on April 09, 2015 Educational

How The Internet is Killing Movie Theaters

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2014 marked the lowest number of moviegoers since 1995. 2014 box office revenue was down 5% from 2013, the lowest drop from one year to the next in almost a decade. 1.26 billion cinema tickets were sold in 2014. Sounds like a high number, except it hasn’t been less than 1.3 billion in 20 years. So, what happened? Where is everybody going to get their cinematic fix? Online. America has migrated to the Internet to fulfill their entertainment needs, and the enormous surge in online media content has hindered our desire to get out of bed and head to the theaters. Here’s how video-on-demand is reshaping the film industry as we know it. 

It started with Netflix. Since its inception in 1997, Netflix has changed our lives with the press of a button. Instant Queue, DVD rentals, hours of binge watching, all at our fingertips, all the time. First, they wiped out Blockbuster. Once worth $5 billion, Blockbuster didn’t have a chance. Their problem? Time. The time it took to get in your car. To drive to the store. To walk through the aisles. TO DECIDE. To debate whether or not to treat yourself to a box of candy to get the full movie experience. To drive home. And to do it all over again when the return dates came around. 

Then there was Hulu. Then Vimeo. Then HBO Go. Then Amazon Prime. Now? Chaos. Netflix has over $50 million in subscribers. Game of Thrones crashed HBO Go. According to Statista.com, global VOD service revenue will go from $25 billion in 2015 to almost $40 billion in 2018. While global box office sales from 2015-18 are projected to go from $40 billion to $45 billion

So why are people choosing VOD over theaters?

CONVENIENCE

Let’s start with the obvious. As long as you have a TV, PC, laptop, tablet, or mobile device (and an internet connection), you can stream any of these programs instantaneously. Movies that hit the theaters could be on demand after a few months, why not just wait? There’s enough content to keep you busy until then. The Guardian made a great point about how all content can eventually be seen: “Back in the olden days people would reply: “Yeah, sure, I’ll get to it when I get to it.” But then the film would end its theatrical run, so your friends had a legitimate excuse to ignore you… And that would be the end of it. But this pop cultural duty-shirking is no longer possible. Films never go away any more. As soon as a film leaves the cinema it becomes available online somewhere.”  

CONTENT

Which leads us to the other reason people are staying away from theaters. Content. The Internet has exceeded theatuers in both quantity and quality. More titles. Better titles. Amazon and Netflix both won awards at the Golden Globes this year for Transparent and House of Cards. Woody Allen is teaming up with Amazon to make an Amazon Studios original film. Vimeo is becoming the epicenter of short films and web series,’ while Youtube is following close behind. One can make the argument that the majority of VOD services contain mostly shows as oppose to movies, but that doesn’t seem to be making a difference to consumers. Quality content is quality content. If House of Cards is more entertaining than The Amazing Spider-Man 2, the audience will spend their free time on Netflix, and not at theaters. 

PIRACY

You can’t talk about the film industry in 2014 without mentioning piracy. First it was The Interview. Then it was EVERY OTHER MOVIE EVER MADE. In my article, Oscar Films Lose Big Due to Piracy, I list each Oscar nominated movie and how much money they lost to illegal online streaming. Piracy is a huge incentive to stay home instead of going to theaters. If every big title can be found for free online, why waste your money? 

PRICES

The average movie ticket rose from $7.96 to $8.33 in 2014, according to the National Association of Theater Owners. But we all know that price is nothing compared to tickets in and around major cities. It’s considered normal in New York and Boston to pay up to $15 for a ticket, plus another $5 for 3-D or IMAX. Online streaming services go by a monthly subscription with unlimited hours. There is no fiscal comparison. VOD wins.

As the movie theater business declines, VOD continues to gain share in the entertainment industry. The theaters need to start producing better content if they’re going to charge high prices for tickets. Or they can lower the prices. Either way, something needs to change to keep theaters alive.

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Nick Shanman

Intern at large. Movie buff.