The Economics of Film: Changing Dynamics and the COVID-19 World
In March 2020, the COVID-19 pandemic disrupted the feature film industry at every level, bringing content production to a standstill and cancelling cinema premieres. Worldwide, cinemas were shuttered and in turn, film goers forced to stay at home, eyeing old and new televisual content to fill the entertainment void.
In the intervening time, the major studios, led by Universal, began to explore ways of reaching their audiences through direct and digital alternatives. Without out-of-home entertainment (except drive-in cinemas), the shuttered cinemas closed off a significant distribution and income avenue for the studios. Moreover, the major studios with their newly created digital streaming platforms – Peacock, Disney+ and Warner’s HBO Max – were poised and equipped to offer an alternative. And, they did.
This article considers three critical areas for the film industry, for discussion: (1) the current economics of film production and the significance of cinema theatre contribution within the film supply chain; (2) historical worldwide box office returns generated through the cinema distribution window and how that compares to the potential income from premium video-on-demand (“PVoD”) platforms; and (3) the level of marketing spend underpinning theatrical releases and the impact under a direct-to-consumer model.
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