OTT has been influencing “cord-cutting” for years creating more and more problems for cable operators. Due to COVID and the lockdown, it seems a similar process picked up the pace when it comes to movie theaters as well.

In this article, we will take a look at the reasons why OTT might have a heavy toll on cinemas and what might be a solution for them.

The global OTT market size was valued at $121.61 billion in 2019 and is projected to reach $1,039.03 billion by 2027, growing at a CAGR of 29.4% from 2020 to 2027 (source AMC). With the OTT on the rise, there has been an increase in “cord-cutting” where people are canceling their cable subscriptions and keeping only video streaming platforms. On the other hand, a growing number of OTT platforms seem to have successfully coexisted with the cinemas. However, that has begun to change when the pandemic started.

In 2020, and 2021 movie ticket sales in the US fell 80% to $2.28 billion, and 70% to $3.6 billion respectively compared to $11.4 billion in 2019 (source Comscore). This disruption influenced the entire chain, starting from production up to the consumption of the content.

Along with the lockdowns, several other factors caused the shift toward video streaming services much faster than it would have probably happened without the pandemic. First, with people being unable to go anywhere they started discovering video streaming services for entertainment. Then, new video services like Disney +, Paramount +, Peacock, and others rolled out with great content libraries. Finally, more and more movies were released on the same dates in movie theaters and on streaming services.

For the majority of people, it became a bigger challenge to decide to spend a monthly cost of an OTT service on a single movie ticket. So everything mentioned does validate the question if OTT services mean the end of movie theaters or if they will be able to exist in the market equally.

Video streaming services are still growing and we can definitely conclude that they are here to stay. They will become an even more valuable entertainment segment that has had an immense impact on the production of the local, non-English speaking content that is gaining global popularity. Besides local content, it is a great place for all the movies that could hardly compete for a spot in movie theaters. Even A-list movies, after they eventually end their cinema screenings find OTT platforms are a perfect place for them to generate more revenue.

Is there anything then that would keep actual theaters existing? Well, going to the movies is still an event where you can spend quality time with dear friends and family while doing something fun. Even the best home cinemas will never provide the same experience as a cinema’s big screen and sound system that immerse you into the movie you are watching.

OTT platforms have many advantages but if movie theaters become more flexible when it comes to their business models if they continue to improve the complete viewer’s experience, and if they manage to convince the big studios that it makes sense to release blockbusters in movie theaters first and then on the streaming services, then there is a chance to create a win-win situation for both sides.

At the end of the day, we still have classic theaters which did not disappear when cinemas came; and we still have radios along with TVs. Finally, let’s not forget that movie theaters survived the video store era as well. So if something can provide a positive experience it will continue to exist but just like everything else, it needs to continuously evolve and innovate.

 

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