Theatrical or no Theatrical?

As the entertainment industry starts to rethink release strategies due to the impact of the enduring COVID crisis Cinelytic provides critical insights into the economics of a traditional theatrical vs. direct to OTT release by using our OTT demand data and our content evaluation platform. 

As a case study, we ran the Tom Hanks film GREYHOUND as the original theatrical release it meant to be and discovered that base case it would have barely broken-even with an ROI of 1.6%.

GREYHOUND was sold to Apple+ for a streaming release when the COVID crisis hit generating a substantial profit for Sony with a reported sale price of $70m.

Our OTT demand data from July10-20 shows that GREYHOUND turned out to be the first major hit for Apple+ which also had to do with the fact that audiences are starved for new content as traditional studios hold back titles for the theatrical window.

The chart below shows the success of GREYHOUND and the current dominance of streaming titles vs. 6 months ago (Jan 10-20) when major studio titles dominated the Top 20:

With theatrical reopening being pushed back further, we recommend that studios/content providers should seize the opportunity of content-hungry audiences combined with a lack of competition and release more titles direct to OTT.

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Industry Insight: Technology is Rapidly Transforming the Competitive Landscape in Hollywood

The entertainment industry is experiencing rapid change. Tech companies, including Amazon, Google, Netflix, and Facebook, have entered the entertainment industry and are presenting a strong challenge to “traditional” companies especially in capturing audiences in OTT, the strongest growing segment.

The Tech Companies ability to digitally distribute content directly to billions of consumers combined with advanced analytics prior to green-lighting projects puts them at an advantage in regards to what content to create and how best to market it

The “traditional” entertainment industry’s biggest competitive advantage is the ability to produce high quality content and its strong IP ownership including libraries. 

Tech companies are spending heavily to close the “Content Gap” and are catching up at a fast pace.

The entertainment industry has been slow in adopting technology for green lighting decisions, and is under increasing pressure to find ways to improve their business models. 

For a really long time, we have been disintermediated from our customer base, because we sell to exhibitors. We had been flying blind.” Stacey Snider, CEO, 20th Century Fox – Variety, 9/20/17.

There is now an enormous opportunity for the entertainment industry to use advanced data analytics from the green-lighting stage to better leverage its talent, experience, and core assets (high-quality IP & libraries) for producing great content that has an audience.

We at Cinelytic are here to provide the entertainment industry with the tools & insights needed to thrive in this volatile environment. Please let us know if you have any thoughts and questions.