When VHS was introduced in 1977 and DVDs burst onto the scene 20 years later, consumers were presented with the first viable alternatives to a movie theater. Though seen as revolutionary then, watching movies at home and bypassing theaters continues to grow. Streaming services have been available since 2005 when YouTube burst on the scene, and its pickup continues to increase sharply, particularly in the past few years. Over the last decade, movie theater attendance has declined sharply, and the list of streaming services seemingly grows every day.  

The film industry is undergoing radical change. In 2018, 28% of consumers preferred to watch a movie for the first time in a movie theater, compared to only 15% who favored streaming. However, COVID-19 devastated theaters due to closures and the apprehension people felt about returning to theaters after the lockdown. Case in point: In 2020, some theaters lost billions after closing their doors due to the pandemic. By June 2020, the percentage of adults who strongly preferred seeing a movie in a theater fell to 14%, with 36% choosing to stream movies instead. 

For better or worse, streaming has significantly impacted the film industry in terms of how films are produced and distributed and how audiences consume them.

How Streaming has Impacted Production and Distribution

Streaming services facilitate the production and distribution of more diverse and niche content. In addition, because they are not as limited by the traditional Hollywood studio system, streaming services can take more chances on relatively unknown filmmakers and projects, which might have a more challenging time securing funding or distribution through conventional channels. A broader range of voices and perspectives are now represented in film and television. It has made it easier for underrepresented groups to find content that echoes their experiences.

In our post, The Evolution of Storytelling and its Impact on Rights Management, we discuss how the pandemic accelerated changes that have been coming for years, such as the collapse of the theatrical window and moving to video-on-demand, into a relatively short period of time. Now every major player has a video-on-demand platform, whether it’s a sell-through platform like iTunes, where users can purchase something to watch, a subscription-based platform like Netflix or Amazon Prime, or a combination of both.

With more and more people choosing to view films and television shows online, the number of people going to movie theaters has dropped, leading to a decline in box office sales. Television networks are also losing audience numbers as more consumers get entertainment via streaming services. However, although streaming services have led to a drop in traditional revenue, they have also introduced new revenue sources, such as subscription fees and advertising tailored directly to viewers’ interests.

How Streaming has Impacted the Audience

Streaming services like Netflix, Amazon Prime, and Hulu have transformed media consumption. Instead of going to a physical location to rent or purchase a movie or television show, consumers can now access a vast library of content online with just a few clicks. As a result, practices like binge-watching have become common. 

One of the drivers of this change could be price: The average cost of a movie ticket at the theater is $10.45, compared to $6.99 for a basic monthly Netflix subscription. Thus, some view the growing preference for streaming services as a positive - movies are becoming more widely available and accessible for everyone.

However, streaming has also significantly impacted viewer experience and entertainment culture. Since films and television shows can be watched online, the traditional experience of traveling to a theater, purchasing a ticket, and watching a movie on a big screen is becoming less common, lessening the sense of community that watching a film with others provides.

How Streaming Might Impact the Future of the Film Industry

Streaming services have become movie-making powerhouses – Netflix alone has produced over 6,000 original titles, including television series, documentaries, movies, stand-up specials, and interactive specials. According to Netflix, should the company continue this trajectory, it will likely hit the following milestones in the next few years:

• July 2023: 60% Netflix originals vs. licensed content 
• December 2024: 75% Netflix originals vs. licensed content
• May 2027: 100% Netflix originals vs. licensed content

Streaming services are now challenging traditional studios as prolific producers of films and television shows. Should streaming services continue investing in original content production, this could lead to an even greater diversity of voices and perspectives represented in the entertainment industry. As these services grow in popularity, their impact on the film industry will continue to evolve, requiring traditional distribution channels to adapt and find ways to coexist.

The Evolution of Film & TV Rights

Entertainment rights management has become increasingly fraught with complexity in tracking various rights and royalties. Our ebook, Complex Film & TV Rights Management: History, Current Tracking, and 21st Century Solutions, explores this evolution and looks at what a modern rights management platform should give you and how to shop for one. Dive in and download the ebook!