The common wisdom is wrong again – streaming and theatrical aren’t at war
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The common wisdom is wrong again – streaming and theatrical aren’t at war

If you believe everything you read – and many of us do – then you could be forgiven for thinking that movie theatres and streaming video on demand market-leader Netflix are competitors. This opinion is proffered by countless authorities, and tends to be bolstered by the fact that Netflix’s business model effectively cuts theatres out of the chain when it comes to movie releases. However, according to a recent study from the National Association of Theatre Owners (NATO), not only is this wrong, it is actually the opposite of what’s really happening: Netflix is driving business at theatres around the US.

Despite a turbulent year on the market, Netflix’s share price is still up by 41% in 2018 so far

graph 20 netflix

Source: Yahoo Finance

It’s counter-intuitive: if you have access to a massive library of films and shows at home – many of which are exclusive new releases that can’t be seen anywhere else (including movie theatres) – why would you go out to watch a movie? Despite that, the study is clear about its findings.

EY’s Quantitative Economics and Statistics Group surveyed 2,500 people in November, 80% of whom said they’d seen at least one film in theatres over the past year. They then examined a range of demographic data from the respondents, including age and streaming habits.

What the researchers found was that the more you stream content at home, the more likely you are to go and watch a movie. Respondents who went to theatres nine times or more over the past year, for example, consumed at least 10 hours of streaming a week. Whereas those who went just once or twice a year streamed just seven hours a week.

Phil Contrino, director of media and research at NATO, summed up findings to reporters: “The message here is that there's not a war between streaming and theatrical. People who love content are watching it across platforms and all platforms have place in consumers' minds.”

Disclosure

Dominion holds Netflix in its Global Trends Ecommerce Fund.


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