The Motion Picture Association (MPA) recently released their annual theme report covering 2020. The report tracks the theatrical and in-home entertainment industry both globally and domestically as well as other video industries. For the THEME report, the MPA relied on various data sources.
In 2020, the global pandemic impacted the theatrical and home/mobile entertainment, as movie theaters and production studios temporarily closed. As millions quarantined, viewers were forced to stay home for their video entertainment. Coinciding with the pandemic, was the emergence of new streaming video services from such prominent studios as Disney , Universal and Warner Bros. joining (and competing) with Netflix, Hulu and Amazon. Hence, stay-at-home viewers were able to watch premium TV and movies across various screens and providers. While industry analysts had commented this trend was already beginning, many agree the pandemic had sped up the pace of adoption.
Here are some findings from the report:
Global Revenue: In 2020 the entire global theatrical and home/mobile entertainment market totaled $80.8 billion, the lowest figure since 2016 and a decline of 18% from 2019. The sharpest decline was in theatrical revenue which dropped from $42.3 billion in 2019 to $12 billion in 2020. Theatrical entertainment accounted for only 15% of the total global entertainment revenue, compared to 43% in 2019.
With shut-downs occurring throughout the globe, consumers relied on digital (video-on-demand, streaming video and electronic sell through) for entertainment. The trend toward digital entertainment was accelerated in 2020 as revenue climbed to $61.8 billion, an increase of 31%. Digital media had accounted for over three-quarters of total theatrical, home/mobile entertainment revenue. There are now 1.1 billion online video subscribers worldwide up 26% from 2019.
Conversely, physical (Blu-ray, DVD and rentals) entertainment revenue continued to decline. In 2020 digital entertainment totaled only $7 billion, less than half of the $14.9 billion in 2016. Globally physical entertainment accounted for 9% of total revenue.
Domestic Revenue: In the U.S., the theatrical, home/mobile entertainment market in 2020 totaled $32.2 billion, down 11% from $36.1 billion in 2019. Theatrical entertainment dropped to $2.2 billion accounting for 7% of the revenue. In 2019 the revenue for theatrical entertainment was $11.4 billion.
Similar to the global market, digital entertainment revenue in the U.S. also grew notably. For the year, digital revenue totaled $26.5 billion, a 33% increase from 2019. While in recent years digital revenue has been increasing, in 2020 digital media exploded accounting for an 82% share of theatrical, home/mobile revenue compared to 55% in 2019.
Despite their continued decline as an entertainment source, in 2020, even physical entertainment generated more revenue than theatrical. For the year, physical entertainment revenue totaled $3.5 billion, a decline of 26% from 2019. In 2020 physical entertainment accounted for 11% of total revenue.
Streaming: Among the drivers in digital entertainment was the increase in online video subscriptions. In 2020, with new launches and more content there were 308.6 million subscribers, a year-over-year increase of 32%. Revenue from online video subscriptions grew by 35% in 2020, totaling $24.7 billion.
For the year, Netflix had nine of the ten most streamed original television programs (based on minutes streamed), led by Ozark. The outlier was the Mandalorian on Disney+ which ranked fifth. The ten most watched acquired series were all on Netflix, led by The Office (the sitcom left Netflix in 2021 for Peacock). For movies, it was a different story, Disney+ dominated with seven of the ten most streamed films of the year led by Frozen II. The most streamed film on Netflix was the Secret Lives of Pets which ranked third.
Fewer TV Programs: With production studios temporarily closed in 2020, the number of original scripted TV programs across broadcast, cable, premium pay and streaming dropped for the first time since the number was tracked over a decade ago. In 2020 there were 493 scripted programs, down from the record high 532 programs in 2019. With production delays, many television programs were moved to the 2021-22 TV season. Moreover, it’s been reported the production slowdown has affected streaming video. In the early months of 2021, the number original shows on Netflix have dropped year-over-year by12%
With the estimated total original TV shows (which includes, unscripted, children’s and daytime dramas), the decline was not as great. In 2020 there were 1,665 shows, compared to 1,675 shows the previous year. This figure has been relatively flat over the past five years. When looking at platforms, pay-TV accounted for 903 shows, a sizable decline from 1,064 in 2019. Making up the loss was online services, which grew to 537 shows, from 381 in 2019. Broadcast was the most consistent year-to-year dropping slightly from 230 shows in 2019 to 225 in 2020.
In 2020, television remains the primary screen for viewing video, accounting for 62% of time spent. This was, however, a drop from 66% registered in 2019. For connected devices share of screen time increased to 17% in 2020, from 13% in 2019. Mobile video accounted for 14% of time spent. The report also notes that time spent viewing with subscription OTT grew by 34% in 2020, surpassing one hour (71.8 minutes) for the first time.
Fewer Movie Releases: Similar to TV shows, the number of movies in 2020 dropped as studios moved release dates into 2021 (and beyond). The report found there were only 338 theatrically released movies in 2020, a year-over-year decline of 66% from 987 movies in 2019. Furthermore, in 2020, the estimated number of movies that began production declined by 45% totaling 447.
As the number of films and movie attendance plunged during the pandemic, financially imperiling movie theaters, studios were seeking new ways to get video entertainment into homes and grow revenue. This included the emergence of premium VOD (PVOD) which shortened the theater window for films to 17 days before becoming available for home video viewing at a premium cost. In a more controversial approach, some movie studios opted to make a film available at home viewing and in theaters simultaneously. Other films intended for theatrical release became available for at-home entertainment.
Box Office: The $2.2 billion in box office receipts in 2020 marked a 40-year low in domestic box office. In 1981 the U.S./Canada market, led by Superman II, generated $918 milion in ticket sales, when the average movie ticket price had been $2.78, compared to $9.16 in 2020. With theaters closed or with restricted attendance from mid-March onward, movie attendance, which had been well over one billion for decades, dropped to 240 million for the year, in all probability, an all-time low.
The top grossing theatrical movie of 2020 was Bad Boys For Life, released on January 17, and generated $206.3 million. The top grossing domestic film of 2019 was Avengers: Endgame with $858 million. Pre-pandemic 2020 looked promising. Box office receipts in January and February had been running ahead of 2019. From January 1 through March 19, the box office was $1.8 billion, accounting for over 80% of the year.
Godzilla vs. Kong: Looking ahead, the business models for entertainment there will be a new normal, post pandemic. A recent example was The Warner Bros. and Legendary Pictures movie Godzilla vs. Kong which has become profitable. The movie grossed over $350 million globally and $69.5 million in its first two weekends since its release on March 31. Making it the highest grossing movie in over one year. The movie was simultaneously released on HBO Max. The streaming which claimed it was the most watched content ever in a given weekend since its launch last May. In the aftermath of the pandemic, this will be the new model in the years to come. It will however, take several years to fully recover.
By Brad Adgate for Forbes