Cinema vs Streaming - Who wins?

My earliest memory of cinema was 1995 in London whereby my dad was bringing me to see the Mighty Morphin Power Rangers film – the one with goo that brainwashed parents.?

We were in the front section, facing the close-up, over the top explosions and flips which I found to be a mesmeric, tour-de-force causing me to eventually imitate a power ranger and sprain my neck doing a cartwheel off my parents’ bed.?

My formative years were spent in a pre-mobile phone environment. The cinema ads received my full attention as a kid, from the in-house Carton poker branding that would cause my brother to plug his ears in terror, to seeing the woman in a sleeping bag in the cinema waiting for the film to start– the ads were part of the main show.

And 25+ years after my date with a neck brace, they are still in the attention driving seat with only 8% ad avoidance (Source : WARC studies of % of Ad avoidance by medium).

People flock to the cinema to forget about life for a little while – it’s escapism at its finest whether you go to laugh, cry or furrow your brow.

It’s no secret that most of the ad industry was reeling from Covid constraints but Cinema was hit particularly hard seeing admissions / revenue drop off a cliff overnight.?

But the resilience of cinema is a sight to behold with admissions growing YOY since 2020 and we are very close to pre-covid levels in the Irish market. In addition to this, Covid saw an emerging trend of distributors going direct to streaming devices; Roadhouse ft. Jake Gyllenhaal / Conor McGregor went direct to Prime Video and has smashed viewership targets.?

Amazon reportedly gave Gyllenhaal and the studio a choice between a $60m production budget and a theatrical release or an $85m budget and have the film go straight to streaming – they decided on the latter and there’s now a sequel in the works.

Outside looking in, one could be forgiven for thinking this cinema resurrection will go unabated but Covid gave rise to a new challenger.

Streaming services such as Amazon Prime, Netflix and Disney+ are greenlighting new series and films to reduce customer churn and this can be seen as a direct competitor to Cinema. With writer strikes and a limit on how many subscriptions a person or family are willing to have, we may see a merging of content platforms.?

With streaming services posing a threat to cinema, they’re facing hurdles to advertise on cinema as distributors have in the past gone straight to TV. This upsets the handshake of staying in your lane and when admissions wane on the passion releases for the franchise safe bets, cinema may start to lose ground. Studios will also move away from the more niche screenplays for a safer bet to guarantee the return.?

This means that the prevailing winds will push distributors in one of two directions; sell to a wider audience in the OTT services over a longer period or if their film has enough appeal, it will bring in the cinema paying audience.

What is left is a zero-sum game. The entertainment industry won’t grow to the point where consumers spend will satisfy all market entrants' balance sheets. The OTT’s are turning to ad-funded models to appeal to different audience segments.

As David Paymer said in Payback ‘Your piece of the pie just got smaller’.?

Who will be in a position to get a second piece?

The content space is seeing new entrants emerge – all laying down their mark against the king in Cinema – the question remains who will merge, who will go it alone and who will be left standing once the dust has settled.?