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May 8, 2018

Are Video Streaming Services Killing Cinema?

Cinema attendances dropped to a 25 year low in 2017. In the Czech Republic, the number of cinema-goers fell 2.5%, from 15.6 million in 2016 to 15.2 million in 2017. In Canada and the U.S., ticket sales fell 5.8% in 2017, the lowest cinema attendance in North America since 1992. In the UK, August which is one of the busiest months saw a 35% decline from 2016 to 2017. So, why aren’t people going to the cinema.?

One reason is pricing. In the US, prices rose an average of 3.2% in 2017. The average cost of just the ticket was $8.97 last year, and that doesn’t include any refreshments. When you are taking a family to the movie theatre, when you throw in food and drinks into the equation, it can be a costly event.

There is an argument that the films last year failed to inspire cinema-goers. Pirates of the Caribbean 5, Despicable Me 3 and World War Two epic Dunkirk did well in the box office on both sides of the Atlantic and prevented the attendance figures for being even worse than they were.

However, the biggest reason why cinema attendances are falling is down to video streaming services. Cinema has faced some strong competition over the years. The first was TV, then Video, DVD, Blu-Ray, the internet and now video streaming services like Netflix, HBO, and Amazon.

The convenience and choice that the subscription services offer are proving popular with the younger generations that prefer a night into a night out. Streaming apps offer all the TV channels and including films, meaning US and UK ex-pats can get all their favorite TV shows and films from their internet connected TV, computer or even on their phone.

In the first quarter of 2018, Netflix had 125 million streaming subscribers, an increase from 117.58 in the final quarter of 2017 and 98.76 million in the first quarter of 2017. Amazon Prime saw an increase from 63 million subscribers in June 2016, to 90 million in September 2017. HBO had an estimated 134 million subscribers in December 2016. Their flagship program Game of Thrones helped HBO subscription revenue hit a record $5.5 billion last year.

Affordable home cinema systems combined with vast catalogs of viewing choices are getting people, especially the younger generation, out of the habit of going to the cinema. Leading film Researcher, Stephen Fellows said:

“It’s not very convenient for them, especially when compared with other options like streaming when you can watch movies as many times as you want, it remembers your place if you pause it and you can watch on multiple devices,” Mr. Follows said.

“The idea of going to the cinema seems antiquated to them, and it is possibly a generational shift.

“However, there has been a big increase in the number of people over 55 going, up by one third, and it might show us what happens at the other end of the scale with the whole demographic getting older.

“The traditional median age of going to the cinema was 24. If you lose at the youngest age and gain at the oldest, it’s a net loss, and you lose out on the most lucrative audience. Teenagers used to go in packs to see whatever new movie there was, however good it was.”

With another summer season of blockbusters ahead including Jurassic Park 3 and Deadpool 2, it will be interesting to see if the decline in cinema attendance can be reversed. But either way, video streaming services are here to stay and will only get bigger and better, adding more pressure on the cinema and movie industry.

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