Under normal circumstances, we would be having a much different experience this summer.  This mid-August week would have seen the closing of the 2020 Tokyo Olympic games, which would’ve been a unifying and celebratory event for everyone around the world.  At this point, we would have had an exciting post-Comic Con outlook to get excited about, as the industry would’ve been rolling out all their most exciting news in the mega Summer event.  And at this point, we would have had a robust Summer movie season with the likes of Black Widow, Wonder Woman 84, Tenet, Pixar’s Soul, and many more already in our rear view mirror.  But none of that has happened.  The coronavirus continued to rage on for the entire summer, even hitting it’s peak in July, and that left us with no Olympics, no Comic Con, and no movie season whatsoever.  2020 is almost certainly going to be seen as the “lost year,” with so much in the way of entertainment and sports having been either altered or cancelled outright in the hopes of flattening the curve of the pandemic.  Worse yet, it’s a problem that we still haven’t seen the light at the end of the tunnel with yet.  We know that like most other pandemics it will eventually burn out, but the impact will be felt long after it has subsided.  Movie theaters will forever change, as will sports and fan conventions.  We may never see the box office numbers that were once the life blood of the industry the same way again, and at the very least, it will take several years if not a generation to get it back to where it was during the 2010’s.  And yet, people are still able to find entertainment that has helped them to endure through these hard times, and it’s been through a platform whose development could not have been better timed for the era that we are going through right now.  For the moment we are in right now, streaming has been the life preserver for an industry and an audience that needs fresh and new entertainment.

The year 2020 will be known for quite a lot of things, but it will probably also be known as the year that Streaming came into it’s own as a vital part of the entertainment industry.  With movie theaters, performance venues, and sports arenas all shut down in compliance of the disease control requirements, streaming became more essential for the average household than ever before.  For the last decade, streaming was just a secondary option for anyone wanting to watch something new on television; competing more directly with say cable television than with any other entertainment output.  But, with things the way they are now, people are looking more and more at streaming as the future of entertainment.  With the “Stay at Home” orders coming down hard on many American states at the first outbreak of COVID-19, people were distressed by the fact that it left them with so little options for entertainment.   But with the loss of movie theaters and sports venues came a boom for streaming services.  The streaming market saw a nearly 20% increase in new subscriptions in just the first half of 2020 alone, greatly outpacing even their most optimistic of predictions.  The market leaders, Netflix and Amazon benefited greatly from these market conditions, but the same was also true for the fresh new crop of competitor whose launch over the last year could not have been more opportune, even though it came in the middle of a pandemic.  For some like Disney and Universal, streaming came as a much needed life line to help save them from the struggles of the economic hit that came from the pandemic.  And while the market has given a favorable hand to the streaming newcomers, it hasn’t all been spread out equally.  With this tumultuous and empty summer about to soon come to an end, it’s makes sense to take a look at who the winners and losers are in this Summer of Streaming.

First, we definitely need to examine the strength of these services by the factors that they themselves measure their success.  Chief among them is the rate of new subscribers to their service and the retention rate that they yield over time.  Netflix has managed to build it’s empire through a very high retention of old and new subscribers over it’s decade long history of streaming content.  As a result, they now have nearly 200 million individual accounts that pay the monthly subscription cost, which generates monthly revenue for the company in the billions, which in turn goes into the production of new exclusive content that will help them to grow their subscriber base even further.  This cycle has enabled Netflix to not only compete with the major studios as a formidable producer in it’s own right, but has up to this point also put the theatrical market into a defensive mode.  Amazon, though they operate a bit differently offering their streaming service as an extension of their Prime membership, still has a high retention rate of their viewership, which has firmly put them in second place overall.  But there is also the other marker of success that the streaming market has been making progress within, and that’s in the accolades it receives.  It’s not enough to have a high quantity of viewable content on any given platform; it also matters if it’s quality as well.  That has been the thing that upstart Hulu has proven among it’s bigger competitors.  Despite having launched well before Netflix and Amazon, Hulu’s subscriber base has remained relatively small.  But, they made up for it by making history as the first streamer to have won the top award at the Emmys, taking home Best Drama for The Handmaid’s Tale.  There are certainly several ways in which the newest competitors can tout their achievements, and the one’s shown from Netflix, Amazon and Hulu have proved that.  And given the shake-up that 2020 has made, these factors may end up being the new barometer for success in a very changed industry.

Considering all the factors, new subscribers, high retention, and accolades for the quality of the content, there are certainly some winners in this Summer streaming season.  Of the newest contenders, there is no doubt that Disney+ takes the crown by a significant margin.  Launching last November to much fanfare, Disney+ positioned itself perfectly to not only put itself in strong contention with the streaming giants of Netflix and Amazon, but to also have a strong foothold just in case something crazy and unexpected happened, like say a pandemic.  Once theaters began closing, Disney made the risky but overall right choice to bring their short-lived box office champ Onward (2020) immediately to the platform.  Onward only managed a two week run in theaters before the shutdown, and while it did cost Disney money to cut it’s run short, it did benefit Disney+ with more interest from prospective subscribers.  Couple this with earlier than expected premieres of Frozen II (2019) and Star Wars: The Rise of Skywalker (2019) on the platform as well, and Disney+ was generating some much needed buzz for a still relatively new streaming service.  And then they pulled out their ace in the deck; the musical Hamilton.  Originally intended for a theatrical release in 2021, Disney instead opted to launch the much anticipated filmed version of the blockbuster stage musical on Disney+ instead; and on a well timed Fourth of July premiere too.  With this, Disney not only propelled themselves ahead among new streaming competitors, they also gave the top dogs a run for their money.  Hamilton was the most streamed film on any platform this summer, even higher than any Netflix premiere, and by a wide margin.  If streaming is going to challenge the norms of Hollywood distribution in the next decade, it may not be Netflix that leads the charge but Disney given the huge swings they are currently taking, and that’s without having played their Marvel cards just yet.

One thing that has also benefited Disney+ plus thus far is their ratio of value to content at the core of their service.  Their $7 a month price tag is relatively reasonable and perhaps even a bargain given what they already have put on their service.  Not only is every Disney movie ever made available, but also every Star Wars, Marvel, and Pixar film, plus a whole host of 20th Century Fox and National Geographic titles as well.  Netflix by comparison has a higher $12 a month base subscription, but their decade long production of original material has helped to back up the value of their service.  Eventually Disney will raise their price once they fill their platform with more original content, but for the meantime, their launch comes at a reasonable rate which has allowed for new subscribers to flock to them quickly, even in the middle of economic hardship.  And for a start-up, that value to cost ratio matters and it probably is what is separating the leaders from the rest of the pack.  This price point in particular is what is holding back what could have been one of the other top contenders from reaching where it should be.  HBO Max, the streaming platform run by Warner Media, has touted itself as the new home for everything under their media umbrella, including Warner Brothers Entertainment, HBO, DC Comics, Turner Classic Movies, Cartoon Network, as well as exclusive rights to Studio Ghibli.  However, while their lineup of content was impressive, their starting price was not; $14.99 a month.  Charging more a month for a platform with very little content than what Netflix has with their huge library, was a hard pill to swallow for many potential subscribers, and in many ways it has been what has prevented it from having a huge start in the market, which has alarmed some in the Warner Media empire.  Still, a last minute deal made with cable giant Comcast has given HBO Max some legs to stand on, but their continued absence from other streaming hardware makers like Roku and Amazon Fire may also dilute any success for them in the future.  For HBO Max’s shaky start, they can only hope that future high profile exclusives like the Snyder Cut of Justice League (2017) can give them the boost they’ll need to gain ground on the likes of Disney, Amazon and Netflix.

It makes you wonder if HBO Max had not made that eleventh hour deal with Comcast that they might have crashed and burned upon release.  It shows that more than anything that succeeding in this new market depends greatly on a good strategy.  Disney benefited from ideal timing and the strength of their catalog, but also being able to improvise in a time of crises has given them the edge they needed to stand out on top.  While HBO Max has had to figure their strategy out in new circumstances, other new platforms are making themselves stand out in other ways.  Apple TV+ launched two weeks prior to Disney+, and did so with lesser fanfare, but also with an entirely different roll-out model.  Apple’s platform runs through their iTunes store, making each of their exclusive content available to purchase separately without a subscription, but also makes this available as well at a bargain rate of $4.99 a month.  The downside is that Apple’s exclusive offerings are the smallest of any of the streamers, but again the smaller monthly price helps to match that value ratio.  In addition, Apple has also given people who have purchased any of their hardware products within the last year a free year long subscription, which is helping to bring people to their service who otherwise would’ve passed it by.  It’s too early to say what their retention rate will be once those free year subscriptions are up, but it nevertheless is a smart strategy for a newly minted service to start out with.  The same could hold true for late comer Peacock.  Launched recently in July, Peacock is taking a very different strategy by offering a sizable chunk of their content for free.  Once potential subscribers sign up for the service, then they are able to watch a number of shows on the platform at no charge, with the remainder available behind a pay wall.  Again, it’s hard to know if this may entice new subscribers to pay more for the premium content, but giving away so much for free at the get go is a smart strategy to entice people to try the service out first; like giving them a test run to see if they like it.  Once Peacock starts offering more exclusives and puts more of it in the premium paywall column, they could likely benefit from all the free subscribers who have enjoyed their service up to that point and find people more willing to pay up.  The times right now favor experimentation when it comes to making a streaming platform work, and for Apple and Peacock, they are experiments that could lead to good things down the line.

But, from what we have seen over the summer, there is certainly one example that will probably stand as a prime example of how not to launch a streaming service.  Poor Quibi almost seemed doomed from the get go.  The pet project of former Dreamworks Animation founder Jeffrey Katzenberg and his chief investor, former Ebay CEO and California gubernatorial candidate Meg Whitman, Quibi was and is an odd little duckling in this streaming battlefield.  Instead of competing with the big studios over challenging the likes of Netflix, Quibi sought to carve out it’s competition against another internet giant; YouTube.  Quibi’s format centers around short 10 minute long videos that are ideally watched on mobile devices; with some shows uniquely formatted to play in a smart phone’s portrait mode.  Though short in length, each show would be given polished production values, and would be produced by some top tier filmmakers with marquee names attached to them.  No doubt Katzenberg was calling in quite a few favors from some of his many Hollywood friends, and there were some interesting projects announced to help launch the service.  The unfortunate thing is Quibi’s very format model does not justify it’s value of a subscription service.  YouTube offers millions of hours of content to for free to anyone who opens up their web page, supporting itself and it’s community of content creators through ad revenue.  No one would want to pay extra to watch something similar to that format, and that is what is at the heart of Quibi’s failure.  Upon launch, Quibi couldn’t muster 1 million subscribers in it’s first week; a number Disney+ achieved in it’s first hour.  And since then, their subscriber base has dwindled more than 80%, leaving the struggling streamer with the smallest overall viewership of any streamer.  Sure, it was a unique angle to take, making what are essentially bigger budget YouTube videos, but it does not justify the cost of Quibi’s subscription value, and as of right now, Katzenberg’s baby is sadly on life support.  Nobody wants to be a cautionary tale, but Quibi may indeed be what we look back on as the model for exactly the wrong way to build a streaming service.

It will be interesting to see what the competition that this summer has brought to the streaming wars will create for us in the years ahead.  Disney is certainly happy to see their streaming platform become a huge success, especially when all the other divisions of their company are suffering during this pandemic.  The upcoming experiment with Mulan on premium VOD will be yet another monumental movement by Disney+ that may change the film industry even more in the future.  And though HBO Max, Peacock, and Apple TV+ are all growing their viewership much more slowly, their experimentation may pan out in the years ahead as well; perhaps even putting them in contention with the industry leaders.  The only certain thing right now is that Quibi is not very likely to last long in this market.  If they couldn’t make their move in a period of time where streaming was the only game in town, then there is little hope for their future.  They’ll likely end up on the ash heap of other failed industry experiments like MoviePass, with their assets likely sold off to each of their competitors.  And let’s not forget, Netflix and Amazon continue to grow as well with this ever expanding market.  Netflix enjoyed it’s best quarter ever in fact, with all the people waiting on the fence finally diving fully in once the loss of the movie theater business made streaming more essential than ever.  At this point, we are learning what it takes to make the best moves in an industry that is rapidly changing.  When many of these streamers set out to launch themselves over the course of the last year, I’m sure that none of them thought that their value would be so needed so soon.  And as a result, we are seeing what could be the start of the new power base for the future of the industry; especially if the theatrical market fails to recover from this pandemic.  Some are winning and some are losing, but the race to the top is a long game, and it’ll be interesting to see what each streaming services pulls out of their sleeves in the years ahead, hopefully in a more stable world than we live in now.

Within a matter of days, it will have been 5 full months since the silver screens went dark across the United States. The COVID-19 pandemic continues to rage on with only the faintest view of the light at the end of the tunnel emerging, and we still don’t know if and when it will be safe to go back to the movies.  My optimistic outlook on the summer movie schedule for this year sadly didn’t pan out, and for the first time ever, the Summer Movie Season did not happen.  Once the launching point for some of the biggest blockbuster openings of the year, the Summer this year saw not one single theatrical opening.  Sure, the odd independent film did make it to a Drive-In here and there, but those were done at the same time as a day and date Video on Demand release, where the actual money was being made.  It’s a sad reality, but one that is unavoidable.  It’s just not safe or possible right now to cram people into a dark confined room and expect them to return in the same numbers as they have before.  As a result, the entire theatrical industry has had to completely restructure itself just to be able to survive.  The largest chains in America, AMC, Regal, and Cinemark have had to take out massive loans just so they can cover the substantial rental fees that their un-opened theaters require to remain standing.  AMC in fact is verging on the edge of bankruptcy and may even begin subtracting their reach in order to survive into next year.  All the while, the theaters are struggling with the ever increasing threat of streaming and VOD taking their business away for good.  This led to the very contentious showdown between AMC and Universal over the decision to release Trolls World Tour early , in breach of Universal’s long-standing contract with AMC.  This led many to believe that AMC would no longer run any Universal film as retaliation.  But, as we learned this week, the two parties came to a new agreement, and it is one that shockingly may forever affect the theatrical industry forever.

Here’s what you need to know about what this new agreement.  Upon the release of any new film under the Universal umbrella, the movie will play first theatrically in theaters like AMC exclusively for a period of 17 days.  Then at the end, it has the option of offering the same films as a VOD rental, thereby allowing the studio to make money off of audiences who prefer to stay at home much sooner than they have before.  What this does is close the previous window of 75 days (or roughly 2 1/2 months) that existed between theatrical and home video releases; a previously agreed upon deal that allowed theaters to benefit much more from the long tail lingering box office runs that have helped to keep ticket sales strong long after opening weekend.  With AMC and Universal closing that exclusive window down to just 2 1/2 weeks, it means that movie theaters only have that short amount of time to make the most of a movie’s opening box office before they lose to competition from on demand.  Now, the deal also gives AMC a bigger slice of the VOD rental revenue on Universal films as well, but upon looking at the deal as a whole, it’s hard to see where AMC really benefits at all.  Ticket sales alone aren’t what keeps the theater afloat; its the concessions sales that actually brings in the profit.  And with a still raging pandemic making concessions sales a harder sale even if the theaters reopen right away, it almost looks like AMC is the losing party in this, because that window of exclusivity is so much smaller.  But at the same time, AMC no longer had any solid ground to stand on.  The thing that makes this new deal between the two entertainment giants so eye-opening is the fact that it is in complete contradiction to what has been the norm in the theatrical machine of cinema for most of it’s history.

With Universal and AMC’s new distribution deal, we see an unprecedented shift in the dynamics between the theaters, the distributors and the studios.  The thing that has drawn so much attention is that this 17 day window is not standard across the industry; it’s just between Universal and AMC.  Naturally, other studios like Disney, Warner Brothers, and Paramount complained to AMC about them giving this special consideration to their competitor rather than them.  And Regal and Cinemark raised concerns as well, saying that AMC was changing a norm across the industry that is going to hurt their long term futures as well.  Sure the pandemic has led to drastic measures to be taken to allow for movie studios to be able to still make revenue during the closure of theaters across the country, but no one thought that Universal and AMC would shorten it by so much.  As of right now, Regal, Cinemark and many other smaller chains maintain contracts with all the studio distribution departments that enshrine that long-lasting tradition of a wide theatrical window.  With AMC’s supposed capitulation, it puts the pressure on the other chains to reconsider their own contracts, as the other Hollywood studios are demanding shorter windows like Universal has gotten, so that they too can remain competitive.  This has led many to believe that this change in the length of exclusivity for theatrical runs may be part of the new normal that we are likely to see after the pandemic has run it’s course.  And it is a new normal that will forever change what we think of as the theatrical experience.

What will change most is the way that we judge a movie by the revenue that it makes.  Particularly in the last decade or so, box office became the barometer of a movie’s success.  If a movie didn’t open well in the first week, or even in the first couple days, it would be labelled forever as a box office bomb, which for some movies becomes a stain that is hard to wash off.  Sometimes, movies would benefit from long theatrical runs, and become a box office hit steadily over time.  Remember, neither Titanic (1997) and Avatar (2009) opened to record-breaking box office, but they continued to build their audience over successive weeks and eventually became the highest grossing movies of all time.  But, with the exclusive theatrical window shortened, that long tail effect is far less likely to happen.  The movies will still be able to generate profit with the VOD option being made available sooner, but box office numbers will likely plummet after that 17 period.  And at that point, we may have to reconsider what we label as a flop and a hit, because many movies make money on different scales.  Something big like a Marvel movie no doubt has a huge front loaded opening weekend, which helps to cement a reputation for being a box office champion, but there are sleeper hits that quietly become profitable long after they’ve left the silver screen.  With a shorter window, the terms box office hit and box office flop become far more relative.  Do we begin to combine these two revenue generators together, or do we abandon the entire notion of judging a movie by how many tickets it sells?  This is one of the things that is likely going to change dramatically with this new normal that is likely going to take place, and it’s one that puts far more pressure on the theatrical market than it does the studio.

What this also means is a huge reversal of established law that prohibited the studios from having too much influence over the theatrical market.  Here’s a history lesson for you:  the United States Supreme Court made a landmark decision in the Hollywood Antitrust Case of 1948, otherwise known as United States vs. Paramount Pictures, where it was stated that film studios could not own movie theaters, nor hold exclusive rights on which theaters would show their movies.  This decision effectively ended a practice known as block-booking, which is where a studio sells to a theater a collection of films as a unit, to which the theaters had to screen, regardless of the quality of the films themselves.  This benefited the studios, because they then could ensure the profitability of their movies regardless if they were good or not, which itself caused an unfair advantage towards what was known as the Big Five of the time (Paramount, Warner Brothers, 20th Century Fox, MGM, and RKO) all of whom owned the same theaters.  The smaller independent studios like Republic, United Artists, Columbia and yes Universal (the ones who didn’t own theaters) complained that block-booking squeezed out business for them and they took the majors to court for what they saw as a violation of Antitrust Laws.  The Supreme Court ruled in their favor and the theatrical and distribution machine that ensured profitability for the major studios were completely upended.  Theaters now had to run independently, and it was now upon the studios to reassess what kind of movies they would be making for theatrical release.  It was a time of significant upheaval, because the studios no longer force theaters to buy nearly 400 movies in a given year, and it led to many layoffs and closures of theaters across the country.  At the same time, television emerged to fill that gap, and the studio system became effectively a shell of it’s former self.  But out of this emerged new innovations like Widescreen and surround sound, which made going to the movies again a special engagement.  And movie theaters likewise adjusted.  The newly formed independent industry grew, and eventually evolved to create multiplexes across the country, creating more theaters than before.  But, under the circumstances that we are in now, a lot of consideration is being given to reexamining that past decision.

There is no doubt about it; the Paramount Case was a violation of Antitrust Law, which stifled competition in the marketplace, and by breaking up the studios from the theaters, it did open the industry up to more independent voices and renewed competition that would help it grow.  But, in a time when the very existence of movie theaters is at a precarious point of collapsing altogether, some are wondering if studios should once again take a larger role in the theatrical distribution market.  There have been exceptions over time.  Many of the major studios today can hold an interest in publicly traded companies that operate movie theaters, although not with a majority stake.  A small chain like Pacific Theaters, which owns the popular brand Arclight in some major American cities, has investors like Disney as a part of their portfolio.  And studios are allowed to have ownership of independent screens as well.  Disney owns the landmark El Capitan Theater on Hollywood Boulevard here in Los Angeles, and have used it as their home base venue for premieres and special screenings.  More recently, Netflix purchased the nearly 100 year old Egyptian Theater down the street from the El Cap, and have used it for their own screenings, while still maintaining the partnership with American Cinemateque that existed previously with the venue.  But the change that we are seeing with AMC and Universal is an unprecedented quid pro quo that we haven’t seen between theaters and studios since that Paramount Case decision.  What does that mean for the future?  The two parties are not exactly breaking the statute of the law, since AMC is maintaining as an independent body, but by giving so much leeway to Universal, it’s granting so much more power to a studio body to distribute the way it sees fit than we’ve seen in a very, very long time.  Is it going to lead to even further control of the theatrical market by the studios from here out?

One thing to consider is that changes have been made many times to the theatrical experience to suit the times, and they have been funded largely by the studios themselves.  The reason why movie theaters converted all to digital projection 10 years ago was because the studios invested in the technology.  They saw the money that was being made by 3D movies like Avatar, and they wanted to be sure that the widest possible reach of the audience could be maintained, so they helped the theaters update their equipment.  The existence of multiplexes are another example of this; when the blockbuster era emerged, more screens were needed to meet demand.  Now, with theaters closed and in need of cash flow, who else can they turn to than the movie studios for a lifeline?  Federal loans can only help in the short run; a long-term plan is going to be needed to get the movie theaters back to normal.  The question remains, do studios step in temporarily or is it time for industry to revert back to its old ways.  The Paramount decision remains in place, but it has been chiseled back over time, and with our current administration, who knows really how much oversight is in place.  Up until now, I would’ve said that the Paramount Decision ensured a far better environment for all parties; it granted more autonomy for the theaters to operate the way that they saw fit, and that put more pressure on the studios to change the movies that they make.  It was a balance that was not always perfect, but nevertheless allowed for more creative freedom to build business more effectively.  But the times call for immediate reassessment of the flaws in the system.  There’s no doubt that part of why AMC is in such a desperate situation is because of their recklessly unchecked growth.  No doubt they felt the pressure to hand more influence over to Universal.  The question is, what is Universal going to do with it?

One thing that is certain now is that enough has been done to ensure that the major theatrical chains will eventually reopen once this pandemic has run it’s course.  That is good news for people like me who greatly prefer the theatrical experience because after spending months watching movies in the home, I can say that there seriously is no substitute.  But, in the case of Universal and AMC, have we seen too much given away in exchange for these theater chains to survive the pandemic closure.  AMC’s window of profitability is much smaller now, and Universal now is able to ensure it’s financial security at the former’s expense.  Not only that, but the other chains and studios are now put into the situation that they have to reconsider their own contracts in response.  Are we now going to see a complete breakdown of the separation of powers tradition in the industry, and witness exclusive engagements between different studios and chains as a new normal?  It’s hard to believe that only 5 months of closed movie theaters could change so much in the industry overnight.  It remains to be seen if the deal made between AMC and Universal will indeed change cinema as we know it.  The next Universal release won’t even be until next year, as they’ve completely given up on the rest of 2020.  With other studios still holding onto their 2020 releases, do they make similar deals with the theaters to ensure their bottom line?  The thing that I worry about the most is that movie theaters, who were already struggling against the rise of streaming, are going to be forever relegated by this move.  We may likely see a complete reduction of the theatrical market in the years ahead, with the larger chains forced to close many of their under-performing locations forever.  Many other contractions in the past have led to periods of renewal after, and movie theaters have made resounding comebacks over the years.  But, this time is different.  The studios have a new way to make money, and it’s putting the theaters in an ever increasing position to prove their worth.  The pandemic is testing that at this very moment.  We’ll know in time what this will all lead to, but it’s safe to say whatever comes out of this time of turmoil for the movie theater industry is not what we would’ve called just a few months ago anything close to “normal.”