Australian cinema operators face a “terminal” threat if major Hollywood studios follow Warner Bros and allow their blockbuster movies to be streamed online at the same time they are released on the big screen, research house IBISWorld has warned.
All 17 of Warner Bros’ 2021 releases, including The Matrix 4 and the remake of sci-fi classic Dune, will be released simultaneously on the film studio’s HBO Max platform, which is yet to launch in Australia.
Before the arrival of Netflix and its many streaming competitors (including Stan, which is owned by Nine, publisher of The Australian Financial Review), cinemas enjoyed a three-month window of exclusivity.
While Warner Bros Pictures Group chairman Toby Emmerich argued the move was in response to the “checkerboard theatrical market” this year and that a lot of people would still choose to go to cinema if they were able to, IBISWorld senior industry analyst Will Chapman disagreed.
“If this approach were to become more widespread, it could represent a terminal threat for cinemas,” Mr Chapman said.
“If people can enjoy major film releases from the comfort of their own homes [on their high-definition televisions], cinema ticket sales would likely decline significantly.”
Michael Hawkins, executive director of the National Association of Cinema Operators, hit back at the IBISWorld report, telling the Financial Review it was “not truly reflective of what is happening in Australia”.
He said HBO Max was not available in Australia so there would be no immediate impact, and that Warner Bros had made it clear it was only a 12-month trial due to the cinema opening issues in America and Europe.
“We believe that when Warners see how much money they are leaving on the table by streaming [their blockbusters] they will come back to theatrical releases,” Mr Hawkins said.
“The talent – directors, producers and actors – are telling them this as well. They all want to make movies for the big screen, and will go elsewhere.”
More generally, Mr Hawkins said cinema could stand on its own two feet amid the growth of Netflix and others.
“We’re an out-of-home … and immersive experience,” he said.
“You can’t go on a first date and bring someone to watch a movie in the lounge with mum and dad. So I think we are safe with that demographic.
“Looking ahead, I am feeling bullish. There’s going to be a blockbuster coming out every week. It’s going to be huge, an embarrassment of riches.”
Revenue rise forecast
IBISWorld is forecasting cinema industry revenue to rise 1.1 per cent this financial year to $1.31 billion, having fallen an average of 7 per cent per annum over the past five years.
During the 2020 financial year, when many cinemas closed due to the pandemic, revenue fell more than 25 per cent, according to IBISWorld projections.
By contrast, IBISWorld forecasts pay television and streaming video on demand (SVOD) platforms to increase revenues by 3.3 per cent in 2020-21, to $5.7 billion.
“The closure of some cinemas due to the COVID-19 pandemic, the strong uptake of streaming services over the past 12 months, the popularity of ultra-high-definition televisions and the recent Warner Bros announcement are all contributing to a challenging outlook for cinemas,” Mr Chapman said.
At the same time Netflix, with its massive production budget, has taken on the big studios with straight-to-SVOD movies like Martin Scorcese’s The Irishman, Roma and Marriage Story, which were all nominated for Academy Awards despite no or limited theatrical releases.
To date, Netflix has received 54 Oscar nominations, winning eight times.
A spokesperson for cinema operator Hoyts said it remained confident that once the virus was controlled, its business would return to normal trading conditions.
“Great home entertainment options have prevailed since television was launched but the cinema remains an out-of-home entertainment experience that continues to evolve and be enhanced by innovation,” the spokesperson said.
“While we have no control over the studio release schedule, we are optimistic about the titles coming to Australian screens in 2021, including The King’s Man, Morbius, Peter Rabbit 2 and the latest James Bond movie, No Time To Die.”
A spokesman for the country’s biggest cinema operator, ASX-listed Event, declined to comment.
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