COVID-19 is forcing people, companies and economies to adapt. Many companies have recalibrated their business models to better compete in this new COVID reality. We have yet to see one of America’s great export industries – Hollywood – evolve to better capitalize on the current reality.
Back in October 2019 we wrote that the future of Hollywood is streamed episodic television, not feature films. Feature films however remain a useful tool for studios to generate buzz for their slate of movies and for building brand loyalty with fans. This is especially true of film franchises (think Star Wars, The Avengers), which generate billions of revenue across theatrical releases, streaming services, video games and merchandise sales.
Feature Film Release Dates Have Been Pushed Due to COVID. This Places Disney (tkr: DIS) and AT&T (tkr: T), at A Distinct Disadvantage to Streaming-Only Services Such as Netflix (tkr: NFLX), Amazon (tkr: AMZN) and Apple (tkr: AAPL)
You may have noticed that feature film advertising has been thin this year. We are normally in full summer movie swing by April/May. Not this year. COVID-19 and a dated business model stopped the feature film release schedule dead in its tracks. 2020 was to be the year where Disney and its streaming service – DisneyPlus – would gain on streaming leader Netflix. Instead Disney, Warner Brothers/ AT&T and others have yet to release their biggest films as theaters have yet to open broadly due to COVID.
Summer features typically run in theaters for a few weeks before migrating to the various streaming services. Disney and AT&T for the most part only make their content available on their respective streaming services – DisneyPlus and HBOMax. Therefore, the delay in theatrical releases has a spillover effect and delays the release of new content to the various streaming platforms. Guess who isn’t beholden to the archaic theater chain release “windowing” business model? Netflix, Apple and Amazon – each of whom is better capitalized than Disney and AT&T.
It’s Now or Never
If now isn’t the time to break with tradition then when is? For me the wait-and-see approach makes sense when dealing with decisions such as whether or not to invest in bleeding edge, unproven technology. In these cases it frequently pays to be a “fast follower.” For all we know COVID may thrive for another few months and another equally damaging virus may be waiting in the wings. Our advice to Disney and AT&T would be to move forward, even if it means breaking glass with your theater owner partners. Start punching out your content over your respective streaming platforms. Skip the expensive movie premiers and talk show promotional circuit. Allocate a portion of those savings to online advertising. A failure to adapt may ultimately mean extinction.