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US Entertainment Industry Trends

Trends in the United States entertainment industry include (a) the dominance of television shows and movies over other entertainment forms, (b) consumers’ use of multiple subscriptions to customize their entertainment experience, (c) the reaggregation of entertainment services, (d) the convergence of telecommunication and entertainment content providers, and (e) the emergence of new and immersive entertainment media.

1: DOMINANCE OF TELEVISION SHOWS AND MOVIES OVER OTHER ENTERTAINMENT FORMS

  • Consumers in the United States are preferring television shows and movies over music, video games, and other entertainment forms. The biggest portion of the hours Americans spent on entertainment in 2018 was spent watching television shows and movies. While 27% of these hours were spent watching television shows and movies, only 19% were spent listening to music, and only 16% were spent playing video games.
  • The rest of the hours were spent on other activities such as social networking and reading.
  • Even though live television, digitally-recorded video, and pay television on-demand content accounted for almost 50% of the hours spent watching television shows and movies, subscription video on-demand (SVOD) providers such as Netflix, Amazon Prime, and Hulu are gaining traction. According to Kathi Chandler-Payatt, an analyst for the media entertainment industry at NPD, “while video content topped Americans’ entertainment choices last year, their viewing continued to shift toward subscription video and other digital forms of viewing.”
  • In 2018, over 50% of consumers in the United States streamed video content through subscription services. Moreover, 22% of viewing hours were accounted for by SVOD providers.
  • The preference for watching television and movies is being driven by the proliferation of digital options for viewing video content.

2: CONSUMERS’ USE OF MULTIPLE SUBSCRIPTIONS TO CUSTOMIZE THEIR ENTERTAINMENT EXPERIENCE

  • Consumers in the United States are carefully selecting which streaming video, television, gaming, and music services to subscribe to. It is no longer uncommon for consumers to subscribe to multiple entertainment services.
  • Of consumers in the United States in 2018, 69% had streaming video service subscriptions, 65% had pay television subscriptions, 41% had streaming music service subscriptions, and 30% had gaming subscriptions.
  • Forty-three percent of households in the United States have subscriptions to both streaming video and pay television services.
  • On average, consumers in the United States subscribe to three paid services for streaming video. Consumers willingly pay for these services mostly to access original video content (57%) and avoid ads (44%).
  • Popular entertainment subscription services include Netflix, Hulu, Amazon Prime Video for television and films, Spotify and Apple Music for music, and PlayStation Now for gaming.
  • This trend of subscribing to multiple services is being driven by the need of consumers to take charge of their entertainment experience and to tailor the entertainment experience to their own preferences.

3: REAGGREGATION OF ENTERTAINMENT SERVICES

  • It should not be overlooked, however, that more and more consumers are finding the entertainment service selection process frustrating. The growth in the number of entertainment services available has made the process more complex. As a result, signs of reaggregation have been observed in the country’s entertainment industry.
  • For example, Apple is on track to launch its streaming service Apple TV+, which will allow users to watch video content from multiple networks including Starz and HBO and incorporate news and gaming subscriptions.
  • Spotify is also partnering with Hulu to offer consumers a discounted streaming music and video package.
  • It appears this reaggregation is happening to prevent costs from going up. As studios and networks (e.g., Disney and ESPN) pull content from competitors and build their own streaming services, content costs may unnecessarily increase. To counter this, some players in the entertainment industry decide to reaggregate.
  • The number of viewers in the United States who feel positive about the increase in the number of options had significantly dropped from 46% in 2017 to 29% in 2018.

4: CONVERGENCE OF TELECOMMUNICATION AND ENTERTAINMENT CONTENT PROVIDERS

  • Content providers and telecommunication providers continue to converge.
  • To illustrate, T-Mobile US, having acquired Layer 3 recently, is looking to offer pay television. AT&T is also incorporating Time Warner assets in its own entertainment offerings.
  • Verizon, which is set to offer 5G, is partnering with Apple and YouTube to offer consumers a network and content bundle.
  • With subscription streaming services becoming mainstream and consumers seeking original content, telecommunication networks are facing increased pressure to include digital content in their product and service portfolios.
  • To remain competitive, telecommunication networks are increasingly finding it necessary to own content and monetize it over their mobile and fixed networks.

5: EMERGENCE OF NEW AND IMMERSIVE ENTERTAINMENT MEDIA

  • New and immersive media will scale up in the next decade as 5G networks emerge.
  • 5G networks will bring about numerous revenue opportunities for the entertainment industry in the United States. It is expected that revenue opportunities worth $1.3 trillion will open up for the industry in the next decade.
  • Gaming service Hatch is one example of a company taking advantage of the rise of 5G networks. Hatch, in partnership with Samsung, is introducing 5G cloud gaming in the country. Its app will allow users to enjoy over 100 premium games with faster speeds and lower latency.
  • Another example is Verizon, which is teaming up with Walt Disney Studios to deliver 5G connectivity to all work aspects of Disney’s StudioLab. According to Diego Scotti, chief marketing officer at Verizon, 5G has the ability to revolutionize the entertainment and filmmaking industries.
  • The development of new and immersive entertainment media, such as those powered by virtual reality and augmented reality, is being driven by the performance and technical improvements that 5G offers over 4G. Compared to 4G, 5G offers 100-times faster data speeds, 10-times lower latency, and 100-times bigger network capacity.

Global Entertainment Industry Trends

Some trends in the global entertainment industry are personalization, 5G, and the new wave of VR/AR technology.

PERSONAL AND INCREASINGLY DIGITAL

The Trend

Location Matters

  • Streaming giants such as Netflix and Amazon recently started to experiment with different price models for individual markets, taking into consideration local economic circumstances and consumer habits.
  • Amazon Prime cost one-third of the price for Japanese costumers of what it cost to Americans, even though they are both wealthy countries.
  • In less developed countries, there is a trend towards offering tiers of payments for different services.
  • For instance, in Southeast Asia, telecommunication companies often offer data, internet, and OTT services together in an affordable package.

Limited vs. Unlimited

  • Not all consumers want to pay for unlimited access; therefore, companies in different markets are offering differential pricing that goes beyond the traditional “freemium.”
  • One example of this is Alibaba in China that rolled out a premium “88 VIP” package that offers exclusive benefits, covering commerce, entertainment, and local services.
  • MoviePass, which started to offer US movie fans unlimited film admissions for a low monthly price now has shifted to a subscription system offering three different tiers of benefits.

Companies at the forefront of the trend

Drivers

Challenges

  • PwC research shows that consumers are still not satisfied with the recommendations from their streaming services, with only 21% of consumers believing that their OTT service understands what they want and 30% saying that their streaming service recommended the same content over and over again.
  • Regulator and new privacy laws around the world may pose a serious challenge to companies.
  • Issues relating to privacy and safety of personal data may limit the ability of entertainment companies to individualize the experience in the future.
  • Consumers and politics are starting to truly grasp the risks associated with the continual provision of personal data and are pressuring companies about the use and maintenance of the data collected. Personal data hygiene has become a key factor in the industry.
  • This concern has been illustrated by the surge of data-privacy focused companies, such as Super Awesome.

5G

The Trend

Companies at the forefront of the trend

Drivers

Challenges

VR AND AR

MOVIE AND ENTERTAINMENT INDUSTRY TRENDS

The Trend

  • The Global Entertainment and Media outlook stated that VR content revenue would increase to $5 billion in 2020, making it a huge trend in the media and entertainment industry.
  • Deborah Bothun, PwC’s Global Entertainment & Media Leader, quote “The next era of differentiation in entertainment and media is being defined and propelled by the consumers’ increased demand for live, immersive, shareable experiences. Consumers want to get closer, more engaged, and better connected with the stories they love – both in the physical and digital worlds.”

Companies at the forefront of the trend

Drivers

Challenges

  • VR so far has failed to captivate consumers to the extent that it was initially predicted at its launch. (S1)
  • Portability was an issue in the previous generations, but stand-alone headsets are looking to fix this challenge.

US Movie Industry Trends

There are several trends affecting the United Stated movie industry. By far, the most popular trend is streaming, followed in no particular order by gender parity, diversity, genres, offerings of physical theaters, and technology.

1. STREAMING

  • Major players in the streaming business are increasing. They are increasing their reach and budgets. We will no doubt see new players in 2019. The format also provides an easier platform for smaller budget movies that are proving popular. This year streaming services are expected to overtake the traditional theater setting.
  • The number of streaming households has grown from 12 million in 2009 to over 71 million in 2017. With a CAGR of 25%, over 69% of all households have streaming services in 2019.
  • Netflix has dominated the streaming market. They have increased the number of films produced directly for their platform and heavily investing in this avenue. In 2017 alone, they invested over 6 billion dollars into making series and features and their revenue grew by 36% in 2017. Netflix had over 700 series in production in 2018. They have stated they are “choosing to be about the future of cinema.” Many of their big releases that have correlated with box office releases have cut into the ticket sales of the box office release, causing concern. Netflix will account for one in every three online subscriptions with the next few years, with a market share of over 50%.
  • Apple has 1.3 billion active devices in its network and has planned a streaming service for this year. They are predicted to be a major player in the industry.
  • Amazon is slowly catching up with Netflix as a major player with its original movies and series.
  • Disney is also entering the streaming market in 2019 along with Facebook.

2. GENDER PARITY & DIVERSITY

  • Gender parity and more diversity in movies and the industry is a frequent topic for industry professionals and viewers alike.
  • The strict gender roles of men and women are changing with movies such as ‘Love Simon’ and ‘Bohemian Rhapsody’, giving movies more diversity.
  • Movies that have been traditionally all-male or all white are experiencing change. We are seeing women cast in men’s roles along with casts that were once seen as all white now becoming more diverse.
  • Black Panther is notable, as the cast is all African American, and was wildly successful
  • We are seeing women organizing to pressure decision makers, and audiences coming together through online mediums to voice their unhappiness against racism and sexism in hiring and casting. Due to the backlash, some studio executives are vowing to hire more women and minorities for key roles.

We are seeing more women producing movies. In 2019, movies are expected from Reed Morano, Elizabeth Banks, and Anna Boden as directed amongst others.

3. TRENDING GENRES

  • Musical themed movies are increasing in numbers are popularity. Some examples are’The Greatest Showman’, ‘Marry Poppins Return’s, ‘Mamma Mia Here We Go Again’, ‘A Star is Born’, ‘Bohemian Rhapsody’, ‘Rocket Man’, and ‘Yesterday’. In 2019, an adaption of ‘Cats’ is expected to be released.
  • Franchises are trending and popular with viewers. Marvel’s Avengers Endgame hit a record with box office receipts. In 2019 we will see ‘Captain Marvel’, ‘Shazam!’, ‘Men In Black’ International’, ‘Toy Story 4’, ‘The Lion King’, ‘Spider Man’, and ‘Star Wars’ amongst others. Seven out of the ten top grossing movies in 2018 fell into this or the blockbuster category.
  • Blockbuster superhero movies always seem to trend. ‘The Black Panther’, ‘Marvel’s Avengers’, and ‘Superman’ have all done well.
  • Social commentary has made its way into movies. We are seeing an increasing number of movies about social issues, diversity acceptance, and political issues. ‘Moonlight’, ’13th’, and ‘Get Out’ have all received awards and praise.
  • Real-Life movies are also on the upswing. In 1996, 7% of movies were real-life based, today it is 27%. The low budget aspect of these movies makes them a popular choice.
  • Christian themed movies have also been a popular, low-budget option for movie producers. ‘God’s Not Dead’, ‘War Room’, ‘Courageous’, and ‘Heaven Is For Real’ all had box office to budget ratios ranging from 844%-3132%.

4. THEATERS

  • Big theaters are buying up smaller theaters to become gigantic corporations. It is expected for this trend to continue.
  • Movie ticket subscription options are becoming quite popular for movie goers. Recently we have seen MoviePass, AMC’s A-list, Sinemia, and Cinemark Movie Club. In 2019, it is speculated that Tegal and Alamo Drafthouse will join the competition. Theaters are seeing positive results from this service.
  • Reserved seating as an option in theaters is on the rise. A movie goer can reserve their seat in advance, skip the line, and go straight to the movie.
  • Food and Beverage choices are also experiencing a big change and becoming part of the ‘experience’. Popcorn and soda have evolved into a vast selection of appetizers, finger foods, and alcoholic beverages.
  • With all the competition from streaming services, theater revenues are still expected to grow at a rate of 3.6% yearly over the next five years, reaching $18.9 billion in the United States, despite declining attendance rates.

5. TECHNOLOGY KEEPS EVOLVING

  • Augmented Reality and Virtual Reality have seen investments in the last two years. They are by no means a big trend, but one to watch.
  • Interactivity has proven popular with Netflix’s Bandersnatch. Not only was it a success with viewers, but it is touted by developers for its advantages, including being difficult to pirate, engaging, and the ability to gain marketing information.
  • Television can now give the viewer a better picture than the movie screen. With most screens in the US being 2K, the UHD television standard is by far superior. This is seen as a disturbing trend for theaters, as they will need to evolve to keep up. This, coupled with streaming services, makes television a very strong competitor to theater screens.

Global Movie Industry Trends

Four trends in the global movie and film industry include increased interest and market for streaming platforms, excessive mainstream content, diversity, and TV and series cinema.

1. STREAMING PLATFORMS

  • With streaming platforms like Netflix, and Amazon, dominating the market and producing original content, traditional filmmakers have to try that much harder to create engaging content that will draw in crowds to the theaters.
  • In turn, this trend has also opened the way for what used to be local content to become global. Because these platforms have popularized not only shows like Sherlock and The Crown, but movies as well.
  • In 2017, the global box office met a record low, however, Netflix increased their revenue by 36% in the same year which was a record high.
  • The streaming industry has attracted the interest of other companies that have geared their business towards streaming rather than cinema including Facebook and Apple.

2. MAINSTREAM CONTENT

  • The trend of creating repetitive content does not seem to be slowing down, though the impact on the global box office is not clear after record-breaking movies released by Marvel with Black Panther and Endgame.
  • In recent years, studios have continued producing “mainstream” content like superhero movies produced with the same general story arc format or live action recreations.
  • The trend is likely to continue as the large studios continue to acquire smaller studios. This is because original content is more likely to come from small studios that are not after breaking box office records than studios like Disney.
  • This trend is expected to continue due to increased pressure on the global market by Hollywood deals and technology platforms like Amazon and Netflix.

3. DIVERSITY

  • A fast growing trend in the global market is more diversity in terms of sexism and racism.
  • Gender equality has continued to be a problem in the film industry in regard to production cast as well as casting processes for female actors.
  • Recent years have brought several “firsts” for African American actors and production cast as well as women in production. These included Ava DuVernay being the first African American woman to direct a movie with a budget over $100 million and Rachel Morrison being not only the first woman to shoot cinematography for a huge action movie but also be nominated for an Oscar for cinematography in a different movie.
  • The industry is not expected to meet full gender parity in the next 5 years, however, advancements are expected to continue.

4. TV AND SERIES

  • There has been a growing culture for series and TV services over the past few years with joint ventures, video on demand (VOD) services, and streaming cinema advancements.
  • The United States and European countries hold the market for series content competing for audience attention rather than box office sales.
  • Streaming and TV have begun joint ventures through VOD services, Live TV streaming, and other partnerships with companies like YouTube and Hulu.
  • Technological advancements have allowed series to become just as technically interesting as movies through high quality cinematography.
  • Binge watching culture has increased interest in series cinema though advanced character development and longer stories.

US Movie Theaters Trends

Movie theaters in the US have been in a state of change over the last several years. Successful theaters have assessed where they can be the most successful and have seen the benefits. Streaming services have hurt the movie theater market, but some believe the change is negligible. Movies that take gender and diversity into account are the revenue leaders. Couple that with a good action-adventure movie and you have the recipe to fill the movie theater.

1. DELUXE FOOD, BEVERAGE & COMFORT OPTIONS

  • Movie theaters that are successful have managed to change with the time and provide the movie goer with perks and comforts they desire.
  • One area not to be ignored is concessions. They make up a large part of movie theater revenue, up to 85 cents out of every dollar spent on food and beverage is profit. In 2018, AMC hit the $1 billion dollar mark for revenue associated with food and beverage. Theaters that are managing to stay ahead of the curve are making changes in this area to make up for shortages in the box office.
  • It is not out of the ordinary to see full service restaurants, drinks, and comfortable recliners in a movie theater. It is one way theaters are attempting to fill the seats and make more money with the upcharge associated with these premium services.
  • Some theaters are even adding virtual reality and children friendly areas to lure people out of their houses.
  • Reclining seats at AMC are credited for giving the company a 76% boost in attendance figures, even though they lost 62% of their seats.
  • Movie goers also can choose their seats before they even go the movie, while skipping the line, and being assured of the seat they desire. This not only benefits the patron, but the theater as well because they get valuable marketing information.
  • AMC will also be offering the ability to order food via a mobile app so that it is ready when you arrive. These perks are apparently catching on. During the premier of ‘Avenger’s End Game’, the company doubled their previous record for food and beverage mobile orders. They set a new first quarter record in 2019, with a capture of $5.23 per patron. This is not your ordinary popcorn and soda choices. Food has been upgraded to gourmet status with fully functioning kitchens and all the offerings. By Labor Day, AMC hopes to have 400 theaters with an upgraded restaurant that offers gourmet food and beverage options.
  • Regal has focused on more food and alcohol options. In 2017, while their box office revenue feel 2.6%, their food offerings only fell 0.3%.
  • Even though streaming is on the rise, people still say theaters are the best place to have an “experience“. You can get swept away by the sounds and color in a way you can’t at home, and on a much larger scale. The theater is a more social event, which is something that the human nature desires. Part of this experience is alone time when you are focused on the movie and the person you are there with. You tend to get distracted at home. Theaters that can monopolize on these aspects can only benefit.

2. MOVIE SUBSCRIPTION SERVICES

  • Movie subscription services or passes have had mixed results. While independent companies such as MoviePass and Sinemia have virtually collapsed, theater-owned programs are more successful. Most major theaters offer some sort of pass. AMC recently launched Stubs A-List. For a fee, you may see one free movie monthly, along with discounts on guest tickets and concessions. AMC considers this a success since around 45% of the members where not a part of their previous loyalty program, and their spending accounts for 6% of total box office revenue. Since last year they have gained more than 800,000 members, when they only set a goal for 500,000. Cinemark’s program had over 560,000 members by the end of 2018, up 26& from third quarter.
  • In a survey from October 2018, only 6% of adults surveyed indicated they might be interested in a monthly plan.
  • One benefit to the movie theater is that more people are going to movies that are considered B-level movies because they can see it for ‘free’.
  • People rarely attend movies alone, and it is most likely that not everyone will have a pass, thus theaters see this as another source to raise revenue.

3. STREAMING & TECHNOLOGY

  • The effects of streaming on the bottom line of movie theaters is mixed at best depending on how you look at it.
  • Subscription revenue is expected to reach $46 billion in 2019, while box office revenue will top out at $40 million.
  • According to Statista, 54% of respondents state their preferred place to watch a movie is at home, while only 13% state the movie theater is.
  • A study by EY’s Quantitative Economics and Statistics group found that people that stream are also more likely to go the movie theater. They believe the two forms of consumption are complementary. In the study it was discovered that people who visited a theater nine or more times in a year consumed more streaming than those who only go to the movie theater one time per year. Teenagers, who stream the most, are also avid movie goers, going on an average of seven times in the test year.
  • Netflix has started putting movies in theaters, but on a very small scale. This could be a potential gain for theaters if it is implemented on a larger scale.
  • On the other end of the spectrum are the numbers when looking at movie theater attendance, which hit a concerning low in 2017. Streaming was attributed as one of the reasons for this decline. Even with the attendance numbers fluctuating, 246 million people attend a movie yearly, and around 35 million go every month.
  • Many cite how much cheaper it is to stream a movie instead of incurring the cost of movie tickets, babysitting, and food.
  • Currently, new releases are supposed to wait 90 days before they are released to be sold or rented. Studios are arguing that this is too long and what to reduce that window. This could affect movie theaters negatively.

4. GENDER PARITY/DIVERSITY

  • Of significance lately is the success of female-driven movies like “Star Wars: The Last Jedi,” “Beauty and the Beast,” and “Wonder Woman”. They were the top three films of 2017.
  • In a study by the Creative Arts Agency and shift7, they discovered that movies starring women made more money than movies starring men (from 2014-2017).
  • Films that pass the Bechdel test (which evaluates female representation in a film), according to the study, outperform other films that fail the test, indicating movies that are female-driven attract more theater goers and revenue. “Wonder Woman” grossed $821 million worldwide. This makes sense, as women make up 51% of the population.
  • Minorities are the most likely group to attend movie theaters, and they make up 40% of the US population. They are even more likely to go to a movie that reflects their demographic. For example, “Black Panther” grossed $400 million in North America, and $304 million internationally in its first ten days.
  • Of interest is the median global box office revenues for certain films. Films that contain less than 20% minority actors grossed less than $40 million on average, while those with more than 20% grossed over $179 million on average.

5. GENRES

  • Certain genres bring in more money, therefore they are better bets when considering how many people will attend the theater. According to Box Office Mojo and Statista, adventures, action, drama, comedy, and horror movies make up top five most successful genres in terms of revenue.

Global Movie Theaters Trends

Streaming platforms, mainstream content, increased diversity and the popularity of TV shows are four global movie industry trends that are impacting the movie theater industry. Personalization, 5G and virtual reality (VR) technology are three global entertainment industry trends that are impacting the theater industry. Out of the seven identified trends, it seems that streaming platforms, personalization and VR technology could have the greatest impact on the business of movie theaters.

1. STREAMING PLATFORMS

  • Streaming services like Netflix, Amazon Prime Video and Hulu are shifting consumers’ preferences. Consumers increasingly favor watching movies at home, rather than going to the cinema.
  • In response to the decreased demand, movie theaters are increasing prices for movie tickets. However, the total box office keeps dropping, even with the increased prices.
  • Due to the rise of streaming platforms, cinema trips are becoming more of an event for consumers, instead of a regular leisure activity.
  • Movie theaters are focusing more and more on acquiring those movies that “have to be seen on the big screen”. These are generally movies with impressive special effects.
  • To combat the rise of streaming services, movie theaters are offering new experiences for consumers. One such experience is the introduction of gaming and augmented reality technology to movie theaters. For example, CineMedia launched the National CineMedia’s ARcade platform that allows visitors to play augmented reality games before showtime.
  • Movie theaters around the world are providing more of a luxury experience to their patrons. This includes high-end seating and restaurant-quality food.
  • Some movie theaters are adopting the subscription model instead of fighting it. Large theater chains offer unlimited movie tickets for subscribers, with prices varying based on location.
  • The rising popularity of ticket subscription services like MoviePass is embraced by some theaters and shunned by others. While some theaters think that the business model behind MoviePass is unsustainable, others welcome the fact that MoviePass is already accounting for nearly 10% of all ticket sales in the US and that the service is especially attractive to Millenials, the demographic most likely to opt for streaming platforms instead of traditional theaters.

2. MAINSTREAM CONTENT

  • As previously noted, mainstream content is mostly repetitive in nature, often following the same general story arc format.
  • Movie theaters rely heavily on mainstream content because of the proven and predictable effect it has on ticket sales.
  • Only 7% of screens in movie theaters show non-mainstream content, and that percentage is predicted to decline in the future.
  • Movie theaters need mainstream content to boost ticket sales, while large producers need theaters to promote digital distribution and to be eligible for awards.
  • The box office performance of mainstream content is more dependent on advertising than on reviews from critics. Therefore, both movie theaters and producers favor mainstream content because they have greater control over the advertising for a movie than over the opinions of critics.

3. DIVERSITY

  • Generally, increasing gender equality and diversity seen in the global film industry does not have a significant impact on the movie theater industry. However, there is currently a small gap between the percentage of females in the world (51%) and that of women who buy tickets to see movies in theaters (50%).
  • Experts predict that the gap will become increasingly smaller, as more and more female-led films get produced.
  • The number of films with women and people of color in leading roles reached a record in 2018. Out of the top 100 films in 2018, 40 featured a female lead or co-lead.

4. TV AND SERIES

  • The growing popularity of series and TV services negatively impacts attendance in movie theaters, because theaters generally do not show series and other content produced for television.
  • Television and the film industry have impacted each other in different ways over the years, but they generally managed to coexist. What is changing in recent years is how consumers choose to access content made for television.
  • Nowadays, series and TV shows are increasingly migrating to streaming services such as Netflix. Therefore, all findings related to streaming platforms are also applicable to TV shows.

5. PERSONALIZATION

  • Movie theaters are increasingly using artificial intelligence (AI) to boost attendance and concession sales. Theaters are targeting customers in increasingly personalized ways, from setting personal ticket price points to further automating every aspect of the movie-going experience to make it more pleasing and familiar.
  • Some movie theaters are using machine learning and AI to make food and beverage purchases a part of the mobile ticketing transaction. The end goal is for customers to just pick up their concessions once they arrive at the theater and to be charged for it without having to go through any kind of collection or sales point.
  • Several movie theaters started implementing a recommendation system similar to that of Netflix. The systems recommends movies and soon to be released features to customers by analyzing their movie watching history to determine which movies they would be most interested in seeing.

6. 5G

  • Even though 5G technology is still in its infancy, it appears that some movie theaters are already embracing it. Recently, Odeon partnered with Norwegian cellular carrier Telia to open the first 5G movie theater in the world.
  • Telia’s 5G network allows for streaming of 4K or higher-quality video at respectable frame rates, while traditional 4G networks struggle with maintaining fluidity while streaming full-HD video.
  • The Odeon Cinema Center in Oslo tested out livestreaming of theatrical films over 5G, but the main purpose of the new technology will be to facilitate the transfer of films to Odeon’s servers for repeated playback.
  • 5G technology can positively impact the speed of movie distribution. The technology allows for instantaneous distribution of video content.
  • Besides movies getting to theaters faster, 5G also has implications for the future role of movie theaters. Several industry experts imagine a future where people go to theaters to participate in live concerts or other events broadcast from remote locations.

7. VR TECHNOLOGY

  • In an attempt to increase attendance, some movie theaters are embracing virtual reality technology. Because home entertainment systems have put a pressure on ticket sales, theaters are focusing on providing premium experiences that cannot be enjoyed at home.
  • Full-fledged VR cinemas are only beginning to surface, but theater operators seem to think that the technology might be the future of cinema.
  • Theaters vary in the extent of VR implementation. Some theaters are satisfied with showing 3D movies in VR to moviegoers that bring their own VR devices like the Oculus Rift and HTC Vive.
  • Imax tried setting up VR centers in movie theaters where people could play games, have social experiences or be immersed in short stories. However, the company deemed the project a failure due to low user engagement and shut down VR centers within six months of opening them. Experts think that the likely reason for the failure of the project was the fact that the VR centers did not offer anything that people could not already experience at home.
  • Other theaters are opting to provide a fully immersive, cooperative VR experience. For example, Cinemark partnered with VR company Spaces to offer a four-person experience that closely resembles an action movie. The VR experience is based on the story from the Terminator trilogy.
MOVIE AND ENTERTAINMENT INDUSTRY TRENDS

US Entertainment, Movie, and Movie Theater Industry Analysis

Provided is a summary of US Entertainment Industry Trends, US Movie Industry Trends, and US Movie Theaters.

US ENTERTAINMENT INDUSTRY TRENDS

1. DOMINANCE OF TELEVISION SHOWS AND MOVIES OVER OTHER ENTERTAINMENT FORMS

  • Consumers in the United States are preferring television shows and movies over music, video games, and other entertainment forms. The biggest portion of the hours Americans spent on entertainment in 2018 was spent watching television shows and movies. While 27% of these hours were spent watching television shows and movies, only 19% were spent listening to music, and only 16% were spent playing video games.
  • In 2018, over 50% of consumers in the United States streamed video content through subscription services. Moreover, 22% of viewing hours were accounted for by SVOD providers.

2. CONSUMERS’ USE OF MULTIPLE SUBSCRIPTIONS TO CUSTOMIZE THEIR ENTERTAINMENT EXPERIENCE

  • Consumers in the United States are carefully selecting which streaming video, television, gaming, and music services to subscribe to. It is no longer uncommon for consumers to subscribe to multiple entertainment services.
  • This trend of subscribing to multiple services is being driven by the need of consumers to take charge of their entertainment experience and to tailor the entertainment experience to their own preferences.

3. REAGGREGATION OF ENTERTAINMENT SERVICES

  • It should not be overlooked, however, that more and more consumers are finding the entertainment service selection process frustrating. The growth in the number of entertainment services available has made the process more complex. As a result, signs of reaggregation have been observed in the country’s entertainment industry.
  • The number of viewers in the United States who feel positive about the increase in the number of options had significantly dropped from 46% in 2017 to 29% in 2018.

4. CONVERGENCE OF TELECOMMUNICATION AND ENTERTAINMENT CONTENT PROVIDERS

  • Content providers and telecommunication providers continue to converge. To illustrate, T-Mobile US, having acquired Layer 3 recently, is looking to offer pay television. AT&T is also incorporating Time Warner assets in its own entertainment offerings.
  • To remain competitive, telecommunication networks are increasingly finding it necessary to own content and monetize it over their mobile and fixed networks.

5. EMERGENCE OF NEW AND IMMERSIVE ENTERTAINMENT MEDIA

  • 5G networks will bring about numerous revenue opportunities for the entertainment industry in the United States. It is expected that revenue opportunities worth $1.3 trillion will open up for the industry in the next decade.
  • The development of new and immersive entertainment media, such as those powered by virtual reality and augmented reality, is being driven by the performance and technical improvements that 5G offers over 4G. Compared to 4G, 5G offers 100-times faster data speeds, 10-times lower latency, and 100-times bigger network capacity.

US MOVIE INDUSTRY TRENDS

1. STREAMING

  • Major players in the streaming business are increasing. They are increasing their reach and budgets. We will no doubt see new players in 2019. The format also provides an easier platform for smaller budget movies that are proving popular. This year streaming services are expected to overtake the traditional theater setting.
  • Netflix has dominated the streaming market. They have increased the number of films produced directly for their platform and heavily investing in this avenue. In 2017 alone, they invested over 6 billion dollars into making series and features and their revenue grew by 36% in 2017. Netflix had over 700 series in production in 2018. They have stated they are “choosing to be about the future of cinema.” Many of their big releases that have correlated with box office releases have cut into the ticket sales of the box office release, causing concern. Netflix will account for one in every three online subscriptions with the next few years, with a market share of over 50%.

2. GENDER PARITY & DIVERSITY

  • Gender parity and more diversity in movies and the industry is a frequent topic for industry professionals and viewers alike.
  • Movies that have been traditionally all-male or all white are experiencing change. We are seeing women cast in men’s roles along with casts that were once seen as all white now becoming more diverse.
  • We are seeing women organizing to pressure decision makers, and audiences coming together through online mediums to voice their unhappiness against racism and sexism in hiring and casting. Due to the backlash, some studio executives are vowing to hire more women and minorities for key roles.
MOVIE AND ENTERTAINMENT INDUSTRY TRENDS

4. TRENDING GENRES

  • Musical themed movies are increasing in numbers are popularity. Some examples are’The Greatest Showman’, ‘Marry Poppins Return’s, ‘Mamma Mia Here We Go Again’, ‘A Star is Born’, ‘Bohemian Rhapsody’, ‘Rocket Man’, and ‘Yesterday’. In 2019, an adaption of ‘Cats’ is expected to be released.
  • Franchises are trending and popular with viewers. Marvel’s Avengers Endgame hit a record with box office receipts. In 2019, we will see ‘Captain Marvel’, ‘Shazam!’, ‘Men In Black’ International’, ‘Toy Story 4’, ‘The Lion King’, ‘Spider Man’, and ‘Star Wars’ amongst others. Seven out of the ten top grossing movies in 2018 fell into this or the blockbuster category.
  •  Blockbuster superhero movies always seem to trend. ‘The Black Panther’, ‘Marvel’s Avengers’, and ‘Superman’ have all done well.
  •  Social commentary has made its way into movies. We are seeing an increasing number of movies about social issues, diversity acceptance, and political issues. ‘Moonlight’, ’13th’, and ‘Get Out’ have all received awards and praise.
  • Real-Life movies are also on the upswing. In 1996, 7% of movies were real-life based, today it is 27%. The low budget aspect of these movies makes them a popular choice.
  •  Christian themed movies have also been a popular, low-budget option for movie producers. ‘God’s Not Dead’, ‘War Room’, ‘Courageous’, and ‘Heaven Is For Real’ all had box office to budget ratios ranging from 844%-3132%.

5. THEATERS

  • Big theaters are buying up smaller theaters to become gigantic corporations. It is expected for this trend to continue.
  •  Movie ticket subscription options are becoming quite popular for movie goers. Recently we have seen MoviePass, AMC’s A-list, Sinemia, and Cinemark Movie Club. In 2019, it is speculated that Tegal and Alamo Drafthouse will join the competition. Theaters are seeing positive results from this service.
  •  Reserved seating as an option in theaters is on the rise. A movie goer can reserve their seat in advance, skip the line, and go straight to the movie.
  •  Food and Beverage choices are also experiencing a big change and becoming part of the ‘experience’. Popcorn and soda have evolved into a vast selection of appetizers, finger foods, and alcoholic beverages.
  • With all the competition from streaming services, theater revenues are still expected to grow at a rate of 3.6% yearly over the next five years, reaching $18.9 billion in the United States, despite declining attendance rates.

6. TECHNOLOGY KEEPS EVOLVING

  • Augmented Reality and Virtual Reality have seen investments in the last two years. They are by no means a big trend, but one to watch.
  • Interactivity has proven popular with Netflix’s Bandersnatch. Not only was it a success with viewers, but it is touted by developers for its advantages, including being difficult to pirate, engaging, and the ability to gain marketing information.
  • Television can now give the viewer a better picture than the movie screen. With most screens in the US being 2K, the UHD television standard is by far superior. This is seen as a disturbing trend for theaters, as they will need to evolve to keep up. This, coupled with streaming services, makes television a very strong competitor to theater screens.

US MOVIE THEATERS- IMPACT FROM TRENDS

1. DELUXE FOOD, BEVERAGE & COMFORT OPTIONS

  • Movie theaters that are successful have managed to change with the time and provide the movie goer with perks and comforts they desire.
  • One area not to be ignored is concessions. They make up a large part of movie theater revenue, up to 85 cents out of every dollar spent on food and beverage is profit. In 2018, AMC hit the $1 billion dollar mark for revenue associated with food and beverage. Theaters that are managing to stay ahead of the curve are making changes in this area to make up for shortages in the box office.
  • Reclining seats at AMC are credited for giving the company a 76% boost in attendance figures, even though they lost 62% of their seats.
  • Movie goers also can choose their seats before they even go the movie, while skipping the line, and being assured of the seat they desire. This not only benefits the patron, but the theater as well because they get valuable marketing information.
  • Even though streaming is on the rise, people still say theaters are the best place to have an “experience“. You can get swept away by the sounds and color in a way you can’t at home, and on a much larger scale. The theater is a more social event, which is something that the human nature desires. Part of this experience is alone time when you are focused on the movie and the person you are there with. You tend to get distracted at home. Theaters that can monopolize on these aspects can only benefit.

2. MOVIE SUBSCRIPTION SERVICES

  • Movie subscription services or passes have had mixed results. While independent companies such as MoviePass and Sinemia have virtually collapsed, theater-owned programs are more successful. Most major theaters offer some sort of pass. AMC recently launched Stubs A-List. For a fee, you may see one free movie monthly, along with discounts on guest tickets and concessions. AMC considers this a success since around 45% of the members where not a part of their previous loyalty program, and their spending accounts for 6% of total box office revenue. Since last year they have gained more than 800,000 members, when they only set a goal for 500,000. Cinemark’s program had over 560,000 members by the end of 2018, up 26& from third quarter.

3. STREAMING & TECHNOLOGY

  • The effects of streaming on the bottom line of movie theaters is mixed at best depending on how you look at it.
  • Subscription revenue is expected to reach $46 billion in 2019, while box office revenue will top out at $40 million.
  • According to Statista, 54% of respondents state their preferred place to watch a movie is at home, while only 13% state the movie theater is.
  • A study by EY’s Quantitative Economics and Statistics group found that people that stream are also more likely to go the movie theater. They believe the two forms of consumption are complementary. In the study it was discovered that people who visited a theater nine or more times in a year consumed more streaming than those who only go to the movie theater one time per year. Teenagers, who stream the most, are also avid movie goers, going on an average of seven times in the test year.
  • Currently, new releases are supposed to wait 90 days before they are released to be sold or rented. Studios are arguing that this is too long and what to reduce that window. This could affect movie theaters negatively.

4. GENDER PARITY/DIVERSITY

  • Of significance lately is the success of female-driven movies like “Star Wars: The Last Jedi,” “Beauty and the Beast,” and “Wonder Woman”. They were the top three films of 2017.
  • Films that pass the Bechdel test (which evaluates female representation in a film), according to the study, outperform other films that fail the test, indicating movies that are female-driven attract more theater goers and revenue. “Wonder Woman” grossed $821 million worldwide. This makes sense, as women make up 51% of the population.
  • Minorities are the most likely group to attend movie theaters, and they make up 40% of the US population. They are even more likely to go to a movie that reflects their demographic. For example, “Black Panther” grossed $400 million in North America, and $304 million internationally in its first ten days.
  • Of interest is the median global box office revenues for certain films. Films that contain less than 20% minority actors grossed less than $40 million on average, while those with more than 20% grossed over $179 million on average.

5. GENRES

Certain genres bring in more money, therefore they are better bets when considering how many people will attend the theater. According to Box Office Mojo and Statista, adventures, action, drama, comedy, and horror movies make up top five most successful genres in terms of revenue.

Global Entertainment, Movie, and Movie Theater Industry Analysis

MOVIE AND ENTERTAINMENT INDUSTRY TRENDS

Increases in the levels of personalization, 5G technology and VR/AR technology are the main trends in the global entertainment industry. The rise of streaming platforms, mainstream content, increasing diversity and the rising popularity of content made for TV are the main trends in the global movie industry.

GLOBAL ENTERTAINMENT INDUSTRY TRENDS

1. PERSONALIZATION

  • Companies in the entertainment industry are relying on artificial intelligence (AI) and big data to anticipate users’ needs and personal preferences and to adapt their offerings to best satisfy them. Some companies that are at the forefront of this trend include Disney, Tata Sky, DAZN, Netflix and Amazon.
  • Personalization is key for understanding how and when people consume entertainment, which leads to more efficient advertising, and a better user experience. Additionally, technological advances are enabling consumers to move from passive to active consumption, from linear to on-demand. 
  • This trend is most evident in those markets where broadband penetration is high. People like to select exactly which content they would most like to consume and they prefer doing it at their own pace. For example, consumers in the developed world are rejecting subscriptions to cable and satellite companies that sell predetermined bundles of channels, in favor of creating their own ad hoc bundles composed of several OTT services.
  • Personalization can also be based on the consumer’s location, and this is especially true for personalized pricing. For example, Netflix and Amazon are experimenting with different price models for individual markets. Telecommunication operating in developing markets like the Southeast Asia bundle phone, data and OTT services in a single package that is offered at an affordable price.
  • Companies in the entertainment industry have noticed that not all consumers are willing to pay for unlimited access to products, which is why they are shifting to a payment tier model to attract a wider set of customers. For example, MoviePass, the theater ticket subscription service recently switched from a single price model to a subscription system offering three different tiers of benefits.
  • One of the key challenges for increased personalization is the fact that consumers are still not completely satisfied with content recommendations, with only 21% of consumers believing that their OTT service understands what they want and 30% saying that their streaming service recommended the same content over and over again.
  • The biggest challenge, however, is the increasingly complex regulatory environment around online data privacy. Consumers and politicians are growing increasingly concerned about the continuous collection of personal data, as evidenced by the surge of data-privacy focused companies like Super Awesome.
  • Movie theaters are trying to use personalization to boost attendance and concession sales.
  • Some theaters are tailoring the ticket price to each individual customer, while others are using AI to connect food and beverage purchases to the process of buying a ticket, in order to create a seamless experience for the customer and to eliminate sales points inside the theater.
  • Several movie theaters are implementing an AI recommendation system that analyzes the movie watching history of customers to recommend films that they are most likely to enjoy.

2. 5G

  • 5G is expected to improve revenues and products in mobile media, mobile advertising, home broadband and TV, immersive media, and new media. This is because there is a growing need for consuming more Internet data. It is estimated that the amount of data consumed globally is growing by more than 25% annually.
  • Besides increasing the amount of media use, 5G has the potential to create significant changes, such as mobile edge computing (MEC) and Network slicing. It will increase data consumption in the developing markets, creating a new audience for entertainment content.
  • The market for 5G is expected to reach $420 billion in the next ten years. Some companies that are at the forefront of this trend include AT&T, Intel, Microsoft, NVIDIA, Tesla, and Google.
  • The 5G technology enables a range of new entertainment use cases, such as VR and AR applications, new ways of gaming, immersive media, in-car entertainment and localized content delivery for in-venue media.
  • However, 5G technology is still in its infancy and it is not ready to meet the demand. To have a 5G network, certain special antennas are needed, which are not yet widely available.
  • Additionally, there are some concerns about the health risks of the technology. Some critics pointed out that there aren’t enough studies on the subject.
  • In Norway, the first 5G movie theater in the world was opened in partnership between the Odeon Cinema Center and the Norwegian cellular carrier Telia.
  • The theater tested out livestreaming theatrical films over 5G, but the main purpose of the new technology will be to facilitate the transfer of films to Odeon’s servers for repeated playback.
  • With 5G technology the distribution of video content can be nearly instantaneous. This opens up new use cases for movie theaters, which can now be used to participate in live concerts or other events broadcast from remote locations.
MOVIE AND ENTERTAINMENT INDUSTRY TRENDS
Verizon Communications Inc. 5G wireless signage is displayed at the company’s booth during the Mobile World Congress Americas in Los Angeles, California, U.S., on Wednesday, Sept. 12, 2018. The conference features prominent executives representing mobile operators, device manufacturers, technology providers, vendors and content owners from across the world. Photographer: Patrick T. Fallon/Bloomberg via Getty Images

3. VR/AR TECHNOLOGY

  • VR entertainment content is expected to reach a market size of $5 billion by 2020.  Khronos Group, Google, Oculus, Vive, and Valve are some companies that are positioned to take advantage of this trend.
  • The number of investments in VR/AR technology is increasing every year and industry cooperation initiatives are emerging every day.
  • News outlets are starting to adopt the VR journalism trend, hoping to put a sense of participation in the minds of viewers.
  • The new generation of VR headsets brings a lot of improvements to the technology, with features such as eyeball-tracking and increased field-of-view.
  • However, VR has so far failed to capture the attention of consumers, at least to the extent that was initially predicted.
  • Portability is still a challenge for massive VR adoption, but the rise of portable dedicated or stand-alone devices has the potential to solve this issue.
  • VR movie theaters are opening across the world, and theater operators believe that VR is the future of cinema.
  • Theaters vary in the kind of VR experience offered to customers. While some theaters are showing 3D movies in VR to people that bring their own VR headsets, other theaters are trying to create a fully immersive, cooperative VR experience.

GLOBAL MOVIE INDUSTRY TRENDS

1. STREAMING PLATFORMS

  • Major streaming platforms like Netflix and Amazon Prime Video are taking away market share from movie theaters by creating original content.
  • Streaming services allow local content to reach a global audience. This made shows like Sherlock and The Crown hugely popular across the world.
  • In 2017, the global box office hit a record low, while Netflix achieved record high revenue in the same year. Cinema trips are becoming more of an event for consumers, instead of a regular leisure activity.
  • Other technology companies like Facebook and Apple are focusing their business on streamed content as well.
  • Consumers tastes are shifting and they increasingly favor watching movies at home, rather than going to the cinema. In response to the decreased demand, theaters are increasing ticket prices, but the total box office keeps dropping even with increased prices.
  • Movie theaters are focusing more and more on acquiring those movies that “have to be seen on the big screen”. These are generally movies with impressive special effects.
  • Some theaters are trying to combat the rise of streaming platforms by offering premium experiences to consumers. This includes high-end seating and restaurant-quality food.
  • Additionally, movie theaters are starting to adopt the subscription model. Several theaters now offer unlimited access for the price of a monthly subscription, and the ticket subscription service MoviePass is growing in popularity.

2. MAINSTREAM CONTENT

  • There is a trend of creating repetitive content in movies because that content has been proven to attract audience attention.
  • Content like superhero movies produced with the same general story arc format or live action recreations is the content that is most produced by film studios, and the trend shows no signs of slowing down.
  • An additional driver of this trend is that large studios are buying out small studios, and large studios are much more likely to create mainstream content.
  • Currently, only 7% of movie theaters show non-mainstream content, and that figure is predicted to decline in the future.
  • Movie theaters need mainstream content to boost ticket sales, while large producers need theaters to promote digital distribution and to be eligible for awards.
  • Showing mainstream content provides more control to movie theaters and producers because its audience is much more influenced by advertising than by industry critics’ reviews.

3. DIVERSITY

  • Greater gender equality and race diversity can generally be seen in contemporary film.
  • Recent years have brought several “firsts” for African American actors and production cast as well as women in production. These included Ava DuVernay being the first African American woman to direct a movie with a budget over $100 million and Rachel Morrison being not only the first woman to shoot cinematography for a huge action movie but also be nominated for an Oscar for cinematography in a different movie.
  • Full gender parity is not expected to be reached in the next 5 years, but advancements are expected to continue.
  • Generally, increasing gender equality and diversity seen in the global film industry does not have a significant impact on the movie theater industry. However, there is currently a small gap between the percentage of females in the world (51%) and that of women who buy tickets to see movies in theaters (50%).
  • The number of films with women and people of color in leading roles reached a record in 2018. Out of the top 100 films in 2018, 40 featured a female lead or co-lead. Experts predict that the gap will continue to shorten in the coming years.

4. TV AND SERIES

  • Joint ventures, video on demand (VOD) services, and streaming cinema advancements led to the increased popularity of series and TV services.
  • TV producers have started joint ventures through VOD services, Live TV streaming, and other partnerships with companies like YouTube and Hulu.
  • TV shows are becoming just as compelling and engaging as movies, due to technological advances in high quality cinematography.
  • The culture of binge watching has increased the appeal of series. Consumers favors series because of the advanced character development and longer stories.
  • This growing popularity of TV shows negatively impacts movie theater attendance.
  • In the past, TV and movie theaters managed to coexist because of the different ways of delivering content. Nowadays, series and TV shows are increasingly migrating to streaming services such as Netflix. This is fueling the movie theaters’ loss of market share to streaming services.
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