a certain number of movies in theaters at a lower price. Many theaters are also attempting to reinvent themselves with their own versions of pre-feature advertising and subscription services. These new approaches have already led to positive changes for some theater chains.

The future of going to the movies will probably look different, and the new business models may turn out to be a success. Innovation will probably be the key as theaters and studios explore ways to reach untapped markets and improve customer stickiness.

In entertainment, everyone is moving to subscriptions. It’s a much more predictable, stable revenue stream for the theater chains and distributors, especially for big-hit movies. The subscription model also poses an opportunity to subsidize the less commercial, riskier independent movies. This is a significant win for filmmakers everywhere. It will also increase the theatre audience and greatly increase concession sales, the theaters’ greatest profit center resulting in better unit economics.

Another big advantage of theater subscriptions is the direct relationship the theaters can build with the audience’s individual members. It’s hard to overemphasize how powerful a marketing tool this can be. Theater chains will know who has seen what movies, and they will be able to predict what movies they’ll likely want to see in the future so they can promote these movies to them in time to get the audience to the theater again.

However, there is one major obstacle. Most people usually go to the same local theater chains to see all the movies and are also probably already subscribed to a few streaming services, so most people will probably end up only subscribing to one to two theater chains. A consolidation of theater chains will likely need to happen until there is a balance within the industry for this subscription model to work.

It remains to be seen whether, after the pandemic, people would rediscover the appeal of going to the theatre.

Do you need help understanding commercial real estate? For more information, you can reach us at joe@joekillinger.co

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Entrepreneur-Investor-Founder. Posting tips and insights from my experiences in real estate, investing & entrepreneurship- https://www.joekillinger.co/

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