Hollywood entertainment executives could be pardoned for feeling a bit worn out by late 2020, given all they’ve gone through for, really, three years: multiple mega-mergers, endless restructuring, numerous streaming launches, broken business models, huge new competitors, even the long-overdue reckonings over inclusion, representation, #MeToo and #BLM.
On top of all that, this year’s pandemic walloped the town. Some beloved entertainers and behind-the-scenes crew died. Dozens of productions were disrupted, leading to cancellation of some series and idling thousands of workers. The theatrical window slammed shut.
Not incidentally, doing everything from home lit a rocket engine under the town’s grinding transition to streaming, the mode of distribution that will dominate its future. A respite from all this would be lovely, no doubt.
Bad news for the battered, however: The rollercoaster of reformation that has sent Hollywood careening into the future isn’t likely to pull into the station anytime soon.
So, what’s the next shoe to drop as Hollywood lurches into 2021? Here’s some highly informed speculation on next year’s most likely trends:
> More Consolidation. MGM got a jump on this trend when news seeped out that it’s for sale, again. The storied studio is a ghost of its glory days, but has several useful assets: more than 4,000 movies, a thriving TV production unit and 10,000 hours of episodic content. That’s a nice package, though not necessarily equal to the $7.5 billion MGM’s board reportedly is seeking. But if they can’t get that price now, when would they ever? That said, further consolidation talk inevitably turns to the usual suspects -- AMC, Lionsgate, maybe Cinedigm -- but maybe also mid-sized powers Discovery and ViacomCBS. Both are launching their version of an encyclopedic SVOD service, but neither is big or broad enough to credibly muscle into the top tier. Where does that leave them long term? For that matter, what about Fox, as the Murdochs contemplate a post-Trump world with only AVOD powerhouse Tubi and a very niche Fox News SVOD service in place? On the hardware side, how long will it take Amazon to buy out Vizio, TCL or another TV maker for its Fire TV platform? That sort of trick would be right out of the Jeff Bezos World Domination Playbook. Would Apple (new Apple TV 4K reportedly coming), Alphabet (watch out for its revived Android TV/Google TV push) or even an invigorated Roku make a big play for market share on the device side?
> More Distribution Windows. We’ve seen at least three flavors of early-release strategies for features on streaming services without any clear winner yet. Next year should clarify some key questions: Do day-and-date releases of big movies drive signups, reduce churn, and build long-term ARPU, like WarnerMedia hopes? What’s the right price for a premium VOD release like Disney’s Mulan? What will theater chains agree to, whenever they’re back in operation, beyond the NBCU-AMC deal?
> Fewer Theaters. Speaking of theaters, expect quite a bit fewer theater screens operating at the end of 2021 than the nearly 41,000 that NATO counted in March. Regardless of any short-term government bailout, theatrical exhibition needs to restructure for the streaming future, too. That means fewer, better screens with plenty of amenities. It likely means diversifying facilities into multi-purpose entertainment centers, with esports arenas, VR experiences, dining and drinking, and special events programming. It also means right-sizing the number of screens for what likely will be fewer mid-range films (which now are heading straight o streaming). And it means accounting for collateral damage caused by the collapsing retail and mall sectors. Whenever going to movie theaters becomes imaginable again, there should be plenty of big movies to watch. The question is how long will it take to get to that point, and which theaters will still be alive?
> Different Deals. When WarnerMedia announced its ground-shaking decision to day-and-date its 2021 film slate, the first question many in Hollywood had was what about the profit participants? Warner will have to do a lot of cleanup (and payout) with talent, agents and managers, and co-production partners such as Legendary. But that rip-the-bandage-off approach also leads to a broader shift, away from the giant roulette wheel that blockbuster projects have been in recent years. It’s a model Netflix has been perfecting for years, and everyone else likely will edge toward something similar in coming years. That means bigger upfront payments, no syndication or international rights to sell, and less upside or downside.
> More Snipped Cords, More AVOD. Financial exigencies will force many households to join the cord-cutting that’s already reduced cable household penetration to its lowest level in a couple of decades. Services such as Tubi, Xumo and Pluto TV should be big beneficiaries, serving up wads of free, familiar programming that feels a lot like cable, without the overhead.
> Beat-Up Broadcasting. Broadcasting was always headed to a down cycle in 2021, especially after 2020’s record election ad spending. But big media companies will continue to shift their best shows to streaming. That will hollow out their broadcast and surviving basic cable networks, which will increasingly feature formula sitcoms and procedurals, mixed with news, sports and unscripted productions. That will only encourage viewers to seek out other sources of entertainment.
> More Bundles, Skinny And Otherwise. Virtual MVPDs, or “skinny” bundles, were supposed to capture those cord-cutters. The bundles typically aren’t so skinny anymore, but continue to add subscribers seeking a part-way solution. Expect to see other kinds of bundles arrive in 2021, featuring collections of streaming services that can’t break into the top tier of must-haves. Which is to say, just about everyone but Netflix, Amazon Prime, HBO Max, Disney Plus, and probably Peacock. Disney, of course, is already bundling, aggressively marketing Disney Plus, Hulu and ESPN Plus. More such deals will follow.
> More International Flavor. To get bigger, the big services need to reach beyond the United States, where the market is already headed toward saturation. One hot market is India, where Disney, Amazon, Apple, Google, and Netflix already have a wide range of interests. With Indian household incomes already at one third of U.S. levels, and more mobile accounts than the U.S. has residents, you can begin to understand the opportunity. The downside: Hollywood-only product isn’t enough to attract tens of millions of subscribers in India or elsewhere. Local audiences want local content, too. Netflix is buying and making content around the world. When will everyone else join the party?
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