Massive media conglomerate mergers were all the rage in recent years, a trend that you would think the coronavirus pandemic would put a halt to as corporations pull back on major acquisitions and overspending.
That’s not the case according to research analysts MoffettNathanson in a new report titled “Say Goodbye to Hollywood”. The report, published in part at THR says they have a “strong belief that the production and distribution of media content will be permanently changed by this crisis”.
Predictions based on the data suggest the U.S. will end up with fewer cinema screens, and most studios will have to look at mergers and acquisitions as “only a few studios will have the right mix of assets to survive” as the shift to streaming services accelerates – leaving the top streaming platforms with the lion’s share of scripted content creation. Nathanson argues:
“Aside from Disney and their control of Disney+ & Hulu and WarnerMedia with HBO Max, the three other majors (Sony, Paramount, Universal) and the two minis (MGM and Lionsgate) will likely need to consolidate to increase selling clout and accelerate cost savings. Indeed, this is what occurred in the recorded music industry over time as six once mighty global recoded music companies merged into three healthier ones.”
They predict most film fans will eventually return to cinemas and that “the theatrical window will remain a critical driver of profitability and social awareness for tentpole movies.” They also add it’s highly likely that mid-budget and non-tentpoles, already dwindling in the cineplexes in recent years, will not be worth the cost and expense of traditional theatrical distribution.
Cinemas are also far less likely to invest in renovations and upgrades as they repair balance sheets post-crisis, and will also likely have to raise ticket prices. They also add they think it would be in exhibitors best interest if they come to an agreement with Netflix and other SVOD services for content – even as it will lead to more aggressive theatrical windowing strategies for studios.
