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How Streaming Companies Are Reaching Into the Movies

By Stephen Lovely - Dec 26, 2018 at 6:14AM

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Netflix and Amazon are coming for the Oscars.

In its simplest terms, the cord-cutting trend is represented as a threat to cable and a boon to streaming services like Netflix. Both of those things are true enough, but there is much more to the cord-cutting revolution than that. Cord-cutting isn't just about consumers fleeing high-priced cable bills; it's also about related trends like the rise of prestige television, the emergence of streaming original content, and the increasing tendency of Americans to enjoy entertainment in the comfort of their own homes. Taken as a whole, the cord-cutting trend is transforming more than just pay TV.

Last year was not a good one for movie theaters. Attendance at U.S. and Canadian theaters hit a low not seen since 1992, with Box Office Mojo estimating that 1.24 billion tickets were sold. This year has proven only marginally better, and the industry as a whole is clearly struggling. While it would be silly to suggest that filmmaking itself is suffering in the era of streaming, it's hard to ignore how it's been transformed.

A father and son eat popcorn in a movie theater.

Image source: Getty Images.

Prestige TV and the Hollywood talent leak

Not so long ago, the TV business was considered less prestigious than the movie business -- in no small part because it was less lucrative. Hollywood movies were where big bucks were made, stars were born, and true art was created. TV was for cheap productions interspersed with ads, and for syndication of those Hollywood movies. That changed with the current "Golden Age of Television," which was ushered in by HBO -- now an AT&T-owned player in the streaming business that competes, in some ways, with Netflix.

When streaming services like Netflix realized that they could make more money with original content than they could with licensing deals, they used HBO's prestige TV as the model. Without the limitations of TV censors, streaming companies could create works that rivaled Hollywood films in budget, scope, and quality. Series could be big draws in an era of binge-watching.

All of this made series more prestigious, erasing much of the gap between shows and movies. And that, in turn, has led to a trend of Hollywood stars ditching movies for shows. From Kevin Spacey in 2013 (Netflix's House of Cards) to Meryl Streep in 2018 (HBO's Big Little Lies), the list of high-profile Hollywood stars dabbling in streaming and TV series has lengthened in the streaming era. Shows can now pay as much as movies in some cases, and a steady role in a series can ensure an actor income and cultural relevance for years. Series production schedules can even leave room for actors to do movies in off periods, allowing them to have their cake and eat it, too.

Original movies and streaming production companies

And the streaming companies are moving over into the traditional-movie playground. In 2017, Manchester by the Sea -- which was distributed by Amazon Studios -- became the first streaming-backed picture to win Best Picture. In 2018, Netflix nabbed eight Oscar nominations.

For evidence of the effect this is having on traditional filmmaking, look no further than the Oscar voters themselves, who reportedly have resolved to look into their own definitions of what constitutes a film as opposed to "TV" in an effort that could prevent content makers from pursuing both Emmys and Oscars. 

The voters were reportedly particularly disturbed by Netflix. While Amazon had given its Hollywood film a traditional run in brick-and-mortar theaters, Netflix's films were released directly to its streaming service in the same way that all of its original content is, as well as in theaters to qualify for Oscar consideration.

Again, this isn't about the death of the film industry so much as a change in the way it works. Amazon, HBO, and Netflix make real movies with real stars. They make plenty of them in Hollywood, and they hire plenty of established Hollywood stars. But for movie theaters and box-office sales, the streaming giants are a real threat.

Streaming services have changed how Americans watch movies -- and how movies are made

We know that streaming services change the way people consume media. Much is made of binge-watching, a new type of show consumption that cable companies can't match. But movie viewing is changing, too. As early as 2012, researchers associated Netflix (along with other factors, such as more people working from home) with an American tendency to stay home more often than they had less than a decade earlier.

And if Americans want to stream movies at home rather than going out to the theater, that can be financially beneficial for viewers, who don't have to shell out for tickets and snacks, and for movie companies, which can make money off of movies that might have flopped in a theater when people who aren't paying for tickets and snacks are willing to stream them at home.

It's hard to see a financial argument for movie theaters on either side of the equation. The popular service MoviePass, which attempted to reconcile the cost-benefit issues of movie theaters by offering subscribers unlimited movies, saw its low-priced model prove unsustainable. Meanwhile, some observers are suggesting that streaming services actually buy up theaters themselves. Perhaps that's the future of the American movie-theater experience: as a loss-leader or promotional tool for streaming services. If not, the movie-theater business may not have much of a future at all.

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