Study: Streaming Could Be More Profitable Than Theater Box Office
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- June 6, 2014
Video on Demand to Account for 43% of Industry by 2017
By James DeRuvo (doddleNEWS)
By 2017, Hollywood is going to be immersed in streaming to the point that it will likely surpass movie theater box office as the number one entertainment revenue source, according to a new study. The results indicate that revenue from streaming video services is skyrocketing, and will increase by up to $10 billion in the next five years. Hollywood is sure to embrace the trend, much like they did the video business, even though they complain of piracy concerns. But is the days of the movie theater drawing to a close? Not quite.
“For all the turbulence caused by the conversion to digital, and the disruption caused by window compressions, new revenue streams, reduced film slates and competition from global producers, the core economic model of the American film industry remains to date largely unchanged.” – Price Waterhouse Coopers
The study comes from Price Waterhouse Coopers, which says that streaming video services will become the biggest revenue source for the film industry within the next four years, reaching $14 billion, nearly $2 billion more than box office revenues. In addition, PWC’s survey indicates that video on demand revenue will rise by $10 billion over the next five years and Hollywood will cash in to the tune of nearly $20 billion by 2018.
What’s accounting for the skyrocketing revenues in VOD purchases over the traditional movie tickets? Well, PWC’s study indicates what you probably already know, that users are relying more on subscription services like Netflix, Hulu, and Amazon Prime than they are for going to the movies. But does that mean that the movie theater will disappear? Not really.
More likely, it’s the video industry itself that’ll take the hit, as users will choose streaming video options to rewatch their favorite films and to discover new films, rather than buy optical media like DVDs and Blu-rays. North American box office accounted for nearly $12 billion in 2013, and will rise to $13.41 billion in 2018. By contrast, optical media purchases are dropping. Also of note is May 2014′s North American box office was the lowest since 2010.
And while streaming video on demand is experiencing an explosion, the study also indicates that while the emerging technology will surpass movie theater sales, it certainly won’t replace it completely. As I said above, North American box office will grow to an estimated $13.41 billion by 2018; now, of course, since movie theaters tend to raise ticket prices with every new summer movie season, a large portion of that increase will be from higher ticket prices. But with movie tentpoles like Star Wars, The Avengers, Captain America, and many others, there will always be a need for event movies that will be shown at movie palaces, because who’s going to want to see them on a computer screen or a postage stamp of an iPhone?
More choices is good for the audience. The only thing that stands in the way of streaming actually achieving the expected earnings, are the ISPs who are buffering the experience until services like Netflix and YouTube pony up.
Hat Tip – The Verge
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