Movie Industry in the Pandemic Era

The film business is changing dramatically due to the pandemic. Movie theaters are closing, film production slowed down, and more and more people are turning to streaming services.

Why Mank Matters in 2020

Photo By: Netflix

David Fincher’s new film Mank was released on Netflix on December 4, which takes its audience back to Hollywood’s golden era in the 1930s. It was a biographical film about Herman J. Mankiewicz, the co-writer of Citizen Kane and an unsung hero behind this masterpiece.

Why does a movie about Hollywood in the 1930s resonate today? Mank features the Great Depression background and the prevalent conservatism in Hollywood in the 1930s. Back in 2020, the film and entertainment industry has been through drastic changes under the global pandemic, and film producers suffering less secured financing. The film also has a broader scope than covering the screenwriter controversy of Citizen Kane: Fincher explores the fragile dynamic between film creators and the mega-moguls that are essential to the Hollywood business that turn arts into a prospective business deal. Meanwhile, Hollywood is witnessing a historically high level of centralization since its golden age, marked by Disney’s acquisition of 21st Century Fox in 2019.

Consequently, the similar situation of centralized power in the movie industry and the resembling radicalization brought by social instability lead to Mank’s significance in 2020: the future of the film industry is puzzled and possibly undergoing a dramatic shift both for the 1930s and for now.

Increasing Budget, Growing Demand

Coronavirus-induced lockdowns are closing movie theaters and making movie production more and more expensive and time-consuming under protocols of social distancing. According to AMC chief Adam Aron, the largest theater chain in the world lost $901 million in 3 months to September 2020, and US ticket sales plunged 97%. The increase in filming budgets and slowdown of releasing films unsurprisingly happen simultaneously with the closure of theaters. Coronavirus safety protocols will increase filming costs by 10% to 20%, as estimated by Jason Blum, founder of Blumhouse Productions. At the same time, movie studios are scrambling to adjust their releasing schedules to the ongoing epidemic. Blockbusters like Wonder Woman 1984 and Mulan had been postponed and more studios are seeking collaboration with streaming services like Disney+, HBO Max, and Netflix. Nevertheless, such collaborations met backlash from filmmakers and critics, who argued that a global theatrical release would earn a much larger box office than the subscription revenues and could thus better relieve the movie industry.

On the opposite side of the industry, its consumers are having an aggregate demand for entertainment products. Being isolated from social activities during quarantine or frustrated by the invasive work-from-home, people seek more opportunities to connect and entertain themselves. With public gatherings called off, people are at home and thus not limited to communicate with mobile devices. Computers and televisions with larger screens are coming back into popularity, and adaptive streaming services like Netflix and Youtube are working to meet the demand of more video-formed media products. Movies, among them, are a major part which owns a massive market.

More Streaming, Less Screening

“A permanent shift has taken place across the industry from a linear platform to a digital platform,” J.P. Morgan’s Alexia Quadrani says. Undergoing a drastic shift from traditional screening to online streaming, the movie industry is seeing more potential in collaborating with streaming services and new forms of business. A year after Disney’s launch of its on-demand streaming service Disney+ in November 2019, it now has more than 73 million subscribers. Though Disney captured almost the best timing to move into the field before the pandemic sweeping across the globe, the competition in this new arena was already fierce. Data analysis showed “little-to-no impact from the Disney+ launch on Netflix trends,” according to Credit Suisse analyst Douglas Mitchelson: continuing its vigorous growth in 2019, Netflix as a largest shareholder of streaming service reported to add 26 million new paid subscribers in the first two quarters of 2020. Many of the services that have turned us into screen addicts didn’t exist a decade ago. But our media consuming habits have been fundamentally changed by these services, and now facing the public health crisis, we begin to wonder if the traditional cinema-going experience may one day disappear.

For some of the audience, going to theaters is less about money and more about the communal experience of sitting together and feeling the lights down and music up. Furthermore, specific genres of films are believed to be unsuitable for watching at home: family movies like Soul must have been more popular than sci-fi like Tenet on digital screening services. The consensus seems to be optimistic for the coming back of theaters. People miss the experience of public gathering, which absolutely includes going to cinemas.

Photo By: Harrison Weber

Future of Movies in the Post-Covid-19 Era

“Releasing more films that were meant for theaters directly to streaming would be a material step down in content revenues from the level generated by their current business structure, but likely even a greater drop in profits,” MoffettNathanson’s Michael Nathanson wrote in October 2020. Digital streaming has a decent chance to attract a larger audience, but the platforms’ total revenue generated from paying customers seems less competitive in comparison to the traditional box office at movie theaters in the short run. However, the services are just getting started, and many of us are confident of streaming economics to be superior to traditional movie economies in the long run. Many platforms now stick to the premium video-on-demand model that keeps all contents exclusive for paying subscribers, so we can expect more flexible practices that probably work better for media companies, streaming services, and the customers.

There will also be a question of whether the soaring of streaming services is sustainable. With lockdown boost fading and people going back to work, Netflix, the clear leader in the industry, reported a slower subscriber growth in the third quarter of 2020. With the audience churn rate slowly rising as people return to normal life pace, the video streaming giants are announcing a new era and paid-streaming services, as well as acknowledging both their opportunity and responsibility to take hold of the great transformation in people’s media consumption.

We never stop asking when we’ll be able to get back to normal. But perhaps what we’re experiencing is the new normal. After months of hiatus, casts and crew are returning to work with unprecedented health checks and safeguards. The industry standards for health and safety are likely to be permanent, and film production will take more time and cost more budgets in the coming decades. And, from production to distribution and consumption, every stage of media contents will be fundamentally different.

Citizen Kane changed how we make movies. 70 years later in 2021, Mank centering around its screenplay brings us back to 1930s Hollywood and simultaneously provides a new angle at the future of movies and theaters. The glossy black-and-white film turns out to be a bridge, connecting the past, present, and future of the industry.

This article was written by Siwei Gu currently based in Shanghai, China. Please send an email to sg6201@nyu.edu to get in touch.

Photo Credit: Easelly

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