In retrospect, the movie industry's opportunity to bypass theaters altogether and instead send new films directly into people's homes has probably always been there. It just took a pandemic to force the business to give it a shot. Trolls 2 World Tour from Comcast (NASDAQ:CMCS.A) unit NBCUniversal was the first mainstream studio-made flick to take that shot. The movie generated around $100 million worth of rental revenue during its first few weeks of availability, rivaling the first film's box office take. On a net basis, the sequel probably made more for Comcast's Universal than the original film did. In short, the model works -- or at least it did for this kids' movie.

This, of course, was the basis of a (very public) spat between NBCUniversal and movie theater chain AMC Entertainment (NYSE:AMC) that materialized in April. Protesting a long-established understanding between theaters and studios that gives movie houses exclusive access to a film's first 90 days of availability, AMC CEO Adam Aron vowed to discontinue showing any Universal titles in any AMC theater.

Person with feet up aiming remote at TV

Image source: Getty Images.

NBCUniversal's chief Jeff Shell backed off slightly on flouting what the success of Trolls 2 seemed to mean for the film business, but only slightly. Even after extending something of an olive branch during Comcast's first-quarter earnings call, he went on to say that "the majority of our movies, whether we like it or not, are being consumed at home. It's not realistic to assume that we're not going to change."

What neither Shell nor Aron may have fully appreciated at the time was that their argument is only a microcosm of the tension between all theater chains and all studios that's become palpable in just the past few weeks. That tension is only apt to grow, given the results of a recent consumer survey.

An untapped opportunity

Add the acronyms PVOD and TVOD to your investment lexicon. Short for premium video on demand or transactional video on demand, the business models join far more established distribution models like SVOD (streaming video on demand) and AVOD (ad-supported video on demand).

They haven't been game-changers. The Digital Entertainment Group's look at 2019's U.S. market indicates that only about one-fourth of the $20.4 billion spent on digital video was spent on a per-title purchase or rental. The rest was spent via subscriptions (think Netflix).

TVOD and PVOD have been a relatively small part of the digital video market for the reason one might suspect: The media available for digital purchase doesn't include the first-run movies that generally command higher ticket prices in theaters when they're new. In fact, TVOD and PVOD films are no longer in theaters; they're often no longer "new" by any stretched definition of the word. Content owners have been content to monetize their older entertainment assets this way, after monetizing them in theaters first.

Consumer preferences are changing, however, in a way that should haunt AMC Entertainment, as well as its rivals Cinemark Holdings (NYSE:CNK) and Cineworld Group (OTC:CNNW.F).

Numbers that should worry movie theater owners

Hub Entertainment Research recently posted its "2020 Monetizing Video" report, laying out the results of a survey of more than 2,000 U.S. residents. Asked about their willingness to pay for a first-run film viewed at home rather than in a theater, 63% of those people between the ages of 18 and 34 said they would either probably or definitely pay to do so. Only 36% indicated they wouldn't do so.

It's not an earth-shattering proportion. In fact, among those polled aged 35 and up, only 12% said they would either probably or definitely pay to watch a new flick at home.

Still, the poll should be particularly troubling given 2019's demographic statistics from the Motion Picture Association of America (MPAA). The MPAA notes that the 25- to 39-year-old crowd sees more films per year than any other group, with each movie-goer in the group nearly doubling the number of annual movie house visits from the next-nearest 40- to 49-year-old crowd every year. People between the ages of 18 and 39 accounted for 40% of all movie ticket sales in the United States last year.

This segment of the population isn't unwilling to pay steeply for the right film, either. Hub Entertainment's survey indicated that 67% of these 18- to 34-year-olds would readily pay $15 to watch a new movie at home, even if they could see it in theaters at the time. Incredibly, 57% of this crowd didn't balk at paying $50 for access to a new film (presumably planning to watch in a group where everyone chips in a little dosh).

Think bigger-picture about smaller screens

It's still too soon to unequivocally say that movie theaters have passed the point of no return. There are also always going to be some theatrical creations that deserve to be seen on a huge screen. It's just a matter of right-sizing the number.

It would be naive to ignore what Hub Entertainment Research's data is telling us, though, just as it would be short-sighted to expect consumers to change their minds and overwhelmingly fall back in love with an actual theater experience. If anything, as consumers age and younger people grow up with even more access to mobile technologies and at-home entertainment options than their parents, direct-to-consumer films will likely become even more commonplace. Comcast's NBCUniversal was simply the name that tipped the scale, so to speak, with Trolls 2 World Tour proving the model works.