How Big Film Studios Can Thrive Through Video on Demand (VOD) in the Post-COVID Era

Before the rise of streaming services, traditional film studios such as Disney, Warner Bros, and Universal primarily relied on cinema releases for their earnings. However, the success of these studios in adapting to the Video on Demand (VOD) model has become a subject of interest during the post-COVID era.

Struggling Box Office vs. Streaming Success

While blockbuster films such as those produced by Disney and Warner Bros could potentially earn more in theaters, the revenue games have shifted. The success or failure of these films on streaming platforms is still ambiguous. For instance, the performance of Disney's Mulan on their platform was a significant factor in determining the future of their VOD strategy. How much Mulan made on Disney’s platform compared to its potential box office earnings at favorable times remains to be seen.

However, the potential earnings from streaming services are becoming increasingly attractive to big film studios. The revenue sharing arrangements between streaming services and traditional cinema releases are clearly in favor of the streaming platforms. This shift is not just about the financial benefits but also about the ability to reach a global audience without the constraints of cinema releases.

Revenue from Streaming Services

For example, Warner Bros’ success with its streaming service HBO Max is remarkable. Every 10 million subscribers add approximately $2 billion to the Warner Bros’ revenue from this service. This is without the need to share any profits with theaters. Similarly, Disney has seen a substantial boost to its profitability with its own streaming service. With 90 million subscribers, Disney is adding $9 billion annually to its revenues, surpassing any single year at the box office.

The advantages don’t just lie in the subscription numbers. Streaming services can further enhance their profit margins by reducing costs associated with cinema distribution. The expenses of production and marketing, while significant, can be managed more efficiently on streaming platforms. A shift from the traditional 50% share to streaming revenue models can significantly impact a studio's bottom line.

Addressing Concerns from the Industry

While the industry shift to streaming might seem advantageous for studios, it has also led to critics questioning compensation for filmmakers and studio personnel. Many in the industry have expressed frustration, particularly regarding CGI-heavy and superhero movies that require substantial investment. The recent delays and challenges due to COVID-19 have only exacerbated these concerns.

?tt’s a legitimate concern, but the industry is adapting. Studios are exploring new business models where the focus is on long-term subscriber engagement rather than one-off theatrical releases. Sony, for example, released its film Morbius directly on streaming, bypassing traditional theaters altogether. This demonstrates a willingness to experiment and find new ways to enhance revenue streams.

The Future of VOD Strategies

The success of VOD strategies will greatly depend on the willingness of consumers to pay for streaming content. Studios must also navigate the complex landscape of balancing entertainment value with the need for sustainable revenue models. The key will be to offer content that not only attracts subscribers but also keeps them subscribed long-term.

Ultimately, the future of the entertainment industry lies in diversifying revenue streams. While traditional cinema releases will still hold significance, the ascendancy of streaming services is undeniably reshaping the landscape. Big film studios need to embrace innovative strategies to capitalize on these opportunities and ensure long-term profitability.

For more updates and insights, visit our website and stay connected with us on social media.