The decline of the theatrical movie experience is caused not by streaming services like Netflix, but by the poor quality of the in-theater experience itself. Consumers will still go to theaters for compelling films, but the industry's failure to maintain a high-quality environment is the root cause.
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Judd Apatow posits the disappearance of culture-defining comedies is a business model problem. Previously, a film like 'Anchorman' could double its box office with DVD sales, ensuring profitability. When streaming killed that secondary revenue stream, mid-budget comedies became a much riskier investment for studios.
Hollywood insider Adam Faze argues that for the Warner Bros. acquisition to succeed, Netflix must continue theatrical releases. It's not just about box office revenue, but a crucial tool for attracting and retaining elite creative talent who value the prestige of cinema.
Netflix's acquisition of Warner Bros., including plans to continue theatrical releases and maintain HBO Max, shows that pure-play streaming is evolving. To dominate, streaming giants must now integrate and preserve traditional studio operations and business models rather than simply aiming to disrupt them.
Hollywood's current crisis is self-inflicted, stemming from a decades-long failure to adapt its business models and economics. Instead of innovating to compete with tech-driven services like Netflix, the industry persisted with inefficient structures and is now blaming disruptors for inevitable consumer-driven changes.
The cynical take on the Netflix-WB deal is that Netflix's true goal is to eliminate movie theaters as a competitor for consumer leisure time. By pulling all WB films from theatrical release, it can strengthen its at-home streaming dominance and capture a larger share of audience attention.
While the general movie theater industry struggles, IMAX is achieving record sales. This demonstrates that in a shrinking or commoditized market, the most viable growth strategy is to offer a premium, differentiated experience that consumers cannot replicate at home.
As major studios pull back from theatrical releases, a new opportunity emerges for cinemas. They can pivot from showing new blockbusters to becoming "revival houses" that program classic, niche, and cult films. This caters to audiences seeking curated, communal experiences beyond at-home streaming, as seen with the rise of anime screenings.
AR Rahman argues that the standard rectangular movie screen is an outdated model. To compete with high-quality home entertainment, theaters must offer experiences that cannot be replicated, such as the massive, multi-sensory, immersive environments pioneered by venues like the Las Vegas Sphere.
Instead of a high-cost, per-visit model, theaters could offer an "all-you-can-eat" monthly subscription. This would remove the friction of buying individual tickets and concessions, encouraging frequent attendance and turning movie-going from an expensive event into a regular habit.
The entertainment industry's resentment towards Netflix is misplaced. Swisher argues that studios are in decline because they failed to modernize, lean into technology, and listen to consumers. Netflix simply capitalized on the industry's inefficient and outdated business models by building a product people wanted.
