Causeway Solutions
ConnectWithCauseway, Entertainment Industry
December 18, 2023
Almost 80% of the general population watches Netflix at least once a month, but the film box office has rebounded to near 2019 levels as fans flock to movie theaters. Learn how the marketing behind theatrical releases influences what movies people watch on their streaming service. Grab your popcorn as you hear about the volatility in the entertainment industry! Listen to the full episode:
Thérèse Mulvey, Vice President of Strategy: Hello and welcome to Connect with Causeway. I'm your host, Thérèse Mulvey, Vice President of Strategy at Causeway Solutions. Today we are very excited to welcome our new Manager of Insights, Jamie Eppler. Jamie is leading the work that we're doing in the entertainment arena, and she brings a wealth of experience in developing client relationships and strategies to impact positive change. It's very exciting to welcome you to Connect with Causeway, Jamie.
Jamie Eppler, Manager of Insights Hello. Great to be with you again.
Thérèse: Well, as you know, we love data nerds. I am also joined by our manager of strategic partner, Lauren Kornick. Welcome back. Lauren. Don't we love data nerds?
Lauren Kornick, Manager, Strategic Partnerships: Oh, yes. Hey, Thérèse. And hey, Jamie .
Thérèse: In today's episode, we are going to talk about the always popular topic of entertainment. We are going to be talking about movies we see in the theaters as well as content we enjoy at home. There is so much data and information to discuss. I'm going to hand it to Jamie and allow her to jump in the deep end.
Jamie: We know that the entertainment landscape, specifically the movie industry, has changed over the last decade. There's been the disruption of streaming, and I think I recall a pandemic somewhere in there.
I was surprised to learn that since the pandemic, the number of theatrical movie screens has only decreased by 5%, and that actually some movie theater companies increased their screen count.
Thérèse: Wow, that's an interesting stat, Jamie. I don't know. I think all of us would've thought it would be higher. One of my favorite sayings: perception is not reality. That's why we need research.
Lauren: And even our own research shows an interesting picture. Compared to this time last year, more people said that they went to the movies up until this point at least once, but fewer now said that they went more than five times. And this back and forth is also seen in the industry's numbers. 2023 is set to have a domestic box office of about 9 billion compared to last year’s 7.5 billion. But we're still not quite at peak 2019 levels of 11.3 billion.
Jamie: Yeah, Lauren, that's really interesting because the Cinema Foundation says box office has rebounded to 2019 levels, but that's specifically on the film by film basis. The biggest differentiator between 2019 and 2022 is the number of wide releases. The movies that were widely released actually performed as well or better than the same type of movie releases in 2019.
Thérèse: So just to reiterate, what you're saying is the movies themselves are performing as well as they did before, but the number of releases is not back to where it was.
Jamie: Yep, you got it. In 2022, the studios released fewer films to theaters because of the pandemic's disruption to production and the increase in direct to streaming releases.
Thérèse: I think it'll be interesting to see how the 2023 numbers pan out compared to 2019.
Lauren: Yeah, the post pandemic stats are, I think, indicative of the strength of movie theaters and the theatrical release in the market. That same Cinema Foundation report that Jamie mentioned also said that in 2023, 50% of the respondents said that they were likely to stream a movie, specifically if they knew that it was released in theaters prior. It's quite a comeback considering that the streaming industry benefited during those days of quarantining and still shows the power, I think, of the theatrical release.
Jamie: Right. Yeah. Lauren, to your point, people are more likely to stream movies. It's almost as if the theatrical releases serve as a marketing strategy more than anything else. If we consider the role that streaming plays, it replaces DVD and Blu-ray sales more than the actual activity of movie going. Streaming does not replace theaters, period.
Thérèse: I think it’s really clear that theatrical and streaming releases are really different. You can compare many of the attributes. They're all movies, but when it comes to being people, they're really different behaviors or activities. That leads me to one of our next topics, which is measurement. And I know they're measured differently.
Jamie: Theatrical tracking and performance measurement is not anything new. There's plenty of well-established players in the market, and the data is reported regularly for everyone to see. You can completely Google top 10 movie releases and box office performance and tracking. In some ways, those theatrical releases are really easily understood.
Thérèse: For movies, people buy tickets. But the streaming market is so different. Much like the struggles that old fashioned broadcast TV continues to be plagued with measurement.
Jamie: We run into a lot of issues with the measurement for streaming services. The fact that streamers themselves are only offering crumbs of data and they're frankly patting themselves on the back for even that. We have no way to validate whether those top trending or most popular titles that streamers put on their front pages are accurate. Netflix shares their hours viewed and number of views, but again, we just have to take their word for it. I know personally as a parent, I refuse to believe that Bunk’d isn't at the top of the chart based on my own kids' consumption alone.
Thérèse: Now I really feel like a boomer. I've never heard of that show. All right. Well, what about third-party measurement companies? Is there some help and opportunity there?
Jamie: Yeah, I mean, as you can imagine, there's plenty of companies trying to chomp at the bit on this gap in the market. There are definitely other measurement companies, including Nielsen. They don't have direct access to the data from the streamers, which means that the measurements aren't consistent across the players and the data that is available doesn't truly explain who is watching what.
Lauren: Even in our own data, we see a relatively consistent rate of people who subscribe to the bigger main subscription services over the last few months. But those numbers can't speak to habits or interests or why they would even subscribe in the first place. Even by the measurements of actual measurement companies that you mentioned, Jamie, they're pretty surface level. Like you said, it's minutes or views or even just media or social media impact. We can know that a movie or show had say a billion minutes viewed within a week, but not who that audience even looks like.
Thérèse: You make a really good point, Lauren. Let's talk about the who a little bit. As we've done in the past with healthcare and politics, this is what it really comes down to in terms of making sure that we understand who we're talking to and what they're doing. What is the consumer profile when it comes to streaming versus movies? How are they different and how are you approaching this question? I think it's really at the heart of what we're talking about.
Jamie: Yeah. I mean, we're approaching the question with another question, which is who will watch where we're trying to create profiles beyond just the standard demographics and give insights beyond minutes watched or the trending titles. Our general plan is to aggregate any available data and to provide that context with our modeled audiences.
Lauren: And that layering is definitely needed. We can find numbers of people who are or were subscribed to a service. But you can break it down to say just making an audience of Netflix Movie Watchers specifically. And according to one of our polls, it's almost 80% of the general population who have watched Netflix at least once last month.
Thérèse: That's crazy. 80%. That's a lot of people.
Lauren: Yeah, it's almost all of 'em. We need to set up a funnel of our own for entertainment audiences. And that answers Jamie’s question about what are they watching and can we predict which part of that large audience for Netflix movie watchers would be open to watching one piece of content over another? Right.
Jamie: And what's the likelihood that they would subscribe to a different streaming service for a similar movie, or would they pay to see a similar type of movie in a theater? There are so many questions to answer about media consumption habits.
Thérèse: This is similar to healthcare models and audience we talked about with Tim [Duer, Causeway Solutions’ VP of Healthcare Insights], in one of our first episodes. Our healthcare audiences are based on something everyone needs, which is healthcare. And here again, we have a huge audience because we're looking at something really everybody does, which is watch content. If 80% are watching Netflix, I guess just about everybody is watching something.
Lauren: And then healthcare, we’re going to focus our models and our audiences on finding those drivers. So here it's drivers of choosing content instead of drivers of care like the healthcare audiences and then usage habits. So instead of care type and frequency of visit, we have frequency of watching type of service or theater content genre and more.
Jamie: Right? And what is unique to the entertainment industry versus healthcare or politics for that matter is the value of artistry. We want to be really cognizant not to override that. For example, a data-driven approach may indicate that demand for succession on HBO was at an all-time high in its final season. They could have kept that train moving while everyone was on, but the artist storytelling knows when the train has met its final destination.
Thérèse: Oh my gosh, you're reminding me of my withdrawal from Ted Lasso. I guess you're telling me that if I am supporting the arts, I've got to be okay with it. Alright, well that brings us to their final area of discussion. The industry overall, and I realize that's a very big question. When I say where is it? There's a lot of change happening. And again, many of them remind me of what broadcast television looked like when cable came to town. Commercials, you got to love 'em.
Lauren: It started to look more like cable. Again, potentially studios are playing with the idea of licensing their content just like in cable or even early streaming days.
Jamie: Yeah, the industry's so volatile right now, clearly trying to gain its footing. In this post pandemic era, streamers are doing what they can to maximize revenue, including changing subscription models. By 2025, we should expect to see 76% of streamers incorporate an ad tier into their subscriptions. I know it's frustrating as a consumer because we're so sick of ads, but frankly it subsidizes the cost of our subscription. Most streamers still have a premium option tier too. If you can't stand a few 60-second breaks, you have the option to pay a little bit more on the front end.
Thérèse: And we will be right back after this advertisement. Just kidding. Well, not only are we hearkening back to the days of commercials, I like to call them or advertisements. It's like fashion, I guess, right? Bell bottoms and Crocs are back.
Jamie: What's true is that there's a rise in streamers that don't require to pay any subscription fees. There's free ad-supported streaming television too, or Fast Services, which is a fast streamer owned by Fox, appeared on the Nielsen charts for the first time in February, and by now it already has greater viewership than HBO Max or Peacock. And just this month, the Roku channel has made its debut on the charts for utilization already on par with Peacock.
Thérèse: I don't know if this is also going to separate people by income. That's for another podcast, right? Who can afford ad free entertainment and who can't?
Jamie: Yeah, exactly.
Lauren: We should just expect to see ads everywhere, return with every service every day.
Jamie: We really did have it good with that ad streaming for a little bit. I read on an article on Vox saying once all streamers incorporate an ad tier that Netflix will be like the new primetime and fast streamers will be the new cable. Advertisers will decide where to spend their money.
Thérèse: Wow. Streamers are positioned to increase profits. How is this landing with people making the content?
Jamie: Well, I mean, they're onto them, that's for sure. As a part of the WGA demands via the strike, they want to increase their flat rate residuals and add some viewership based residuals. But the barrier to the latter is the fact that they lack data transparency as we discussed earlier. Essentially, the people who make the movies and shows have no insight into how they're actually performing.
Thérèse: Well, clearly this is just the tip of the iceberg. There are a lot of open-ended questions, but at the same time, we are out of time. We would love to have you back in a few months, Jamie, to see where some of these trends get to by that time. I think there's going to be a lot happening this summer. That's going to be pretty interesting.
Jamie: I'm sure I'll have lots more to share in a few months’ time.
Thérèse: As always, thank you to all of you for joining us. We have a new feature for our podcast this episode, which is Extra Data. We will post this to our social media sites so that you can view more in-depth information on many of the topics we cover today.
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