In the ever-evolving landscape of streaming content, one thing has become increasingly clear to film professionals: the era of unabated growth in streaming, both feature films and series content, is ending.
Before unprecedented disruptions in late 2020, streaming giants like Netflix and Amazon invested heavily in original films, but after management changes at Amazon Studios, films fell sharply out of favor. However, the pendulum could swing back at Amazon after the acquisition of MGM in 2022 for $8.5 billion.
Strong economic headwinds, content bloat, and declining demand have given rise to a more measured approach. This article delves into the changing dynamics of streaming feature films, exploring the decline in interest, the Wall Street influence, and the future strategies of the industry.
A Peak in Output: The Streaming Surge
For years, streaming services have flooded the market with a seemingly endless stream of original content. The fourth quarter of 2022 marked a zenith, with a remarkable 11% growth in streaming original titles. However, as the dust settled on this boom, the industry witnessed a noticeable slowdown in production during the subsequent quarters of 2023. The correction is likely to be fierce.
The Wall Street Factor: From Subscribers to Revenue
The financial landscape plays a pivotal role in this transformation. Wall Street’s insatiable appetite for subscriber growth once drove streaming platforms to pour vast sums into content creation. However, the tide has shifted, with investors now emphasizing revenue and profitability over sheer subscriber numbers.
Netflix, once the pioneer of big-budget streaming movies, serves as a prime example. In 2022, the platform released a whopping 75 English-language films, but that number plummeted to just above 40 in 2023. The reasoning behind this shift is clear: investors want tangible returns on their investments, not just the promise of more subscribers.
From Streaming-First to Theater-First: A Shifting Paradigm
One of the most notable trends is the growing preference for theatrical releases over streaming debuts. Legacy studios like Paramount and Warner Bros. have opted to give their promising titles conventional theatrical releases before making them available on their respective streaming platforms.
This shift reflects an understanding that theatrical releases can make a substantial impact, not only culturally but also financially. It’s a strategy that allows studios to tap into both the theater and streaming markets, maximizing revenue potential.
The Streaming Movie’s Identity Crisis
As streaming platforms attempted to mimic Hollywood’s blockbuster model, they found themselves at a crossroads. While Netflix made headlines with extravagant deals for films like “The Irishman” and “Knives Out” sequels, the overall quality and appeal of these movies came into question.
Once heralded as the saviors of original storytelling, feature films produced by many streamers are now often viewed with skepticism. Some industry insiders describe them as closer to ’90s-era direct-to-video releases, lacking the charm and impact of true Hollywood blockbusters.
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Pay-1 & SVOD Rate Cards for Motion Pictures and Series Exhibited Worldwide in Multiple Availability Windows
- Motion Pictures: Pay-1, First Run, Second Window Features, Recent Library Features (Tiers AAA,A,B,C), Library Features (Tiers AAA,A,B,C), Current and Premium Made-For-TV Films and Direct-To-Video Films, covering many license periods over the last decade
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- Because most-favored-nation rates operate in practice, the rates and terms apply to a diverse range of content and distributors worldwide in multiple availability windows.
The Industry’s Response to Challenges
As the streaming landscape undergoes significant changes, studios are reevaluating their strategies. They are no longer willing to throw vast sums of money at streaming movies solely to boost content volume. Theatrical releases are increasingly seen as a way to achieve both strong viewership and maximum revenue. However, it remains to be seen if filmgoers will return to the theaters that so isolated them just two years ago.
Balancing Act: Theatrical and Streaming
Studios are discovering that they can have their cake and eat it too. By adopting a hybrid approach, they release films in theaters and subsequently on streaming platforms, benefiting from both avenues. Recent examples like “The Boogeyman” and “Evil Dead Rise” demonstrate the profitability of this strategy.
Strategic Content Acquisition
Streaming platforms are becoming more discerning in their content acquisition, moving away from accumulating a vast library of content in favor of targeted, high-quality acquisitions. This shift reflects a recognition that quality often trumps quantity.
FilmTake Away: Navigating the New Streaming Era
The streaming feature film landscape is undergoing a significant transformation, with a shift from quantity to quality, from subscribers to revenue, and from streaming-first to theater-first strategies. Wall Street’s influence has brought about a fundamental change in how the industry operates.
While streaming remains a dominant force in entertainment, it is no longer a gold rush of unlimited content creation. Film and television executives must adapt to this changing environment, recognizing that the future may lie in a more balanced approach that leverages both theatrical and streaming markets.
In this evolving era, success will be defined not just by the number of subscribers but by the profitability of content. The days of making streaming movies just for the sake of streaming volume are fading into the past. As studios redefine their strategies and audiences evolve in their preferences, the industry must remain agile and innovative to thrive in this new streaming era.
Warner Bros. Discovery has lost 2.5 million subscribers in its direct-to-consumer (DTC) division, encompassing HBO cable subscriptions and the Max and Discovery+ streaming services. The company also experienced a massive loss in advertising revenue for linear television, which still keeps the lights on at many studios.
After years of focusing on producing original content, Netflix reversed course to prioritize third-party content licensing again. Luckily, the most prominent content distributors have grown wary of hoarding content exclusively for their direct-to-consumer streaming services.