Here Are the Ways the Pandemic Changed Hollywood

A pedestrian crosses the street in front of the Hollywood Wax Museum in Los Angeles. (Photographer: Patrick T. Fallon/Bloomberg)

Here Are the Ways the Pandemic Changed Hollywood

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In the early days of the coronavirus pandemic, things seemed to be going from bad to worse for Hollywood. Studios, already suffering from declining ticket sales, now faced theater and theme park closures, release delays, and production freezes. Television networks, battered by cord cutting, saw sporting events canceled or delayed, depriving them of their most valuable programming.

But the chaos also sharpened Hollywood’s attention, forcing it to focus on what consumers want. Streaming services, already a major priority, fast became the only way most people got their film and TV fixes. Netflix Inc. added 26 million customers in the first half of 2020, a record for new subscribers. And so media companies set aside legacy businesses and learned how to stream.

Warner Media LLC experimented with dropping TV episodes on its new HBO Max service all at once. Walt Disney Co. announced plans for more TV shows based on its Marvel and Star Wars properties, bolstering its approach of spacing out major releases to maximize Disney+ subscriptions. Universal, Warner Bros., and Disney all canceled plans to release major movies in theaters and put them online instead. News and sports divisions everywhere tailored programming to streaming audiences. And now Amazon is buying MGM.

The transition hasn’t been seamless. Some companies introduced services mid-pandemic, asking customers to subscribe based on films and shows that couldn’t be properly marketed with billboards or as coming attractions in theaters. NBCUniversal Media LLC, which had planned to use the Summer Olympics to promote Peacock, instead had to rely on English soccer and reruns of The Office. Warner Media’s introduction of HBO Max was hamstrung by its initial absence from the popular Roku and Fire TV streaming devices and by confusion over how it differed from HBO Now and HBO Go. And, of course, RIP Quibi.

Now, though, more than a year into a pandemic, the future of entertainment seems clearer. Pop culture has moved online—for everyone. “My 91-year-old mother is texting me now,” says Tom Bernard, the co-president of Sony Pictures Classics. “A lot of the older generation—people who aren’t teenagers and in their early 20s—the internet has now become the system for communication.”

Although no one can say precisely how this will all play out once movie theaters, theme parks, and live events get back in full swing, there are some key ways the entertainment industry has evolved that will change life for you, the viewer.

You will now get cinema-quality new movies without entering a cinema.

When Godzilla vs. Kong was released this March, it signaled the return of the Hollywood blockbuster. The monster mashup has grossed more than $425 million at the worldwide box office, making it the biggest English-language movie since the pandemic began. But as it was filling theaters to their permitted capacities, Godzilla vs. Kong was also the most popular movie on HBO Max. Warner Media had released it in theaters and online at the same time, continuing its recent break from decades of orthodoxy.

Since the days of Jaws and Star Wars, studios have released movies more or less the same way: several months in theaters, followed by home entertainment, be it Betamax, VHS, or DVD. Universal Pictures Ltd. was the first to change things during the pandemic, releasing Trolls World Tour as a $19.99 rental in April 2020. Then Warner Bros. Entertainment Inc. followed suit, releasing Scoob! on HBO Max in May. Disney, which made $11.1 billion at the box office in 2019, released the film version of Hamilton directly to Disney+.

Here Are the Ways the Pandemic Changed Hollywood

None of the studios offered specifics on the returns they saw from their experimentation, but they clearly liked the results enough to continue. Universal skipped theaters and released The King of Staten Island as a stream over the summer, and Warner Bros. and Disney dropped Wonder Woman 1984 and Soul, respectively, online and in theaters simultaneously in time for Christmas. Warner Bros. then moved to release its entire 2021 slate, including Dune, Space Jam: A New Legacy, and Godzilla vs. Kong, on HBO Max at the same time as in theaters.

This isn’t the first time original movies have been released directly on the internet. Netflix and others have been doing it for years. But it’s a first for the major movie studios. In the past, theater chains would have blocked such efforts, but once the pandemic began, their leverage was gone. “The movie business I grew up in is effectively over,” says Alex Kurtzman, a veteran writer and producer whose writing credits include Transformers and Star Trek Into Darkness. “And I’m not sure that’s a bad thing.”

This doesn’t mean cinemas are dead. Even with the pandemic dampening U.S. box office returns, Tenet brought in $360 million globally from its theaters-only release in August. But there will be no going back to the way things were. The influx of subscribers has further strengthened the streaming companies’ hand, to the point that every major studio is producing original movies for them and shortening the planned exclusivity windows for theatrical releases. Warner Bros. announced in March that starting in 2022, movies would go to HBO Max 45 days after they leave theaters, down from 90. Universal has cut deals with theaters for a 17-day window, and Paramount Pictures Corp. has said it will go to as few as 30 days. “The experience in the pandemic for us with these films has been really good,” says Andy Forssell, general manager of HBO Max. “Regardless of what happens, we’ll do more and more.”

The U.S. will no longer be your entire media universe.

China became the world’s largest movie market for the first time last year, with $3 billion spent on tickets, almost $1 billion more than in the U.S. and Canada. And though it’s easy to dismiss this change as a result of the pandemic—Chinese theaters reopened sooner than those in the West, and most planned major U.S. studio releases were delayed—analysts have been forecasting that it would happen sooner or later. The pandemic only accelerated the timeline by 5 or 10 years.

There are many reasons to believe the U.S. won’t ever reclaim its primacy, starting with this one: China has built more than 20,000 screens in the past three years alone, bringing its total to 75,000, almost double the number in the U.S. and Canada. And the U.S. and Canadian figure is declining.

Here Are the Ways the Pandemic Changed Hollywood

The globalization of the movie business is a sign of what’s to come for TV as well. International markets contributed 83% of Netflix’s new sign-ups in 2020 and now account for more than 60% of its user base. It will be only another year or two before African, European, and Middle Eastern customers outnumber those in the U.S. and Canada. Disney+, HBO Max, and Amazon.com Inc. are expanding their international streaming operations as well. India already accounts for a third of Disney+ subscribers, thanks in large part to the unique inclusion there of cricket, a national obsession. Disney is hoping to use its formula in India—a mix of sports, original series, and low prices—to expand its reach across South Asia.

As American media companies look abroad for growth, they’re also bringing the stories they make there back home. Netflix is investing billions of dollars in programming in more than a dozen languages, and consumption of these shows is soaring everywhere. The French show Lupin and the Spanish Casa de Papel both rank among Netflix’s 10 most popular series ever, globally, and Lupin was the first French show to crack the U.S. daily top 10.

“If you nail something and it’s great, it doesn’t matter where it came from,” says Franklin Leonard, a producer and the founder of the Black List, an annual survey that ranks the most-liked unmade screenplays in Hollywood. “There is a willingness to take bigger risks on things that seem culturally specific, because you can gather all the audience that embraces it via streaming.”

You love sitcoms. Studios will make more.

The most precious commodity in U.S. entertainment right now is the old-fashioned situation comedy. Stuck in isolation, people have sought out comfort food. Viewers devoured Ted Lasso, Apple+’s comedy starring Jason Sudeikis as a U.S. football coach hired to lead a struggling English soccer team. They caught the final season of Schitt’s Creek, a Canadian comedy about a wealthy family brought down to size. “Over the last 12 months, Americans have been looking for a solace away from the realities of the world,” Nielsen Co. wrote in a March report that noted surging interest in comedy.

Here Are the Ways the Pandemic Changed Hollywood

Many viewers have run out of good new stuff to watch, though. Sitcoms used to be the most popular type of program, led by NBC’s powerhouse “Must See TV” Thursday night lineups. Broadcast networks still release a fair number of sitcoms each year, but streaming services and cable networks have been emphasizing prestige dramas—dark and depressing tales of murder and violence featuring controversial antiheroes. Even so-called comedies such as Barry, Atlanta, and Fleabag weren’t necessarily laugh-out-loud funny. They could be awkward, stressful, and message-driven.

The lack of new sitcoms has pushed people deep into streaming-service libraries. Many users of HBO Max have started Friends at 8 p.m. and watched until they fell asleep, leaving episodes to play until morning. Viewership of other old comedies, such as The Bernie Mac Show, Roseanne, and George Lopez, soared. In 2020, Americans spent more than 11 billion minutes watching Family Matters, the 1990s sitcom about a middle-class Black family in Chicago and their ultranerdy neighbor, Steve Urkel.

If there’s one thing media companies know how to do, it’s how to run with what works. Apple has ordered two more seasons of Ted Lasso. Reboots of Saved by the Bell, Punky Brewster, Gossip Girl, and more old series are being planned or released. Even with the possible end of the pandemic in sight, Netflix, Amazon, and Hulu LLC are all looking for more big, broad comedies and other escapist programming for the years ahead. Because when people return to the outside world, they’ll be looking for anything but a return to darkness. “People are gravitating toward lighter content,” says Mary Viola, producer of the teen romantic comedy Tall Girl. “The reason we’re doing well at Netflix is we can deliver lighter, poppier fan fare that audiences really seem to respond to.”

Here Are the Ways the Pandemic Changed Hollywood

Even sports fans won’t need cable anymore.

Anyone looking to cut the cord over the past decade has run into the problem of live sports. Netflix offers the same sitcoms, dramas, and reality TV you can find up and down the cable listings, but it doesn’t have the rights to the most popular sports in the U.S. The pro leagues and their media partners have worked hard to keep it that way. Media conglomerates pay huge amounts for the rights to air games, which in turn generate billions of dollars in customer fees for their TV networks; the leagues must respect those rights, and though most major sports operate their own streaming services for hardcore fans, they can be expensive and subject to local blackouts. The leagues have also been reluctant to emphasize streaming for showcase games that promise massive audiences, lest the feeds crash. “The whole business of cable was this crazy machine that got built that extracted a certain number of dollars per household, and it was good for everybody for, like, 20 years,” HBO Max’s Forssell says.

Until recently there was little reason to change the model. Even as ratings for most cable programs fell each year, live sports remained a big draw. But viewership has plummeted during the pandemic. The World Series was the least-watched on record. Ratings for the NBA Finals dropped 51% from the year before. The Super Bowl was the least-watched since 2007. At first networks blamed the twin disruptions of Covid-19, which had upset their schedules and forced them to modify their traditional formats, and the presidential election.

They responded, though, by doing something they’ve never done before: buying up lots of streaming rights for sports and putting them on their own platforms. In January, Comcast Corp. announced it would shut down NBC Sports Network and shift many of the golf tournaments and Nascar races the channel had hosted to Peacock. Then it bought exclusive rights to the WWE Network and put wrestling on Peacock, too. Disney’s new rights buy for the NHL included 75 hockey games for ESPN+ and Hulu. In the biggest deals of all, Comcast, Disney, Fox Sports, and ViacomCBS Inc. secured agreements to stream NFL games on their services starting next year, in addition to airing them on cable. After years of using live sports to get people to pay for cable bundles, media companies realized they could do the same for streaming services.

By fall you’ll be able to watch live football, baseball, tennis, soccer, and hockey on the internet without a cable subscription. A new basketball deal is only a year or two away. With sports in the fold, streaming will truly be the new hub of the entertainment universe. “Now that sports are moving out of the bundle and into streaming, you really have a recipe of the destruction for the legacy multichannel bundle,” says Rich Greenfield, an analyst with LightShed Partners who coined the hashtag #GoodLuckBundle to denote the demise of cable.

It’s gonna cost you.

And now for the downside of all this. As media companies invest in their own streaming services, they’re also reserving their best titles to entice you to subscribe. Want unlimited access to Toy Story for your kids? That’ll be $8 a month for Disney+. How about WWE? Fork over $5 for Peacock. Oh, you like reruns of Friends? Add in $15 for HBO Max. If you stop paying for cable but sign up for all the major streaming services out there, you’ll probably end up spending about the same amount.

Here Are the Ways the Pandemic Changed Hollywood

The pandemic has also increased the cost of making movies and TV shows, because productions must hire health and safety personnel and film for fewer hours per day, thereby prolonging shoots. The average cost of production has grown at least 20%, most producers agree, and it may never go back down. Media companies already tried to recoup those costs by firing thousands of employees last year. Raising prices will be next. Netflix and Disney are already doing so, and it’s only a matter of time before their competitors follow. Some customers will get around this by signing up for services when there’s something they want to watch, then canceling when they’re done, but it will be a hassle.

That hassle speaks to the growing belief among some analysts and executives that, as streaming services have proliferated, the ecosystem has grown too complicated to appeal to consumers. There are just too many different bills and support email addresses to deal with. There’s no good universal guide to who’s showing what. And toggling among apps can be confusing and annoying. What the industry really needs is for someone to bring the different services together and package them in one place. To create something like …  the cable bundle. —With Elizabeth Elkin

©2021 Bloomberg L.P.

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