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Freedonia Market Research Blog How Movie Studios Are Reacting to the COVID-19 Pandemic

How Movie Studios Are Reacting to the COVID-19 Pandemic

by Freedonia Industry Studies

March 23, 2020

States are taking a variety of steps to help curb the spread of COVID-19, from limiting the size of public gatherings to shutting down movie theaters and other entertainment spaces. This has caused the nation’s two largest theater chains, Regal Cinemas and AMC Theaters, to temporarily shut down all of their theaters in the US.

Unsurprisingly, theater closures are bad for business for the nation’s movie studios. Theatrical releases are scheduled up to a year in advance, and theaters are the main revenue generator for movies that cost hundreds of millions of dollars to produce and market.

Some studios have opted to delay releasing big-budget films until later in 2020, with the hope that the COVID-19 pandemic will be contained and consumers will feel more comfortable congregating in theaters again. NBCUniversal, however, is taking a slightly different approach. In addition to delaying some its releases, the studio also announced that it would release select movies as a digital rental, priced at $20, at the same time as or recently after its theatrical release.

Granted, the movies that NBCUniversal has selected so far are not among its biggest revenue generators, so the risk of lost sales is not as large. However, for an industry that has long resisted altering its business model even as consumers have changed how they view most of their entertainment, this shift is significant and could have a long-term impact on the theaters that support movie studios’ revenue.

Basically, businesses must address this uncertain environment by considering how they can continue to reach and serve customers, even if they have to use avenues they had previously resisted.

For more information see Freedonia Focus’ Motion Pictures & Video: United States and Recreation: United States reports. Freedonia Custom Research is available for questions requiring tailored market intelligence.

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