Rethinking the Role of Movies in New Hollywood
New Hollywood and Old Hollywood are rethinking the value of movies shown in theaters. On the one hand, the film industry is enduring a difficult time. Worldwide movie ticket sales in 2024 are projected at $31.5 billion, which is lower than the $33.4 billion forecast for 2023 and 25% below the pre-pandemic peak of $42.3 billion in 2019. Total ticket sales have declined noticeably from 2000 to 2024. But in one important way, theatrical releases of movies are becoming more valuable: by stoking demand for their eventual release on streaming platforms.
As The New York Times reports, the value of theatrical releases as a driver for streaming success is becoming increasingly clear in the entertainment industry. For example, although Amazon’s Red One earned a modest $80 million in domestic box office receipts, Amazon said that the theatrical campaign amplified the movie’s streaming performance, making it Prime Video’s most-watched debut and achieving 50 million viewers within its first four days.
In addition, Paramount said that the theatrical release of A Quiet Place: Day One sparked a 207% rise in interest for earlier entries in the Quiet Place franchise that were streaming on the Paramount+ streaming service. Streaming is also giving poorly reviewed movies a second chance with audiences unwilling to spend money on a flop (Joker: Folie à Deux, trashed by critics and a financial flop in theaters, is a hit on MAX.)
All this is good news for Amazon and Paramount because streaming success translates to revenue for their ad-supported tiers.
I wrote about this phenomenon a few years ago as the lingering effects of the Covid-19 pandemic forced studios to figure out how to distribute movies online and in theaters amid uncertainty over when people would return to movie theaters and how often they would attend. Some studios sold movies originally intended for theaters directly to streaming services. Others experimented with simultaneously releasing films in movie theaters and streaming services, known as day-and-date releases.
But studios that gambled on exhibiting movies in theaters discovered that sometimes they could have it both ways: enjoy a hit in the theaters followed by streaming success. For example, in 2022, The Batman earned $750 million globally before Warner Brothers premiered the film the HBO Max streaming service. The Batman then enjoyed a first-week viewership of an estimated 4.1 million households (per Samba TV) — the second best first-week for a theatrical release on HBO Max. One of the biggest movie success stories of 2022 (or any year), Top Gun: Maverick, took seven months to arrive on its studio’s streamer (Paramount+), which didn’t stop it from immediately becoming the service’s №1 offering. Black Panther: Wakanda Forever banked $842 million globally during an 82-day run in theaters — and then became the most-watched Marvel premiere on Disney+ based on hours streamed within the first five days.
Now the tail is wagging the dog. Studios see theatrical releases as a means to a streaming end. They are figuring out how to manage this interplay with effective marketing. For instance, when Kingdom of the Planet of the Apes hit theaters in May, Disney-owned Hulu offered subscribers an “exclusive look” at the film. This movie built anticipation for the theatrical release and also encouraged viewers to explore the eight other Planet of the Apes films available in Hulu’s library. When Kingdom of the Planet of the Apes screened in theaters, the film’s visibility then built anticipation for its release on streaming. Talk about creating a virtuous circle.
The winner: Old Hollywood/New Hollywood hybrids like Disney, Paramount, and WarnerBros. Discovery that already possess film distribution and marketing know-how. And credit must be given to Warner Bros. Discovery CEO David Zaslav. When the WarnerBros. Discovery merger was announced in 2022, Zaslav articulated a blueprint for how New and Old Hollywood are operating now. Zaslav said, “We are not trying to win the direct-to-consumer spending war.” He noted that company would resist the trend of taking movies directly to streaming amid a pandemic-era decline in moviegoing. Instead, he actually increased the number of theatrical releases for the company’s movies.
He reasoned that movies in theaters would create buzz for their eventual streaming release while making box office revenues at the same time. “There’s an ecosystem of economic return when you open something in the theaters,” he said during an analyst conference in November 2022. For instance, the WarnerBros. movie Elvis was a smash in theaters before going to HBO Max, where it also proved to be popular.
On the other hand, Netflix faces a challenge: the New Hollywood leader clings to a streaming-first model, mostly eschewing movie theaters.
Will Netflix rethink its strategy and cozy up to movie theaters?
