The Data Is In: Theatrical Films Massively Outperform Straight-To-Streaming Films
That’s Right...I’m Debunking One of the Biggest Myths of the Streaming Wars
Well, it’s time to finally, officially and definitively answer the question…
Should You Release Your Film in Theaters or Straight-To-Streaming?
Rephrased, does it make sense to release films “straight-to-streaming” à la Netflix? (And formerly Apple, Prime Video, Hulu, sometimes Disney+, HBO Max in 2021 and occasionally Peacock and Paramount+?) Should movies skip the theatrical and home entertainment windows?
Apparently, at least a few companies no longer think this makes sense either. Check out this headline:
That followed a previous story that Amazon will do the same thing. Frankly, I’d have loved to put this analysis out last year to predict that the streamers would come to this conclusion, but instead I’ll have to explain it.
(To be fair, I have been predicting and arguing for this for a while now. I directly answered it here and here. I built a valuation model for Netflix films here. I wrote about sending movies to theaters for The Ankler here. I mentioned it or hinted at it tons of times in my weekly Streaming Ratings Reports. Don’t worry, I have a reading list in a future article.)
But frankly, we’ve never really had enough data to answer this question. Until now. Until we got a full year of mostly normal data.
You see, before 2020, the streamers didn’t release one iota of data. And Nielsen didn’t release public metrics. And right when Nielsen started releasing a weekly top ten list of data (for folks like me to use), theaters shut down because of Covid-19!
Here’s a super crude timeline:
2022 was the first year where films came out in theaters, had a (mostly) normal theatrical run, then later came out on a streamer. We just didn’t have the data before now, so that’s partially why some of my earlier attempts to answer these questions had a lot of caveats. Or I relied on basic economics and financial models.
(Right upfront: you should know that, when I worked at a major streamer, I had PLENTY of data telling me that theatrical films crushed straight-to-streaming films in terms of performance, viewership, interest, and more. But I couldn’t very well share that data outside the company, could I?)
This month, I’m gathering all the publicly available data we have, all the theatrical box office performance, and I’m going to try to answer the question as definitively as possible. Here’s the plan:
Today, I explain my methodology, with a teaser of the single best data looks to prove my point.
Tomorrow, I’ll dive deep into the Nielsen data, slicing the data every (meaningful) way, whether it helps or hurts my case. And I’ll account for many objections you may have.
Then, for the rest of the month, I’ll look at other data sources (many more!) and provide some more conclusions on what this insight means for the entertainment industry as a whole.
When we’re all done, I’ll basically have written a mini-book on this question. To keep things organized, I’m actually going to publish each successive article on this article’s webpage as well, creating one, giant resource. (But this resource will only be available to paid subscribers.) I can only do this incredibly time-consuming, data-intensive research with the support of paid subscribers. Advertising won’t support it. So, again, a sincere thank you to all my paid subscribers.
Table of Contents
The Key Question: What’s the Best Way to Release a Film?
Historically, films went through a series of “windows”, something I’ve explained before, starting with theaters, then going to home entertainment, then to pay cable, then to regular broadcast TV and cable. Nowadays, streaming is concurrent with pay cable.
As I’ve shown before, the bet for obliterating all the windows into one looks like this:
It seems obvious—to me at least—that you can’t collapse all those windows and expect to make the same amount of money! You’d basically need that streaming window to generate three times the revenue what every other window used to make.1
Before 2023, we didn’t have the data to judge whether this was true, and had to trust the streamers. But now we can verify it for ourselves. Do “straight-to-streaming” films have three times the viewership (or three times the value) compared to films that go to theaters?
We can simplify our question. Really it is this:
When a film comes out on streaming, does a theatrical run…
Help
Hurt
Have no impact on
…its streaming performance?
The streamers have always argued that “exclusivity” was valuable. Presumably that meant more people were watching on streaming because they hadn’t gone to theaters to see the movies. Or that subscribers were more likely to stay subscribed to a streamer based on the exclusivity of films that went straight to a streamer. That’s the basic bet of Netflix (and formerly Apple and Amazon, and sometimes Disney, Hulu, Paramount+, and Peacock, and formerly HBO Max).
My hypothesis, having worked with this data since 2020, is that we’ll see option 3 (no impact), with an outside chance at option 1 (theatrical generates bigger streaming numbers). And cards on the table, I’m writing this section before I’ve pulled the data for this report.2
If I’m right, that’s a pretty big blow for the straight-to-streaming crowd. Remember, if all things are equal, take the extra box office money, right?
(One point on language: I categorize film release methods on streaming into three buckets:
First Run - Meaning the first day something is available
Early - Meaning any day between 2 and 60, but usually 18 days.
Pay 1 - Day 60 to the end of year one.
Today, when I say “theatrical”, I mean Early and Pay 1 films. When I say “straight-to-streaming” I mean “first run”. Also, theatrical runs can vary from blockbuster releases on 2,000+ screens to limited engagements less than 600. I usually mean over 600 screens in this analysis.)
Bottom Line, Up Front: The Answer
When I write a long, explanatory article like this, I usually save the answer for the very end of the article. But I know some of you don’t need all the dirty details, so I’ll put my results right up here.
First, here’s every film that made the Nielsen charts on streaming in 2022, divided by those that were “first run” on streaming (meaning straight-to-streaming) and those that went to theaters (in both the Pay-1 and Early windows). I saved “library” titles for a future analysis: