What do you mean by streaming and how does it work?
Any live/pre-recorded audio/video content that is stored and hosted on an external server and is accessed by user on their device through the internet is termed as streaming. The media content is not downloaded or stored on the user’s device. It is streamed through the internet and is made available for the duration it plays. Media content includes audio files, podcasts, music, movies, videos and television shows.
In order to stream media content, the user is required to have access to uninterrupted internet connection on any device. It could be a smartphone, laptop, desktop, smart TV/devices or Tablet.
Transformation Of Film Distribution
Traditionally people have been accustomed to watching movie in theaters as a medium of entertainment. With the launch of video home system (VHS) in the 1980s, it became a luxury to watch movies from the comfort of homes.
With the advancement of technology, DVDs were introduced in 1995 and they gained popularity around 2000. DVD players became a rage in the market and it quickly replaced VHS.
Within a few years OTT platforms were launched in the market and it changed the way people consumed movies. Movie streaming on OTT started in around 2008 and it gained popularity in a decade. As per a survey conducted by Statistia for the residents of U.S., 28% participants strongly preferred watching a movie in theatre in November 2018. But by June 2020, 36% strongly preferred movie streaming on OTT platforms.
Though OTT platform were gradually gaining popularity and becoming most preferred medium of entertainment for audience globally by 2018, the outbreak of Covid-19 pandemic in 2019 accelerated the usage. With social distancing becoming the norm and as people continued to remain indoors, the demand for OTT platforms increased.
Media houses began producing web series and videos to cater to the audience on the OTT platforms. With temporary lockdowns across nations and restrictions on social gatherings, media productions began releasing movies on the OTT platforms rather than a theatre. Streaming film from the comfort of anywhere and anytime has become the norm.
Though lockdowns have been lifted and theatres have opened up across the nations, majority of people prefer watching movie from home. Two main reasons are convenience and cost-effective. Globally, there were 1.51 billion OTT subscribers in 2020 and it has risen to 1.88 billion in 2022. It is predicted to reach 2.15 billion by 2025.
Globally, OTT platforms generated a revenue of USD 6.1 billion in 2010 and 157.3 billion USD in 2022. By 2028, it is forecasted to have a global revenue of 242.9 billion USD. This increasing trend ensures that media houses and production companies will continue to produce content to cater to OTT platform specific audience.
Film Distribution in Movie Theatres And Streaming
Movie theatres have been traditionally a place of entertainment. With cinema, the theatre provides a complete experience of sound effects, comfortable seating, entertaining environment and the company of people with similar taste in movies. It comes as a full package. However, when the Covid-19 epidemic broke out and social isolation started to become the norm, the world has gone virtual.
Streaming movies online on OTT platforms is highly preferred. As per Statistica, 14% of people preferred watching a movie released in theatre when compared to 36% of people who wanted to stream a newly released movie online. The numbers of people streaming newly released movies online are bound to increase in the future, hence film distribution is becoming hybrid – online and in cinema halls.
Income From Film Distribution
Producers of a movie or a production house get in touch with film distributors in the geographies they intend to release the movie. It is usually based on the states of a country where the producer wants to release the movie.
Film distributors agree to release the movie in the theatres in return for a commission. The theatrical/distribution share is often used to compute the commission. Usually, it is the cost of releasing the movie along with 7%-8% of distribution as commission. This is how revenue is generated from film distribution.
Challenges For Film Distributors in 2023
With the changing landscape of film distribution in 2023, the producers of movies are facing some problems. Let’s discuss them in detail below.
• Rise of theatre ticket cost for movies
As the living costs increase decade-on-decade, so do entertainment costs. There is an upgrade in the theatrical experience that costs the theatre owners. This running cost along with added profit margin is collected from the customer in the form of movie ticket. The producing house must convince its target audience to spend money to become a viewer through their content and promotion.
• Increase in competition
Entertainment is an ever-growing industry. With new talent coming in, the production houses attempt to churn different, unique, and audience-worthy content constantly.As a result, the quantity of movies has dramatically increased. The number of movies produced, distributed and released are high. The audience are spoilt for choice. Getting people to choose to watch your movie by paying a movie ticket requires executing a strong strategy.
• Encourages small budget filmmaking
Films produced on a tight budget but with strong content get selected in film festivals. Though they draw a lot of attention on such platforms and garner praise from recognized individuals/bodies, it does not translate into financial success. Unless a film performs well commercially, it will not make profits.
There are several reasons for small budget movies to be critically acclaimed nationally or even globally and yet not perform well commercially. Some of the common reasons are that the movie caters to a niche segment of audience; is content-strong but does not have movie stars with huge fan following, etc.
• Easy film release process
After distributing the film to be released in the movie theatres across the country, producers release the movie on major OTT platforms.This is a short time following, possibly within three weeks of the movie’s theatrical launch. Since the movie is readily available on the OTT platform and the monthly subscription cost of the platform is much lower than the movie ticket, a majority of audience prefer watching the movie on VOD platform.
Producers are facing a constant struggle to strike a balance between maintaining fandom and catering to the demands of their target audience versus making profits.
• Single source of income
To save on parting with the commissions to be given to distribution agents, film producers opt to release the movie on major OTT platforms. This means that the production house is solely relying on the revenue generated from the OTT platforms. It is highly unpredictable to rely only on one or two platforms. It might even result in not making any profits even if the movie garners praise from the audience and critics alike.
The way individuals consume entertainment content has evolved as a result of OTT platforms. Since it is accessible from anywhere, anytime and on any device at a pocket-friendly price, it has become the most preferred mode of entertainment. Overcoming the challenges that this change brings and catering to the needs of the target audience by distributing films on the OTT platforms is something that film producers have to figure out. Since the trend is here to stay for a long time, the ones who formulate a strategy and pivot fast will reap the most benefit.