The business model for the entertainment industry has arguably undergone more change in the past year than in any other in its history. Traditional strategies for releasing films and other video entertainment that had been relatively static for decades were thrown into chaos by the COVID-19 pandemic, specifically altering many of the ways the industry considered the timing and distribution—or “windowing”—of new content.
The prime beneficiaries of these sweeping changes were, of course, over-the-top media providers, to whom consumers flocked for their entertainment during quarantine and the months that followed. An OTT industry already beginning to make inroads with viewers found the door opened—or a window, as it were—to build brand identities and accelerate growth. But now, as the pandemic begins to recede, industry experts anticipate a swinging of the pendulum and a need for OTT providers to again rethink their windowing strategies.
“In Q1 2021, U.S. households are starting to see the end of the COVID-19 pandemic, and with that, they are starting to return to their original preferences to watch new movies in a theater, with other people,” said Steve Nason, a senior analyst for consumer research firm Parks Associates. “The pandemic roiled traditional content windowing, and with some consumers ready to return to the theater, the studios will have to continue to experiment with hybrid release strategies.”
Theater Renaissance?
According to research from Parks Associates’ recently released survey, 41 percent of U.S. broadband households are now comfortable going back into movie theaters—including half or more of consumers ages 18-34. The survey also revealed that theaters have returned to being the most preferred venue for watching a new release, and that consumers are neutral or unlikely to subscribe to another OTT service in order to watch a new release.
What does it all mean for over-the-top media? First, it likely means losing some viewers to the local cineplex on big premiere nights—a fact that eventually would have needed facing in any post-pandemic reality. Beyond that, with the attention and entertainment dollars of audiences spread across movie theaters and a variety of streaming options, it means OTT providers must work not only harder, but also smarter, to prove their value to viewers.
Providers will need to be increasingly savvy about their windowing strategies moving forward. A platform will need to consider its content, delivery system and resources. Netflix, for instance, has built its name on a subscription-based business model. Suddenly charging a one-time on-demand transactional fee to view a new blockbuster, or converting to an ad-supported model, would likely turn off a number of its customers.
The ‘Ted Lasso’ Formula
Yet providers will need to think creatively and flexibly. Simultaneous (or day-and-date) releases may be a concession OTTs will need to make to the theater industry to score premium content. Timing will matter: If your subscription-based platform features a robust library, keeping your audience engaged for longer with new, bingeable series, may lead them to feel most fulfilled—and avoid other entertainment options.
Then there’s Apple’s “Ted Lasso” formula. For a fledgling platform with somewhat limited offerings, releasing new episodes of a can’t-miss on a weekly schedule is a way to engage your audience more often, buying time for the acquisition and development of additional content.
Over-the-top media isn’t going away, but the industry has arrived at a pivotal moment in its development. As long as consumer demand for a theater experience exists, OTT will need to work with studios and cinemas—or at least take them into account—in order to optimize their own profits. For individual providers, understanding OTT’s place in the entertainment ecosystem and tweaking windowing strategies to their own resources, goals and ideal business model, will be more important than ever.
George Meek is CEO of InPlayer.
