Author: Allie Adajar, Graphics: Jennie Wang
The BRB Bottomline: Movie theaters are set to make a major comeback as the leading source of entertainment in the movie industry amidst rising streaming service costs.
Mickey Mouse was envisioned for the big silver screen. Now, audiences are opting for movie nights in the comfort of their own homes on their smart TVs. The digital age has seen massive popularity in recent years as more and more streaming platforms become accessible. In the last decade alone, the rapid growth of streaming services has led to a plunge in movie theater attendance. In 2018, 28% of people preferred to view movies in theaters, while only 15% favored streaming. Just two years later in June of 2020, the COVID-19 pandemic led those who primarily desired theaters to sink to a meager 14%, while the quantity of those who would rather stream surged to a whopping 36%.
The exponential growth of streaming services has led to a shift in motion picture consumer behavior, expanding its potential for financial profits in the form of monthly subscriptions. Yet consumers are becoming familiarized with the steep accumulation and expansion of streaming expenses, leaving room for the once magical movie theater experience to regain its prominent and long-lasting legacy of timeless entertainment.
The Film Reel of Movie Watching History
The Pandemic Scares Away From Theaters
Chaos ensued when COVID-19 struck and in-person activities came to a stuttering halt. People began to quarantine, leaving their households significantly less due to fear of infection. Like countless other businesses centered on face-to-face customers, the pandemic devastated the movie industry by forcing instantaneous decline and loss in engagement, with closures spreading like wildfire all over the U.S. in states such as California, Florida, and New York.
As of early 2023, Regal Theaters shut down thirty-nine U.S. theaters amid bankruptcy due to a combination of the notable decline and monthly theater rents rising approximately 30% from 2019 to 2022. Looking at the domestic box office, profits reached approximately $7.5 billion in 2022, marking a 30% reduction from pre-COVID numbers. Cineworld, the parent company of Regal Cinemas, reported losses of $3 billion in 2020 and $708.3 million before tax in 2021, cumulating to a net debt of $4.84 billion.This movement did not leave the Berkeley community unscathed. The Regal UA theater in Berkeley, which was operational for 100 years, was shut down last year as an inclusion in Regal Cinemas’ nationwide downsizing. Students and locals alike expressed disappointment at the closure of this beloved site, highlighting people’s prevailing inclination to in-person experiences.
Image 1 (Berkeleyside): The Regal UA Berkeley Theater, formerly located at 2274 Shattuck Avenue.
The Strategies Behind Streaming Success
With the fall of cinematic theaters inversely came the rise of streaming services such as Netflix, Disney +, and Prime Video, enticing consumers by offering diverse selections at the tips of their fingers. These platforms strategically enter partnerships with prominent movie production companies to gain access to fan favorites. In July of 2021, Netflix formed an exclusive deal with Universal Studios, particularly its animation studios Dreamworks and Illumination. This granted Netflix exclusive streaming rights to newly released animated movies for ten months out of their eighteen-month pay window, establishing Netflix as the sole streaming outlet for accessing these movies during these periods of time.
Moving forward, streaming media now creates original content ranging from movies to TV shows. Over the span of a few days from June 14 to June 20 of 2021, the Disney streaming service’s second original Pixar movie “Luca” garnered 1.573 billion minutes of viewership. Its popularity was not short-lived; “Luca” was the most-watched streaming movie of the year and earned a nomination for Best Animated Feature at the Oscars. This demonstrates the bright potential for fresh content on streaming services to be lucrative and triumphant.
Image 2 (UPI): “Luca” director Enrico Casarosa and producer Andrea Warren, Director photographed at the Oscars nominees luncheon in 2022
The overwhelming success of original substance extends to an international level. Prime Video recently acquired the largest international audiences ever for two original feature films titled “My Fault” and “Medellin”. “My Fault” ranked in the top 10 most-watched titles in over 190 countries. “Medellin” came close behind in over 170 countries. This direct-to-streaming strategy further diversifies the selection of movies available while also luring subscribers with projects that are that cannot be viewed in theaters. Streaming’s affordability, convenience, availability, lack of advertisements, and seemingly endless movie choices attracted swarms of consumers and were an enormous contributor to the slip in theater attendance.
Titans of Streaming Up Their Game
Swelling Subscriptions
Despite undeniable flourishment, streaming platforms have been drastically hiking up subscription prices due to the relentlessly competitive nature of various rivals, resulting in extreme customer dissatisfaction. Across leading services such as Apple TV and Hulu, the average monthly price rose about 23% in November of 2023, enormously surpassing the 3.7% 12-month inflation rate only two months prior.
Furthermore, the ad-free appeal is vanishing as services begin to add commercials as another maneuver to urge subscribers to pay more. Disney+ is charging an extra $3 per month to enjoy entertainment free of ads. This payment plan totals $13.99 a month, twice as much as the standard subscription price of $6.99 monthly at Disney+’s launch in 2019. Companies have distinctly shifted their focus from collecting subscribers to chasing maximum profits.
Image 3 (Variety): A chart outlining streaming platform subscription price increases as of October 2023.
Superior Showtimes
Surviving movie theaters are determined to stay, offering reasonable prices and making innovative decisions to enhance engagement such as technology upgrades, improved seating, and better food and beverage options. The average price for all these add-ons? The average movie ticket price in 2024 is only $10.78, making it clear that movie theaters are determined to take back their losses to streaming. While this is not far off from subscription costs, theaters are making strides to provide high-quality movie-watching experiences.
Traditional digital projectors are being replaced with laser units to improve picture quality. Ordinary seats are getting swapped out for fully reclining lounge seats with heating features. Companies like Marcus Theatres move beyond the typical popcorn and soda and give audiences menus featuring appetizers, entrees, salads, sandwiches, desserts, and more. Others like Cinepolis, a luxury cinema chain, volunteer gourmet food and full waiter service from one’s seat at the push of a button. These overall advancements are successfully enriching the moviegoing experience, alluring audiences back into theaters.
Image 4 (Cinepolis): A featured photo on Cinepolis’s website under Food and Drink Menus.
As providers of at-home entertainment lose their initial charm with continuously rising prices and the unwanted addition of commercials, movie theaters are slowly but surely making a comeback. At the end of the day, no home movie-viewing escapade compares to the magic of theaters and the aroma of buttered popcorn. Movies will now and forever endure on the big screen, as they have always meant to be watched.
Take-Home Points
- The film business was severely damaged by COVID-19 which led to many theater closures, including the Berkeley Regal UA.
- Concurrently, the popularity of streaming services like Netflix and Disney+ skyrocketed due to its original content and wide selection.
- Streaming companies are trying to maximize earnings by increasing subscription costs and introducing advertisements, upsetting users.
- In attempts to enhance the moviegoing experience, movie theaters are improving extras like food, seating, and service to draw business back.
- Even in the face of competition from streaming services, movie theaters aim to give audiences a unique experience that is impossible to duplicate at home.