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Claus Mueller


Claus Mueller is a Film Festival Ambassador to filmfestivals.com

He is based in New York where he covers the festival scene.


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Farewell to Movie Theaters?

The impact of streaming has been discussed in most professional meetings long before the onset of the covid-19 pandemic and has been an essential topic.  At the 2020 Berlin Film Festival and Market debates on distribution and funding were a key issue. However, the impact of the ongoing pandemic on the viewing habits of the audience is still rarely reviewed. The confluence of several factors has created a significant and growing rupture in traditional film consumption. Rapid expansion of large streaming services like Netflix, Amazon Prime, Hulu was ongoing prior to the pandemic, and continues. New services such as Disney+ and HBO Max have also entered this space, as well as individualized services set up by traditional distributors that focus on demanding productions enabled by cloud computing technologies.  This has resulted in a tremendous growth in programs now offered to the public, exceeding   tens of thousands of films and more than 500 series from all corners of the world.  A parallel but equally important factor is the re-orientation of leisure activities towards the home, forced by the pandemic but also shaped by demographic shifts to small or one-person family units. Staying at home as mandated by official rules and social mores has radically changed the use of visual media as reflected in the significant growth of streaming service subscriptions and VOD purchases.  During the first quarter of 2020 Netflix added 2.3 million new subscribers in North America and the overall hours streamed increased 27% through May 11, expanding its established market lead. This is also reflected in the significant growth of consumers buying large smart televisions with superb image resolution, sound, and preloaded streaming services.  A third factor is the resulting shift in viewing habits as initially prompted by the pandemic but also influenced by the long-term decline of going to theaters to watch films. The industry responded to that shrinking of the box office by heavily investing in upgrading   screening facilities, increasing the ticket charges and boosting film marketing budgets. Another factor playing out which is rarely mentioned in industry discussions is the consequence of the current economic recession for the potential customers of movie houses. The crash is already close in character to the great depression of the 30’s. We are seeing high unemployment rates that continue to grow, particularly among those in the lower and middle segments of the labor market.  Many have lost their jobs and health insurance, and their unemployment benefits are likely to be curtailed in the near future. Their disposable income for leisure activities is now much.

The notion promoted by the theatrical film industry of a return to the “normal” state enjoyed in past years appears to be as illusionary, as is the idea that the pandemic will fade away. Over twenty states have reported a spike in infections just this month. At the same time, the three largest theater chains have reported multibillion-dollar deficits and are close to bankruptcy.  Some joke that Netflix could easily acquire the discounted  AMC chain but having bought the New York Paris  and the  Los Angeles Egyptian theatres to screen its  productions during the award season Netflix would not want to dilute the value of its  shares through an AMC ownership.  Netflix shares are currently ranked as the highest priced media shares  and have a must buy recommendation by stock analysts.  The value and success of streaming services aside, the shift in viewing habits is more important in the discussion of the future of theatrical distribution. Variety reports that a recent mid-May study by Performance Research of about 1000 people reveals that given the choice between viewing of a  first-run feature at home or in theater, 70% of the respondents selected their home, 17% are not sure and  only 13%  would go to the theater. An equally startling result comes from a Center for the Digital Future survey.  Whereas catching up on Television/movies at home is ranked second highest of the 15 most enjoyed activities during the pandemic, going to the movies ranks second to last of the 15 activities most missed. Home viewing, be it through streaming services or video on demand, has taken on an important role in the everyday life of audiences. This is reinforced by the new trend among distributors and studios to embrace digital platforms because they can also provide a higher return than theaters.  Consideration of the virtual cinema as an online alternative to theaters is mandatory now.  Equally important, if not more so, is the resistance of the audience to be exposed to the threat of a real or imagined virus. The hard truth is that a film theater can serve well as a pandemic incubator. Exacerbating this issue is the fact that about one third of the theater going audience is aged fifty years or more and are therefore more anxious about getting infected. The large theater  chains may try to provide a secure setting by  requiring masks, providing more space to the  ticket holder,  ensuring a germ-free clean environment, and using only employees recently tested as virus free, but they cannot guarantee that all visitors will use masks even if mandated by local regulations. Popcorn and other concessions are an important source of income for theaters, without which most would not turn a profit. Unfortunately, theater goers cannot wear masks at all times whilst consuming those goods which theaters so desperately want to sell. They cannot accommodate large audiences unless local regulations are relaxed, which seems unlikely given the increase of infections in cities which have done so and the fear of a second wave. If or when regulations are relaxed there is no reason to assume people will return to theaters as they once did give justifiable pandemic fears and their home-based alternatives. 

 

Claus Mueller  filmexchange@gmail.com

 

 

About Claus Mueller

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