Has Coronavirus Changed Hollywood Forever?

Amid an unprecedented shutdown of movie theaters and entertainment production, major players are experimenting with new business models as digital platforms ascend and artists take up a DIY ethos: “You have to adapt.”

Huw Samuel had planned to take his girlfriend to see Universal’s The Invisible Man in a theater near his home south of London. Then the coronavirus crisis changed his plans, as it has for people around the globe in ways both dramatic and mundane.

Like those in America, U.K. cinema chains were forced to close in mid-March, so Samuel, 29, did the next best thing for a date night — he brewed a pot of tea, turned off the lights in his apartment and rented Invisible Man on Amazon Prime for £16, or about $18.

“I thought it was a pretty reasonable price — about what we would have paid for tickets,” says Samuel, an actor and director whose work on a commercial and a feature have been delayed by the pandemic. “It was only corona that put me off going to the cinema … but this has opened my eyes to more streaming possibilities.”

Long before a public health crisis closed exhibitors’ doors, the audience’s retreat from the theater to home video had driven both anxiety and opportunity at entertainment companies. But COVID-19 represents a watershed moment in the business, one that is accelerating current trends in media consumption and forcing Hollywood to embrace its digital future.

Desperation has driven studios to shrink the once sacrosanct 90-day theatrical window, a move some have been contemplating for more than a decade. At the same time, new streaming video services are drawing heavy investment, and though no company wants to be perceived as profiting from the disaster, streaming usage will be up 60 percent overall during the crisis, according to Nielsen. Gaming will spike 75 percent, according to Verizon. Internet demand is already so high in Europe that government officials there have asked Netflix, Amazon, Apple and Disney to reduce the video quality of their streams to lessen the burden on the continent’s networks.

“COVID-19 will expand the gaps between those lagging and leading in the transition to digital distributions and business models,” says venture capitalist Matthew Ball, former head of strategy at Amazon Studios. “OTT video services will surge, while pay TV loses its most valuable content — sports — and sees an accelerated decline in subscriptions and ad revenue. Parks and movie theaters are ground to a halt, while gaming companies hit new highs in usage.”

The virus disaster, which has shut down production at virtually every entertainment company, also has exposed weaknesses, especially in those that carry a heavy debt burden, like ViacomCBS, Endeavor and theater chain AMC Entertainment, or those that rely on travel to theme parks and cruise ships, like Disney. Cowen analyst Doug Creutz has cut his earnings estimates for all the entertainment companies he tracks through 2022, slashing his price target for Disney from $159 to $101 and for ViacomCBS from $25 to $17.

Widespread layoffs are expected in an industry that had expanded to meet the demands of the streaming content bubble, with agencies including Endeavor and Paradigm already cutting staff and with UTA slashing employee salaries. The question for many in entertainment is how permanent these changes will be — will the industry rebound once the pandemic has passed and come to resemble its former self or will this crisis cement a new normal in Hollywood?

When Universal executives called Blumhouse CEO Jason Blum to discuss plans to make The Invisible Man available for home rental just three weeks into its theatrical run, along with another Blumhouse movie in theaters, The Hunt, “I was supportive of their decision,” Blum says. “It was a very tough decision. In a time of crisis … you have to look forward. You have to adapt.”

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SOURCE: The Hollywood Reporter, Rebecca Keegan