Commentary

Cinema strikes back on heels of emerging entertainment models

An entertainment industry is emerging where movie studios and streaming services are converging with new business models that will integrate with the metaverse and even location based entertainment.

Image provided by iStock.

August 8, 2022 by Kevin Williams

Pundits who predicted the death of the movie cinema have been proven wrong, as evidenced by ticket sales success of "Spiderman: No Way Home" ($1.89 billion in global box office), "The Batman" ($752 million) and "Sonic The Hedgehog 2" ($331 million).

But there is no question traditional cinema has been uprooted by streaming TV services, which are currently undergoing a merger and acquisition phase of their own.

What is now emerging is an entertainment industry where movie studios and streaming services are converging with new business models that will integrate with the metaverse and even location based entertainment.

There are many moving pieces to this picture to sort out.

In search of an audience

Movies that had been held in reserve until the end of the global health crisis, as well as new productions, are all vying to generate revenue in the face of an industry suffering from the encroachment of streaming TV's success before and during lockdown. Along with the concerns of the decline in cinema going audiences over the last few years.

During CinemaCon in Las Vegas, AMC's CEO suggested that theaters could negotiate with streaming services to add cinema runs to their content. Streaming services, after all, such as Amazon, Apple, Disney and Netflix, are in need of new investments due to subscriber losses. The shuttering of CNN+ sent shockwaves through the streaming sector, as mergers and acquisitions continue. (I.e., Chicken Soup for the Soul Entertainment in May announced plans to acquire the Redbox streaming service for $375 million.)

The physical factor

Which brings us to location based entertainment. The need to find a way to protect revenue and show a profitable business model has had some companies turn to a physical presence in the entertainment landscape.

The success of Nintendo and Universal with "Super Nintendo World" and the Netflix pop-up attractions have directed streaming, cinema and studio development to consider a location-based entertainment future.

Movie theater groups are also keeping a close eye on "cinema entertainment center" concepts as they seek to find the right mix of entertainment to weather the storms expected as the industry consolidates after harsh times.

Immersive reorganization

Meanwhile, the restructurings among the cinema, studio and entertainment groups continue.

CJ Entertainment and Merchandising, a Korean entertainment conglomerate, comprising divisions in the mall and retail scene, cinema and digital entertainment industries, including its own streaming service, has invested $82 million in Korean Telecom, which acquired a minority stake in Hyperreal Digital, a developer of digital humans and virtual avatars. (Hyperreal last year raised some $7 million in seed funding to expand its work in creating the tools for avatar representation in the metaverse and virtual production with a large library of virtual content.)

CJ ENM, a division of CJ Group that owns the largest multiplex cinema chain in South Korea, with operations across the globe, known for its CJ 4D Plex cinema experience, 4DX, ranked as the fifth largest with some 455 locations. The company invested in several failed VR cinema concepts in 2018, as it continues strive to find the winning formula.

The digital character beckons

The ability to create digital humans for movie and gaming content has also been seen as an essential for the prospects of the burgeoning metaverse. Investors, along with the need to have digital avatars, are banking on the need to clothe these digital humans.

The Fabricant, a development house focused on creating fashions for digital avatars, has been described as creating the "wardrobe of the metaverse," and looks to establish itself as a leading digital fashion house. The company has raised $14 million led by Greenfield One.

Netflix announced it will follow the current video craze with an anime-style series based on the popular Namco arcade brawler, "Tekken."

The movie industry, for its part, has just seen a video game character, "Sonic," top the movie box office for a second time, reinforcing the importance of digital characters in entertainment.

Cinema, and its physical presence as an entertainment medium, is far from dead as many pundits had predicted. And while the industry needs to reinvent much it had taken for granted, the movie-going audience is still there and hungry for more.

(Editor's note: Extracts from this blog are from recent coverage in The Stinger Report, published by Spider Entertainment and its director, Kevin Williams, the leading interactive out-of-home entertainment news service covering the immersive frontier and beyond.)

Music & GamesApple

About Kevin Williams

Along with advisory positions with other entrants into the market he is founder and publisher of the Stinger Report, “a-must-read” e-zine for those working or investing in the amusement, attractions and entertainment industry. He is a prolific writer and provides regular news columns for main trade publications. He also travels the globe as a keynote speaker, moderator and panelist at numerous industry conferences and events. Author of “The Out-of-Home Immersive Entertainment Frontier: Expanding Interactive Boundaries in Leisure Facilities,” the only book on this aspect of the market, with the second edition scheduled for a 2023 release.

Connect with Kevin: