With the work that we do with Audience Analytics, we see three distinct "waves" of audiences - Wave #1 is the film afficianado who watches preview films, in film festivals etc and considers themselves a cinephile, wave 2 is the audience that shows up in theatres, and wave #3 is the audience that waits for it on streaming platforms.
I'd argue that while the individual ticketing revenue has dropped, the audience size has significantly expanded - that growth in audience isn't exactly all in the US, but global so there are different layers of the infrastructure that is capturing that additional revenue.
While that feels off at first, the three OTT platforms fund 53% of the total production costs these days (more than all the studios put together) and do create sizeable amount of content and jobs.
Like you rightly said, the pandemic has trained us all to stay at home more. Wave 1 and 2 might still continue, but wave 3 is here to stay.
Seeing a theatrical movie on streaming is like seeing an expensive product with its price marked down. Seeing a direct-to-streaming movie is like seeing a product that was always cheap. Even when the film's budget is astronomical.
Also I'll add at least in the UK the exhibition window is now finally standardized as 45 days. That is meaningful it is valuable still to exhibit a film in a cinema it does provide something that just putting it up online that impacts a film's bottom line, of course assuming it's good enough.
I was just at the distributor slate day in BFI IMAX on wednesday with the annual Rentrak numbers. For the UK we are back to 2019 numbers of admissions, and on track to exceed it finally with the last 3 months of the calendar year granted we've had some heavy hitters this summer and will for December. France is exceeding it's pre-covid numbers altogether, but I suppose that has to do with Cinema being a cultural thing Vs pure Entertainment. So depends on the region.
The claim we've stopped going to cinema is like 80 years old as soon as TV came out. Exhibitors are adapting and the communal experience and going to a cinema is as strong as ever with Gen Z contributing a large chunk to admissions.
We are definitely fighting for audiences time however more than ever.
I usually embrace your data driven insights and analyses. But I have to admit that this time I am underwhelmed, to use a decent phrase. It starts with the claim for mono causality ("[The One Thing] Why We Stopped...") which we all know does not exist in a supercomplex socio-economc system like the movie business, and ends with the quite obvious attempt to make arguments and analyses fit the claim. That's not what you have been doing before and hopefully not what you will do in the future. Keep up the good work!
[In 2007, we published an article in the Journal of Marketing, which provided empirical proof that shrinking the release window would pay for studios, because the underlying consumer preferences support it. And yes, we accounted for adaptive consumer expectations. I'm not saying this because "we knew", but simply that things are much more complicated than what is suggested here. "The one thing" argument is inadequate, despite it might its assumed popularity.]
Hey Thorsten. Thanks for sharing your thoughts, and it's always good to hear from someone whose own work (including your JoM paper) has shaped how we understand release windows.
This is a guest post from Daniel Parris, who writes the fantastic Stat Significant. He writes with a different eye than I do, which is why this may have felt out of step with what you normally read on my blog. His essays lean more on perspective and personal view than on the data alone. Both are very valid approaches, and different readers will prefer different ones.
To put it in the language you are craving, what you've detected is a covariate shift. After years of training on my posts, your model received an out-of-distribution sample from a different data-generating process and correctly flagged it. I'd call it a clean natural experiment with a single exogenous change to the author variable, though attributing the entire effect to that one treatment would be a monocausal identification strategy, and I know better than to try that in front of you :p
Dear Stephen, you reply and explanation is much appreciated. (And you kind words also! ;-)
Regarding the substantive issue we are talking about here, I'm fully with you that what Warner did during the pandemic was a kind of natural experiment, and that it would be interesting to learn from it. But as you indicate, the conditions were truly messy (the world was inmidst of a pandemic, with extensive restrictions affecting movie going), so analyzing what happened and what impact it had would be a true challenge. More importantly so, Warner did not "just try" something new, but used the situation to implement what studios wanted to do for quite some time -- to shorten windows as a consequence of what they saw as a long-term shift in consumer preferences, something they could not do before without risking to go to war against movie theaters. So in economic terms, the whole thing was highly endogenous.
But my main concern is indeed the essayist, highly speculative nature of the work you have linked here. Though I from time to time like to read such pieces, what I am not a big fan of is when they use data to offer evidence for their claims -- or "pseudo-evidence," as the data does not really support the claim, but the authors make it look like that (see our discussion above). When you, as the distinguished thoughtful data analyst, recommended this essay, I initially had the same expectations that I have when reading your work, and thus I ended up being somewhat confused. It would certainly have helped me if you would have pointed naive readers like me at the somewhat speculative nature of Daniel's post. Maybe next time! ;-)
Can't wait for you next analysis -- keep up the good work!
I see where you're coming from and appreciate the feedback. Thank you for taking the time to share your thoughts (and for doing so kindly), as these conversations help the community.
The parenting factor was a huge factor with my family. Insofar, the "couch discount" was and still is a significant savings for the tickets alone, but the price of concessions also contribute to this dilemma. Theaters need to fess up about this and do their part to bring us back to the silver screen.
YEAH!!! If, like me, you still prefer seeing movies in theaters—even when surrounded by legions of tweens scrolling TikTok—take comfort in this: Hollywood still has a financial incentive to preserve the theatrical experience.
"We find that films originally released in theaters consistently generate more engagement across all viewership periods—throughout their theatrical runs, paid digital releases, and eventual availability on subscription platforms—than movies released exclusively on streaming. This suggests that theatrical exhibition still serves as a signal of quality, giving audiences a reason to seek out the film later."
But everyone knows studios use quality to decide which films go to theaters or streaming. When the movies are good, the studios will choose to show them in theaters, so maybe movies that show in theaters can "consistently generate more engagement" because quality is better?
With the work that we do with Audience Analytics, we see three distinct "waves" of audiences - Wave #1 is the film afficianado who watches preview films, in film festivals etc and considers themselves a cinephile, wave 2 is the audience that shows up in theatres, and wave #3 is the audience that waits for it on streaming platforms.
I'd argue that while the individual ticketing revenue has dropped, the audience size has significantly expanded - that growth in audience isn't exactly all in the US, but global so there are different layers of the infrastructure that is capturing that additional revenue.
While that feels off at first, the three OTT platforms fund 53% of the total production costs these days (more than all the studios put together) and do create sizeable amount of content and jobs.
Like you rightly said, the pandemic has trained us all to stay at home more. Wave 1 and 2 might still continue, but wave 3 is here to stay.
Seeing a theatrical movie on streaming is like seeing an expensive product with its price marked down. Seeing a direct-to-streaming movie is like seeing a product that was always cheap. Even when the film's budget is astronomical.
Also I'll add at least in the UK the exhibition window is now finally standardized as 45 days. That is meaningful it is valuable still to exhibit a film in a cinema it does provide something that just putting it up online that impacts a film's bottom line, of course assuming it's good enough.
I was just at the distributor slate day in BFI IMAX on wednesday with the annual Rentrak numbers. For the UK we are back to 2019 numbers of admissions, and on track to exceed it finally with the last 3 months of the calendar year granted we've had some heavy hitters this summer and will for December. France is exceeding it's pre-covid numbers altogether, but I suppose that has to do with Cinema being a cultural thing Vs pure Entertainment. So depends on the region.
The claim we've stopped going to cinema is like 80 years old as soon as TV came out. Exhibitors are adapting and the communal experience and going to a cinema is as strong as ever with Gen Z contributing a large chunk to admissions.
We are definitely fighting for audiences time however more than ever.
I usually embrace your data driven insights and analyses. But I have to admit that this time I am underwhelmed, to use a decent phrase. It starts with the claim for mono causality ("[The One Thing] Why We Stopped...") which we all know does not exist in a supercomplex socio-economc system like the movie business, and ends with the quite obvious attempt to make arguments and analyses fit the claim. That's not what you have been doing before and hopefully not what you will do in the future. Keep up the good work!
[In 2007, we published an article in the Journal of Marketing, which provided empirical proof that shrinking the release window would pay for studios, because the underlying consumer preferences support it. And yes, we accounted for adaptive consumer expectations. I'm not saying this because "we knew", but simply that things are much more complicated than what is suggested here. "The one thing" argument is inadequate, despite it might its assumed popularity.]
Hey Thorsten. Thanks for sharing your thoughts, and it's always good to hear from someone whose own work (including your JoM paper) has shaped how we understand release windows.
This is a guest post from Daniel Parris, who writes the fantastic Stat Significant. He writes with a different eye than I do, which is why this may have felt out of step with what you normally read on my blog. His essays lean more on perspective and personal view than on the data alone. Both are very valid approaches, and different readers will prefer different ones.
To put it in the language you are craving, what you've detected is a covariate shift. After years of training on my posts, your model received an out-of-distribution sample from a different data-generating process and correctly flagged it. I'd call it a clean natural experiment with a single exogenous change to the author variable, though attributing the entire effect to that one treatment would be a monocausal identification strategy, and I know better than to try that in front of you :p
Dear Stephen, you reply and explanation is much appreciated. (And you kind words also! ;-)
Regarding the substantive issue we are talking about here, I'm fully with you that what Warner did during the pandemic was a kind of natural experiment, and that it would be interesting to learn from it. But as you indicate, the conditions were truly messy (the world was inmidst of a pandemic, with extensive restrictions affecting movie going), so analyzing what happened and what impact it had would be a true challenge. More importantly so, Warner did not "just try" something new, but used the situation to implement what studios wanted to do for quite some time -- to shorten windows as a consequence of what they saw as a long-term shift in consumer preferences, something they could not do before without risking to go to war against movie theaters. So in economic terms, the whole thing was highly endogenous.
But my main concern is indeed the essayist, highly speculative nature of the work you have linked here. Though I from time to time like to read such pieces, what I am not a big fan of is when they use data to offer evidence for their claims -- or "pseudo-evidence," as the data does not really support the claim, but the authors make it look like that (see our discussion above). When you, as the distinguished thoughtful data analyst, recommended this essay, I initially had the same expectations that I have when reading your work, and thus I ended up being somewhat confused. It would certainly have helped me if you would have pointed naive readers like me at the somewhat speculative nature of Daniel's post. Maybe next time! ;-)
Can't wait for you next analysis -- keep up the good work!
I see where you're coming from and appreciate the feedback. Thank you for taking the time to share your thoughts (and for doing so kindly), as these conversations help the community.
Luckily, with declining birthrates could-be parents could be set to take theatrical attendance to the next level.
The parenting factor was a huge factor with my family. Insofar, the "couch discount" was and still is a significant savings for the tickets alone, but the price of concessions also contribute to this dilemma. Theaters need to fess up about this and do their part to bring us back to the silver screen.
YEAH!!! If, like me, you still prefer seeing movies in theaters—even when surrounded by legions of tweens scrolling TikTok—take comfort in this: Hollywood still has a financial incentive to preserve the theatrical experience.
"We find that films originally released in theaters consistently generate more engagement across all viewership periods—throughout their theatrical runs, paid digital releases, and eventual availability on subscription platforms—than movies released exclusively on streaming. This suggests that theatrical exhibition still serves as a signal of quality, giving audiences a reason to seek out the film later."
But everyone knows studios use quality to decide which films go to theaters or streaming. When the movies are good, the studios will choose to show them in theaters, so maybe movies that show in theaters can "consistently generate more engagement" because quality is better?