The movie business is moving online faster than ever

The trend accelerated by the COVID-19 pandemic is now irreversible, here’s what it all means

More films than ever are produced exclusively for streaming services — and this is just one of the big changes happening in the entertainment market during the last 24 months. (Image: Jonas Leupe, Unsplash)

It’s no secret that the traditional model of film distribution had been repeatedly challenged by Netflix and other digital services, creative studios and consumers themselves long before the COVID-19 pandemic. Changes were coming anyhow. But nobody could have predicted back in 2019 how fast these changes would actually happen and how quickly Hollywood’s way of thinking about movies would have to adapt to a new entertainment landscape on a global scale. Simply put: the driving force behind modern cinema now is not movie theatres or the retail movie market in general (DVD/BD/UHD and digital sales). Not anymore. Streaming is.

This is the main takeaway from the latest Motion Picture Association report (PDF download) which includes total figures for 2021 and a number of interesting remarks. The good news: after the 18-month shock of the pandemic that kept most theatres in the world closed or barely operating, the entertainment industry seems to have largely rebounded. Combined global theatrical and home entertainment revenue clocked in at $99.7 billion in 2021, while that number was $80.8 billion in 2020 and $101 billion in 2019. The bad news, for the traditional movie distribution chain at least: out of that $99.7 billion total, almost 72 billion came from streaming services. This 72% of 2021 revenue was just 46% in 2019 ($58.8 billion), leading many to believe that not only has the balance of power between theatrical and home releases obviously shifted, but it has done so irreversibly.

Netflix has considerably ramped up film production for its own library during the last few years, challenging Hollywood studios in terms of output volume. (Image: Netflix)

We may have a better idea about this balance at the end of 2022 — when Hollywood will have enjoyed the benefit of fully operational movie theatres for a full calendar year — but that will not affect the shift already underway in terms of film production. All streaming services put together — Amazon Prime Video, Apple TV Plus, Disney Plus, HBO Max, Hulu, Netflix, Paramount Plus, Peacock, Roku, Showtime, Starz — released just 93 original films in 2017. That number has almost doubled to 179 in 2021, which is almost 40% of what all traditional Hollywood studios — the “big six”, now “big five” — and indies put together have produced in the same year.

It is Netflix’s output that played the biggest role in this, of course, as the service has been ramping up its movie production considerably since 2018. Netflix means to offer at least one new film every week of a calendar year and it’s on track to do just that in 2022 with over 70 movies already planned. It’s not just Netflix that produces more movies exclusively for the streaming market, though. Amazon Prime Video does too, as does Warner’s HBO Max, as does Apple TV Plus and Hulu. If this trend continues, films produced exclusively for streaming services will soon be just as many as the ones produced for the traditional film distribution chain: movie theatres, digital rentals and sales, optical disc sales and VOD services. What’s more, it will all have happened in just six years, give or take.

Remember those straight-to-video, low-quality movies people used to watch on videotapes in the ‘80s and ‘90s? That model is making a comeback… sort of. (Image: Ron Lach, Pexels)

Regardless of whether that may come to pass or not, the traditional movie business itself will also be adapting, by the look of things. It’s highly likely that it will be returning to a model it used to follow in the ’80s and ’90s, obviously taking into account the role of modern Internet services: the “straight-to-video” approach which will now become the “straight-to-streaming” one. Hollywood will continue to produce movies at a steady pace but it will only be releasing the best ones among them (the blockbusters guaranteed to bring in high ticket sales) to theatres. Films with little chance of great commercial success will be coming straight to Hollywood studios’ streaming services in order to bolster each one’s library — something of a necessity given the arms race going on between Disney, Warner and Paramount for the most popular alternative to Netflix.

The difference, though, between the ‘80s/’90s “straight-to-video” model and the modernized “straight-to-streaming” one is important: movies that got released based on the former back then were considered of lesser quality, to begin with — good enough for a lazy afternoon maybe but not much else — while that may not be the case at all with today’s “straight-to-streaming” movies. Those might be e.g. cinephile productions designed to attract a smaller audience anyway (but of high value in the artistic sense), as well as actual AAA productions that Hollywood studios strategically pick to release on their streaming services in order to boost subscription numbers and keep growth rates steady. This is exactly what Disney chose to do with Turning Red in March, for example, with great success. Others will probably follow.

The entertainment industry still needs wide theatre releases of films in order to sustain its high production costs, but that may not be always the case. (Image: Bence Szemerey, Pexels)

There’s no denying that the entertainment industry as a whole is going through a rough transitional period: on one hand, it’s perfectly clear that streaming services are the future in several important ways. On the other hand, it’s also clear that these services cannot currently support the movie business financially all on their own, so the traditional film distribution model Hollywood has followed for decades is still needed. Yours truly published a story about a year ago titled “We cherish home entertainment, but we do need cinemas” — based around a similar Motion Picture Association report — and that observation holds true in 2022. All the pandemic did was push things forward at an unexpectedly fast pace. Whether the entertainment market will be able to smoothly adapt at the same pace, remains to be seen.


Kostas Farkonas

Veteran reporter with over 30 years of industry experience in various media, focusing on consumer tech, entertainment and digital culture. No, he will not fix your PC (again).

Veteran reporter with over 30 years of industry experience in various media, focusing on consumer tech, entertainment and digital culture. No, he will not fix your PC (again).




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