top of page
  • Dan Goodley - Publicis Media Exchange

Cinema and Premium Video on Demand: A lifelong marriage, or a necessary but temporary solution?

Updated: Jun 5, 2022

As the pandemic continues to prevent consumers from returning to cinemas en masse, particularly in global markets, the volume of films that have been released directly to rental and streaming services has steadily increased. From Premium Access and limited streaming windows, to bypassing theatrical release entirely, studios have employed a range of strategies to ensure their content is seen.


Having highlighted PVOD’s central role in cinema’s short-term future at the beginning of the pandemic, we revisit the topic one year on, both to provide an update of the current state of play, as well as the potential implications advertisers may experience in the mid-to-long term.


THERE’S MORE THAN ONE WAY TO CRACK AN EGG

The initial response from studios to worldwide cinema closures was two-pronged. Upcoming blockbusters had their release dates pushed back, while films that had had their theatrical runs cut short were fast-tracked to pay-per-view services, such as iTunes. However, as lockdown restrictions extended from weeks to months, studios pivoted to using their existing Subscription Video on Demand services to distribute previously delayed content to consumers. In fact ,the appeal of having a film studio and streaming service under the one umbrella was such that it led to Amazon recently purchasing Metro-Goldwyn-Mayer, which will further boost Amazon Prime’s content library.


After the relatively unsuccessful release of Tenet (the film grossed $364m globally, falling well below the film’s supposed break-even point of $450m), Warner Bros. bit the bullet, announcing that their entire 2021 movie slate would be released simultaneously in theatres and on HBO Max in the United States at no additional charge to subscribers, with films available on the platform for 30 days.


In the case of Disney, the distribution strategy has varied from film to film. In the earlier stages of the pandemic, titles such as Artemis Fowl and Lady And The Tramp, were made available on Disney’s own streaming service Disney+, at no additional charge to subscribers. Higher budget films, such as Mulan, were released as part of Disney+ Premier Access, with the film becoming permanently available to subscribers for a one-off payment of A$35. So far in 2021, Disney has adopted a simultaneous release strategy, with Raya and the Last Dragon, as well as upcoming films like Black Widow, opening in both theatres and Premier Access on the same day.


There are several advantages to such distribution methods. Not only do studios avoid distribution fees when films go straight to streaming, but the strategy also facilitates an increase in subscribers. Disney reported a 68% increase in Disney+ downloads ahead of Mulan’s release. Despite these advantages, few films have reached the financial heights they would have reached in a COVID free environment, meaning distribution methods that rely heavily on streaming are unlikely to be viable in the long term.


AN APPETITE FOR THE CINEMA EXPERIENCE REMAINS

Despite studios pivoting to alternate distribution methods, there are several indicators that the consumption of film will be returning to the more traditional method sooner rather than later. Universal Studios has elected to delay the release of the upcoming James Bond film, No Time to Die, several times to ensure the film benefits from a global theatrical release. Similarly, Disney have signaled their intent to return to the big screen, recently releasing a sizzle-reel highlighting both past and future Marvel projects, which celebrates the cinema experience and ends with the tag line “See you at the movies”. As a further vote of confidence in cinema, Disney also announced that upcoming films Free Guy and Shang-Chi and the Legend of the Ten Rings will both receive 45 days of theatrical exclusivity before heading to Disney+.


Safeguards are also being implemented to ensure cinema audiences bounce back quickly, particularly in global markets hit harder by the pandemic. In both the US and the UK, global cinema chain Cineworld has announced a multiyear agreement with Warner Bros. in which cinemas will receive a 31-day exclusivity window for new films. Given these markets typically set the tone for the rest of the world, it is likely that a similar cinema-first strategy will be adopted in Australia sooner rather than later.


Recent data suggests audiences are equally keen to get out of the house and back in front of the silver screen, restrictions permitting. In April, Val Morgan reported that cinema admissions reached a post-lockdown record of 4.15 million in the Easter school holidays, a 37% increase compared to the summer school holidays.


Furthermore, Raya and the Last Dragon grossed almost $8m at the Australian box office, despite also being available to stream at the same time on Disney+, making it the sixth-highest grossing film of 2021. This indicates that even when presented with a choice between attending the cinema or streaming at home, audiences are ready and willing to prioritise the experience of attending the cinemas.


IMPLICATIONS FOR ADVERTISERS

While I do expect PVOD’s dominance in the cinema space to be temporary, as long as pandemic-related restrictions prevent global audiences from returning to theatres in droves, streaming remains an alternative means of consumption. However, that doesn’t mean that cinema doesn’t provide Australian advertisers with several advantages to consider, even in the short-term.


For starters, one of the biggest differences between PVOD and traditional cinema is the lack of advertising in the former. This means that for brand association to be achieved with a certain film, there isn’t really an alternative other than traditional cinema advertising. Furthermore, due to the lower cost of entry made possible by a deflationary market, advertisers who may not previously have had the opportunity to enter the cinema space have done so. Diversification is already evident in SMI data, with categories such as recruitment, government, produce and gambling all seeing an uptick in cinema spend compared to the previous two years. These advertisers can now access an experience-driven audience, in an environment tailored for higher engagement and brand recognition.



30 views0 comments
bottom of page