The new deal between US film and television heavyweights HBO and Warner Brothers to release Hollywood movies for online streaming at the same time as in cinemas could threaten cinema groups such as SA’s Ster Kinekor and NuMetro already ravaged by Covid-19 lockdowns.
HBO and Warner Brothers signed a deal this week that will debut blockbuster films in cinemas at the same time as online streaming through the HBO Max service.
The move, just as people are slowly returning to cinemas to see new releases, has the potential to add strain to an industry already hurt by closures for months and social-distancing guidelines that sought to limit public gatherings.
What would that mean for Ster Kinekor or NuMetro if MultiChoice, or another local player, can strike a similar deal?
Nitesh Singh, MD for Accenture Africa’s communications, media and technology practice, said the effect would be significant.
“One cannot argue that local theatres, during the pandemic, have seen footfall plunge at never before seen levels,” he said.
“Theatres need to quickly reimagine their business models to get footfall back to decent levels. But as long as digital platforms get the content at the same time this will further strain their business. For the MultiChoices of the world, negotiating deals such as this to get content readily will assist their traction in the market,” said Singh.
Arthur Goldstuck of research firm World Wide Worx said: “Warner Bros clearly understands that the age of the cinema releases of new movies is drawing to a close, which will happen in SA as well. Ster Kinekor will have to reinvent itself. Where it is involved in co-productions, it will need to look for ways of releasing those productions via streaming as well as in cinemas.”
Ster Kinekor and NuMetro have traditionally had the advantage of showcasing the latest movie releases for blockbuster titles such as The Avengers and Bad Boys 3. After these titles have had time to rake in money at the box office, they are released on DVD and for online streaming.
Companies such as Netflix have disrupted this model by releasing big-budget productions on their platforms without theatre runs.
“Ster Kinekor’s cinemas are among the most advanced in the world, cutting edge in terms of both experience and the technology used,” said Goldstuck. “It will now need to take another leap in terms of its business model, recognising that consumer behaviour is changing. Consumers have access to unlimited content at home. Cinemas now have to find ways to attract people out of their homes.”
Analysts agree that MultiChoice’s aggressive move in 2020 to sign content deals with Netflix, Amazon Prime Video and others indicates it is probably heading in the same direction as HBO for services such as Showmax. At the same time, other streaming players such as Netflix have been making fresh titles such as 2019’s Birdbox available to SA audiences at launch.
MultiChoice said it has “for many years enjoyed a great relationship with the top Hollywood studios and production houses” and is committed to ensuring “great movies continue to be made available ... on the multiple platforms we operate”.
When cinemas were closed this year South Africans turned to video streaming to watch a growing number of films and television shows. Netflix reported this week that viewing went up by almost 200% in SA compared to 2019.
“Warner Bros have been mum on how long the exclusive period will run, however inking deals for exclusive content will attract traffic,” Singh said. From a Hollywood perspective “this has startled the industry and has not been received positively. As one can imagine, theatres are concerned that losing the immediate exclusivity to the HBO Max platform will further cause strains on a business model that has been largely impacted by the pandemic”, he said.
As a platform, HBO Max did not live up to expectations when it launched earlier this year. Having the latest blockbuster titles readily available will help to grow its business.
HBO Max is currently not available in SA.
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