Asaf Ashkenazi
Asaf Ashkenazi
Nov 28, 2018

The Coronavirus, more specifically categorized as COVID-19, has aggressively dispersed itself across the globe on an unexpected scale. This pandemic, classified as such by the World Health Organization, has massively disrupted global supply chains, worldwide trade, basic business operations, and overall activity outside of the home. Governments large and small have asked citizens to refrain from gathering in groups, barring many from attending concerts, movie theatres, religious services, and other common social functions. The virus has unfortunately started to make significant inroads in the United States

Like other global industries, Hollywood has been unable to escape the disruptive reach of COVID-19, with many experts expecting the worldwide box office to take a hit of approximately $5 billion. With China and the United States being the two nations with the highest number of movie-goers, this figure may not be so far-reaching. NBCUniversal recently announced a huge move -- rather than releasing its latest films in traditional movie theaters, the media conglomerate decided to exclusively stream the premieres of The Invisible ManEmma, and Trolls World Tour for a total of $20 beginning Friday, March 20th. 

This isn’t the first unprecedented change in the expected Hollywood entertainment pipeline due to COVID-19. Highly anticipated movie releases, such as MGM’s latest James Bond iteration, No Time to Die, have been pushed to the end of the year in an attempt to avoid potential losses in ticket sales. Other films currently in production have been put on hold, with Paramount announcing a delay in production for Mission Impossible 7 due to health concerns. 

It’s no secret that movie attendance could be in peril due to non-viral causes as well, namely streaming services offered by Netflix or Amazon. However, due to highly-popular franchises such as the Avengers and other fantasy-driven, action-packed films, the movie theater has so far been able to hold its own. Loyal fans flock to movie premieres, taking their millions of dollars with them. Viewers love entertainment, and rather than choosing between two menu options, the question becomes -- why not have both? However, if society is unexpectedly paralyzed by a fast-spreading virus, the answer becomes quite clear, with Hollywood anticipating it in a number of ways.

Self-quarantine, as many have pointed out, lends itself to binge-watching. Disney+ capitalized on this by releasing the second installment of its beloved Frozen franchise, factoring in the worldwide school closures that have children at home for weeks on end. Society has already been preconditioned to heavily consume streaming as opposed to traditional entertainment methods, so this comes as no surprise. The live-action version of Lady and the Tramp premiered on Disney+ long before the Coronavirus outbreak. What has changed is the timing -- firstly, the amount of time spent at home as mandated by governments the world over, and secondly, the accelerated rate at which streaming will be consumed due to this prolonged quarantine. This signifies a potentially massive cultural shift that the movie industry was aware of, but not prepared for at this scale, leading to production shakeups and delayed releases, as well as an entirely new reliance on streaming as exemplified by NBCUniversal.

Additionally, since revenue from cinemas does not currently exist, studios need to adapt to generate new revenue – and they’re releasing titles to streaming “renting” much faster or even directly to streaming and skipping cinemas entirely. And that represents a giant shift in revenue type with higher-priced content moving from cinemas to streaming. Pirates follow the money, so where there is more money there is more risk for studios to lose revenue. Content creators will clearly prioritize the security of their content as they expand streaming options. At the same time, they also must ensure those content protection efforts don’t hamper user experience or lead to troubles with user retention. Usability will be key for today’s content-hungry, price sensitive consumers. That’s a Verimatrix specialty, with some of the largest studios relying on Verimatrix for years to strike the perfect balance between content protection and happy customers.

Although the extent of COVID-19’s havoc remains to be seen, it clearly exposes the vulnerabilities of the current Hollywood business model. Once we go back to normal, people will go back to cinemas, but others will expect to continue receiving titles directly in their homes in parallel to the theatrical window. And Verimatrix is here to help solve real business challenges associated with that likely shift.

To continue this discussion, we are hosting a webinar, "Video Piracy & the Pandemic" on Tuesday, April 7 at 9am PT/5pm GMT. Please join us to hear more about how any service provider can keep piracy at bay, while retaining and attracting new subscribers.