The way we literally view movies is changing…slowly, but surely, leaving the huge IMAX screens for the smaller displays of our HDTVs, laptops, tablets and even our smartphones. The multiplexes are not happy about it, but they appear to be doing nothing to prepare themselves for the inevitable. According to an article in the International Business Times, U.S. box office revenue was the lowest it has been in three years – but only 5-percent down in 2014 thanks to a strong first quarter. Paul Dergarabedian, Rentrak's senior media analyst, said, "The fact that we only were down 5 percent is a testament to the strong first quarter. Much of this year's drop can be pinned on what can only be described as a dismal summer, when box office revenue dropped 15 percent to its lowest total since 2006. Summer was really down, to say the least."
Why this downward trend continues is really quite simple, yet brought about by many factors. When my generation was growing up, there were no video games, no cellphones, no tablets…hell, I was 27 years old before the first Apple IIes were available for home sale. We have to entertain ourselves with our imagination. With money so tight – things were purchased in cash, not with a credit card – most families only had one vehicle and 12-to-19-inch TVs were still only black and white…anytime we had the chance to go to the movies, it was a big deal. The picture was huge, the color by Paramount was awesome and the loud speakers made you feel like you were there…participating in the movie. What kid (or adult) couldn't wait to go to the movies?
Today's moviegoers are brought up on video games that have the realism of the movies, and they are portable. If you spend any time in a Best Buy, you can see that gone are the $700, 26-inch color console TVs and in are the $300, 46-inch displays and larger – you throw a 60-inch HDTV in your living room, man cave or whatever…add surround sound, and you have yourself a stay-at-home theater experience. No bad weather, no driving, no parking, no walking, no standing in lines, no $5 box of candy, no finding a seat, no fear of a mad gunman arriving to randomly shot someone, for the price of one ticket you can stream a month's worth of Netflix and you can watch it on your own schedule. Ticket sales are down in the key demographic age groups – 18-to-24 year olds are down 17-percent and 25-to-39 year olds are also down 17-percent. Dergarabedian says that, "You're losing that younger audience because they're agnostic about how they get their content."
"The Interview" gave us a glimpse into what it would be like to get a movie first on our mobile or HDTV rather than going directly to a theater – it took in a surprising $15 million of its first four days of online sales and rentals. It was streamed more than 2 million times over the holiday weekend once released on Google Play, YouTube Movies, Microsoft's Xbox Video. While the figures are impressive, especially for a mediocre movie, does this mean that we can expect to see a lot more of this from the studios in the near future. I would have to say, "NO!"
But happen it will…eventually. There will come a time when an entire wall in a home will be a Media Screen, where we will watch everything from the local news, our favorite comedy shows and yes, our first run movies. It will all be done with streaming downloads where you pay a monthly fee or with some pay-per-view arrangement. If you look at the chart below, you can see that even DVD rentals and sales are way down – unless there is some need for portability, most shows can be streamed from Netflix, Hulu, YouTube and others. Just as DVDs replaced video tapes, download streaming will eventually replace DVDs.
The old way of doing things will hurt the revenues of movie theaters the most and disrupt the revenues of the movie studios at first. Releasing a movie to the theaters, then after a while, release it on DVD, and after a while longer release it to HBO or Starz has made them billions of dollars. The studios, who will suffer the least, realize that with the declining DVD sales and declining ticket sales, other avenues of revenue must be explored. The movie theaters are fighting a losing battle when they refuse to release a film that customers can see on both a 5-inch display as well as an IMAX screen and there is already disagreements between the studios and theaters – studios are also making exclusive deals with specific theaters and holding back releases to others.
Almost ten years ago, TechDirt took a poll and asked people where their preference was for watching a movie – at home or in a theater – and 75-percent said that they preferred to watch their movies at home. This was before big screen HDTVs were the rage and the selection of streaming movies was very limited. Technology keeps changing and yet the movie theaters want to continue to do "business as usual," and they openly admit to that fact. The movie studios, however, will go where the customers want them to go so they can follow the revenue trail…it may take some time, but the day is coming when a new featured movie will be streamed immediately for our viewing enjoyment…wherever we may be seated.