How The Theatrical & Hollywood Business Model Needs To Evolve

By Agambir Bajwa 
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While being under lockdown, some of the studios and theater chains have struggled to stay in business. This pandemic has given them a new reality to deal with but has also opened their eyes to see that there needs to be a robust change for the industry to thrive again. This is a six-part breakdown of how the theatrical and Hollywood business model needs to evolve.

​Ticket and Food Pricing
Going to the movies is expensive for the average person. Think about it. A regular ticket in the United States is usually $9 in small-town and $16 in a big city like New York or Los Angeles. Plus, people typically buy overpriced food from the concession stands (that's where theater's make most of their money). Business Insider reported that AMC has said that 71% of people buy something from the concession stand. There are clever ways that theaters get people to spend more money. Still, for one person to go to the movies and get popcorn, a drink of soda, and a box of candy and a regular movie ticket, it would cost them around $30. That price would increase if you live in a big city like New York or Los Angeles. For one person to spend that much money on 2 hours of entertainment, it seems a bit much.

Now imagine if you are taking your family to see a movie. You could be spending upwards of $100 for two hours of family entertainment. Theaters need to reevaluate how much money they are charging people for food. The studios also need to decrease the amount of money they spend on a movie, because the more they spend making them, the more it costs to watch them. There are easy ways you can cut the budget of a film. For example, you don't need to pay talent a massive $10-20 million salary for them to be in your film or to direct your film. Going to the movies is expensive. The pricing system of going to the cinema needs to be reevaluated and adjusted if theaters want to stay in business. Developing a subscription service for movie passes is a good start, but it'll take some time until that is profitable. 

Streaming Services​
These days, movie theaters have to compete with the high level of content on streaming services to get people's attention. Look at shows like "The Witcher," "The Mandalorian," "The Crown," etc.; they are basically eight-hour-long movies. Then you have films like "The Irishman," "6 Underground," "Bird Box" which would most likely not have been as big of hits in theaters as they were on streaming. Still, because they are included with a Netflix subscription, people are more likely to see them. Streaming is keeping people occupied in terms of content. So the industry needs to think about what kinds of films audiences will leave their house and pay money to see in theaters. Those films have to be worthy of playing in theaters in today's changing cinematic landscape.

The Theatrical To VOD Release Window
I believe that the theatrical to VOD release window needs to change. However, the problem here is that you cannot make the window so small that audiences will just wait it out and not see a movie in theaters. For big-budget blockbusters with a lot to lose if they don't play in theaters, the 90-day window should stay. But for smaller films like "Jojo Rabbit," "The Invisible Man," "Murder on the Orient Express," the release window needs to be shortened to 40-60 days so that people who want to see it in theaters have a chance. Still, word of mouth from a theatrical release will remain so that more people check them out on VOD platforms. 

The Once A Month Movie Goer
When green-lighting or acquiring films, the studio needs to consider how well it can play in theaters or if it is better suited for streaming. The first question they should be asking themselves is, if the average person who only goes to see one movie a month, if even that, will they see this movie? For most films being released in theaters in the past couple of years, the answer would be no. Going to the cinema is an event for most people. They want to see a film worthy of the big screen with an audience. The average consumer doesn't want to pay to see a movie that looks like it belongs on Netflix.​

I don't believe that the budget for a film impacts the likelihood of audiences seeing it. But what needs to happen is that the people running the studios, producers, directors, and writers need to know what audiences these days like. For example, when you look at all the big-budget "blockbusters" coming to theaters, you can see most of the time it just seems like studios are throwing movies at the wall and seeing what sticks. The people making blockbusters need to be fans of the stories they are telling. That is why the Marvel franchise, "Wonder Woman," "Aquaman," "Jumanji: Welcome To The Jungle" have done so well at the box office. If Hollywood wants to release films in theaters, the films they put out need to balance creativity and business to entice the once a month moviegoer. Disney currently follows this strategy and just look at the rewards they are reaping. 

​Diversity In Films
A great story can inspire the world. So why isn't studio fare diverse? I've rarely seen films where being white is what defines the character. Still, most of the time, when I see a person of color on the big screen, their race is what defines them, not the fact that they are a complex human being. There is no reason why most films should have a majority/all-white casts or white leads because the story doesn't require it. Hollywood is just choosing to cast films with white actors and ignoring the actors of color that are just as talented. When you think about it, the color of their skin doesn't define the most celebrated characters in cinematic history. They are characters that anyone around the world can relate to regardless of race, gender, or beliefs. The films we see should have more diversity.

Part of this diversity problem has to do with the higher up's at studios. When you see who is running the show behind the scenes, you can see that majority of the people are white. Movies are a global business; the world is full of diversity. The people making the decisions aren't reflective of the world we live in. You can create as many statements as you want about injustices that people of color have to deal with. But you have to take a hard look in the mirror to see that you are part of the problem. The annual diversity report titled "Hollywood Diversity Report 2020: A Tale of Two Hollywoods," published by UCLA's social sciences division, showed that white men and women hold 93 % of all senior executive positions in the industry. That means that approximately one in ten executives are people of color. These white executives are the individuals who oversee core studio operations, which include casting, marketing, legal, etc. That same report also mentioned that audiences favored diversity not only domestically, but also internationally. 8 of the top 10 grossing films worldwide had a majority non-white audience. This diversity problem doesn't only need to be solved in front of the camera, but also behind the camera. Not only is it the right thing to do socially, but it'll make movies appeal to a broader audience and generate more revenue for the studios.

The Cinematic Experience 
It's apparent if you look at the box office from the last couple of years that audiences don't just pay to see blockbusters. If you just look at the box office last year, you have films that are at the opposite ends of the budget spectrum that made a lot of money. I'm talking about films like "Joker," "Avengers: Endgame," "Parasite," "Hustlers," "Us," etc. Audiences want to see something that is not only a story worthy of the big screen but also something they want to experience with an audience. Streaming content is getting very good these days, and the line between what's theater worthy and what's television worthy is blurring. The highest compliment you can give to a streaming movie or television series nowadays is that "it looks like a legit movie."

Different films have different goals to meet based on their budgets. The mid-range movie isn't dead, it's just Hollywood that's failing it. With very strong word of mouth, good buzz, and audience interest, people will see mid-range or low-range movies. Look at what happened with films like "Ford v Ferrari," "1917," "Knives Out." These are films worthy of having a cinematic experience for. Having a high budget or being a franchise movie doesn't always lead to box office success. Look at films like "Mortal Engines," "Terminator: Dark Fate," "Blade Runner: 2049," "Dark Phoenix," "Gods of Egypt," etc. Some of these films are good, and some are not, but it should've been clear to the studios from the development stage that neither would be a box office hit. The studios really need to consider how a movie will do financially because even though some talent might want their films to play in theaters, nobody wants a box office flop attached to their name and for the studio to lose a lot of money. The studios have to play smart.

As this piece comes to an end, let's remember that film studios are like other businesses. They need to make money, survive, and pay their employees to keep making movies to inspire people and the next generation of storytellers. There's much that needs to change behind the scenes, in front of the camera and at movie theaters. Change is slow and hard, but it is necessary. Movie theaters won't die because of the pandemic, but the industry needs to evolve if it wants to stay relevant and be impactful.

What do you think movie theaters need to do in order to survive this current period in history? Do you agree or disagree with any of my assessments? Let us know your thoughts in the comments section below or on our Twitter account.

​You can follow Agambir and hear more of his thoughts on the Oscars and Film on Twitter at @AgambirBajwa