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Turns Out That Studios Did OK Even with a Pandemic. Theaters, Not So Much.

The Motion Picture Association's 2020 report reflected a difficult year for studios. For theaters, it was disastrous.

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One of Cinepolis’s luxury theaters

Cinepolis

Revenue declined from theaters, home digital platforms, and physical media in 2020, according to the Motion Pictures Association’s annual report. Worldwide, the year-over-year decrease was 18 percent — $80.8 billion versus $98.3 billion. The organization, which represents the five major studios plus Netflix, paints a picture that on the surface suggests major losses last year.

In his report introduction, MPA chairman Charles Rivkin refers to the comeback stories that Hollywood loves but adds: “Most of us anticipate that things are unlikely to return to what is ‘normal’ anytime soon.”

The numbers reflect a challenging year, but North America saw the best of it. Its decline was was 11 percent, to $32.2 billion, while foreign markets dropped 23 percent, to $48.2 billion. That discrepancy reflects the penetration of alternative platforms; it also may testify to the member companies’ ability to keep losses to a minimum.

A dour analysis, but not dire. For the genuinely bad news we have theaters, which saw catastrophic declines. Widespread closures for months in all zones, followed by minimal attendance when theaters reopened, made theatrical revenue draw its lowest share ever.

In 2019, the MPA report stressed the dramatic growth of home viewing options. That year, ticket sales were flat worldwide but home-platform revenues increased to 58.3 percent. In 2020, that percentage vaulted to 85.1 percent.

Losing theaters impacted overall revenue, with totals down $18 billion. The survey doesn’t report on profits or losses at member companies, but the data buttresses the assumption that those who produce and distribute movies will have an easier time surviving than the beleaguered cinemas.

The biggest fall came in theatrical play, which is also the sector that brings studios their lowest overall return. Domestically, they recoup around 55 percent in film rental, less overseas. The return on home platforms is usually much higher. For domestic VOD, the take is 70 percent. From the increasingly lucrative Premium VOD option, 80 percent.

“Trolls World Tour”

DreamWorks Animation

Along with their 2020 drop in revenues, studios spent much less on production, released fewer films, saw reduced marketing expenses, and put staffs on furlough or layoffs. Sophisticated home-viewing options were already in place. As we saw a year ago when Universal shifted its first-run films to PVOD, they found themselves free to experiment with release strategies. That will likely continue as theaters move toward nationwide reopenings and studios commit to 2021 release dates.

Some other items of note:

– While theater revenue plunged, revenues from digital platforms rose 33 percent domestic, 31 percent foreign.

– Worldwide in 2020 there were 1.1 billion to subscription services such as Netflix and Disney+ (the former with the wider reach). That is 26 percent above 2019.

– Physical media sales (DVDs, Blu-Rays) fell around 20 percent worldwide, now representing only nine percent of revenues.

– In 2020, 46 percent of North American residents age two or older bought at least one movie ticket. (Theaters were open without restrictions for the first 10 weeks of the year.) That’s down from 76 percent in 2019.

– Frequent moviegoers, defined as those who go at least once a month, comprise three percent of the population but made up 43 percent of total sales.

– These figures do not include pay television platforms like HBO, which also provide a major source of studio revenue. These total over 530 million users, down two percent from 2019.

– Fifty-four percent of American adults watched at least one VOD movie in 2020, up from 49 percent in 2019. While that’s a healthy 10 percent increase, it suggests the gains in VOD revenue stems from greater renting frequency among all customers.

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