Why is OTT the Next Logical Step for Movie Theaters?

The COVID-19 pandemic has created a big void in the film industry and certainly, the road back to normalcy will be a long one. Film exhibitors are unsure of how long it will take for the customers to return to a crowed, enclosed space, even after the stipulated ease in lockdown restrictions.

Moreover, there is a delay in the release of the major blockbusters. Movies that were scheduled to be released between March and November were either postponed or canceled around the world, affecting almost everyone associated with the showbiz business. 

On top of it, the streaming platforms are rapidly taking over the entertainment industry, especially, when the movies and TV shows are concerned. People are switching to at-home entertainment sources and the film exhibitors are afraid that the online video streaming industry would supplant the moviegoing experience for millions of people and this would hit the offline business, even after the COVID-19 effect lessens. 

According to Technavio, online streaming services are poised to grow by $149.96 billion during 2020-2024. With such a high growth rate, VoD platforms like Netflix, Hulu, Amazon Prime are going to pose a threat to the offline entertainment industry. 

The film industry is surrounded by a number of challenges during and after the COVID-19 effect. Thus, it is important to find ways that can help the film exhibitors retain their presence, beat the competition, and continue to build smart revenue streams. 

The latter segment of this blog discusses the inception of this problem and shares different business models that can be adopted for the long-term survival of the film exhibitors/movie theaters, worldwide. Let’s get started. 

COVID-19 Outbreak and its Impact on the Film Industry:

In effect to the pandemic and the call to maintain social distancing, several COVID-19 hotspots closed the movie theaters. Over 70,000 theaters were shut down in Mainland China in January 2020. Within the first two months of 2020, China’s Box Office dropped down to $3.9 million. 

• On March 8, the movie theaters in Italy were closed in effect to the pandemic. Before the shutdown, the box office tracking registered a fall of 94%, when compared with the same period in the previous year.
• To minimize the impact of the growing pandemic, France operated the movie theaters with half capacity, leaving strategic seats unavailable, so that distancing can be maintained. 
• As the infectious disease started to spread globally, Qatar on March 12, US on March 17, New Zealand & Australia on March 22, Malaysia & Thailand on March 18, and Singapore on March 27 shut down their movie theaters, hitting the global box office and its revenue. 

Change in cinema attendance, box office, and average ticket price during the coronavirus (COVID-19) outbreak in Russia on March 19, 2020

As a result, the global box office is predicted to lose $5 billion. Also, about 120,000 film industry workers have already lost their jobs in Hollywood due to the major lockdown in the film industry (according to the US entertainment industry union IATSE). 

How to Cope with the Effect of COVID-19 on the Film Industry? 

To deal with the challenges that COVID-19 have on the offline entertainment industry, be it the competition with streaming services or 50% occupancy of moviegoers in the movie halls, the film exhibitors should create their Over-the-Top (OTT) app. 

Over-the-Top (OTT) app is an umbrella term, given to the types of apps that use the internet to deliver video content on a smartphone, tablet, smartTV, instead of a traditional distribution method like satellite or cable.

The film exhibitors have the advantage that they have a huge user base and a loyalty point system already in place. This can be immensely helpful in getting started with a great viewership. Moreover, OTT apps can have advantages and be an amazing source of revenue, even after the COVID-19 effect diminishes.

If you’re a film exhibitor, trying to cope with the effect of COVID-19 by launching an OTT app, then following are some of the business models that you must consider in order to stand against the online streaming competition: 

1. Buy Exclusive Rights of New Releases

At the base level, you can follow the traditional rule of releasing a movie. You can buy exclusive rights of new releases for the first 7-8 weeks or for the time the movie is screened offline. Having a movie available exclusively on your OTT platform can give it an advantage over other on-demand streaming platforms like Netflix, Prime, Hotstar, etc. That way, you’re not just another OTT platform. People will look up to your platform for the latest releases, which the rest of the OTT platforms cannot offer. 

2. Buy Streaming Rights for Selected Movies

Other than buying streaming rights for 7-8 weeks, you can also think of buying exclusive streaming rights for selected movies. These movies will remain available on your streaming platform, exclusively. This may include blockbuster movies (that performed well in the initial weeks) or you can buy streaming rights for short films that are promising and bring traffic to your OTT app. 

3. Implement Pay-per-View Model 

Pay-per-View is a business model, wherein the viewers purchase the ticket of a video to either watch it live or on-demand. This will work quite similar to your offline ticketing system where the customers buy an e-Ticket or an offline ticket for a one-time watch. 

Apart from keeping the viewers engaged with exclusive content, OTT platforms can be a great source of new revenue streams for film exhibitors. With some of the innovative add-ons in the OTT app, new ways to viewer-engagement and revenue can be introduced. For example: 

• Movie Merchandise: A movie’s success is never dependent on box office collection and critics review. Memorable characters that win the hearts of millions of people turn out to be a great source of branding and revenue.

  For movie merchandise selling, the OTT movie streaming platform can be integrated with an eCommerce store. This can be a great way for movie creators to promote their new release amongst the viewers by selling merchandise, designing content to win them, etc. People coming to the platform for merchandise can be converted for watching their favorite moves on the platform as well. 

• Food & Beverages: This is one of the biggest sources of revenue for film exhibitors. If you’re launching an OTT platform for movies, then the app can include the option for online food delivery. You can either tie-up with third party food-delivery partners or can offer your own food delivery services. You can bind food delivery services with movie packages. For example, the pay-per-view package can have deals, such as 1 movie streaming for 24 hours + 2 large popcorn + 2 Pepsi  @ $200, delivered at a selected time slot .

• Loyalty Points: This is one of the old school ways to bring the customers back on any platform. On your OTT platform, you can give loyalty points to the customers for their tickets, merchandise, or other activities that they perform within the app.

• Star Talk: If your platform is the way for customers to virtually meet their favorite stars, watch trailers & show previews, you have the key to bringing cinephiles to your platform.  

In fact, an OTT platform can have advertisements as an amazing source of revenue. There are different ways advertisements can be placed in an app or within videos, which can open new earning streams.  

So, this was all about how to manage the cinephiliacs and revenue for film exhibitors as the COVID-19 effect diminishes. In addition, it is important to take care of the audience that joins the theaters offline. Here are some of the ways that film exhibitors can adopt in order to make movie theaters a safer place.

Precautions which would make consumers more likely to visit movie theaters within a month of coronavirus restrictions

Planning to Launch an OTT App for your Movie Theater? 

The COVID-19 pandemic has raised alarms for the film exhibitors, asking them to stay cautious of the  worst situation. In such times, the film exhibitors can harness themselves with viable solutions like the OTT movie app.

If you think such an idea can add more value to your business, then go ahead and share your OTT application development requirement with our experts. We are available through our 30-minute, no-obligation consultation session where our team will help you out to materialize your OTT app idea for movies.