What to expect from the streaming industry in 2021

Yahoo Finance’s Julie Hyman and Brian Sozzi discuss how the entertainment industry navigated 2020 and break down 2021 predictions with Box Office Guru Editor, Gitesh Pandya.

Video Transcript

JULIE HYMAN: Well, my family Christmas tradition tends to consist of getting Chinese food and going to the movies. But obviously, things are a little bit different this year. We will not be going out to a theater, but we will have to choose what to watch on a streaming service. We're joined now by Gitesh Pandya. He is the Box Office Guru founder and editor. Gitesh, thank you for being here.

And obviously, things have changed in terms of how companies are coming out with their movies now, how studios are coming out. And I think the biggest marker of this change might be "Wonder Woman" being out on HBO Max streaming simultaneously with what is going on in the theaters. The people you're talking to in the industry-- I mean, how big of a change is this? How long-lasting of a change do they think it will be?

GITESH PANDYA: Well, it's a bit of a panic that's been going across the industry, as far as will this be a game-changer? Will other studios follow? I think it's very experimental. I think it's a bold move that Warner Brothers made. Now, obviously, movie theaters have been closed for a long time this year. Normally, the box office would be in the $10-$11 billion range. A year ago, it was $11.4 billion in 2019. This year, for 2020, we're one week away from finishing, I'm projecting $2.3 billion for 2020. That's an 80% plunge. That's 80% of the box office wiped out this year because theaters are closed.

And it's not going to change too much in the first quarter of next year. So much of 2021, a lot of theaters closed, slowly reopening. Warner Brothers hedging their bets and saying, listen, we're going to open these movies in theaters where they are allowed, but also on HBO Max in the United States over a 30-day window to drive subscribers. And "Wonder Woman 1984" is the first movie to try this sort of new strategy. It's this weekend. I've had a chance to see it. It is a movie you want to see on the big screen. It's a superhero film, but obviously, about a third or so of the theaters across the US are not even open. So you'll see an audience of comic book fans seeing this at home on HBO Max this weekend.

But it does open the door for this whole holiday season for people to see movies like this at home on streaming. And then, the other studios so far have not been following suit, but we'll have to wait and see.

BRIAN SOZZI: Gitesh, let's stay on the movie theaters. What does the movie theater industry look like after the pandemic?

GITESH PANDYA: It's incredibly challenging. And in my opinion, I think it's about the experience. That's where the theaters have to really push it. They need to offer a bigger and better experience in the theater that you cannot get at home because if one thing that we've seen in 2020, it's that the amount of streaming content has skyrocketed-- not just B-list product, but A-list product. Almost everything is coming at home because of necessity.

So that's a new challenge at theaters have next year. So when it comes to the seats, the food, the concessions, the drinks, live entertainment or live talent doing interactive Q&As, things like that-- anything that theaters can do to up the experience, to make it unique, exciting is going to help.

Also, the premium formats-- IMAX, 4DX-- that's something you can't get at home. So I do think that 2021 is going to be led by the bigger brands, the big action films, the movies that really take advantage of the big screen experience. And over the next two years or so, we'll start seeing some of the smaller films get back as well. But it's going to be the experience, and these theaters have to up their game to get the bodies back into those seats.

JULIE HYMAN: Gitesh, for the movies that are being released streaming-- either streaming only or simultaneously in the theaters-- how do we measure those? Because traditionally you would get box office receipts from the theater companies. You could also do some on-the-ground research. Now, do we just have to rely on the studios or the streaming companies to give us the numbers?

GITESH PANDYA: Well, right. For streaming, it's a new methodology. Is called crossing your fingers. You have to hope that these companies release numbers. Usually, they'll release them on an earnings call at some point where it benefits them-- not on any regular basis. And so for some of these films, there are a lot of streams, a lot of views that are happening, and they will boost them, more from a PR perspective. And as far as the media goes, as far as consumers, we don't know exactly how much of a success each film is. The studios know themselves. They'll share what little they can.

But I think in the broader sense, Disney Plus, HBO Max, Netflix, Amazon, and so on-- they are looking to drive subscribers. And you can do that by having more content, more unique exclusive content, and that's why you're seeing some of these studios who are affiliated with a streaming service push some of their titles to streaming only instead of a theatrical release.

For example, Disney-- they own Pixar. They have the movie "Soul," which was supposed to come out last June in theaters. It got pushed, and now it's coming out on streaming tomorrow. It's a wonderful film. I recommend it. But it's not one of those sort of "Toy Story" franchise films which gets pushed until theaters are ready. It's going straight to streaming, and it helps to make Disney Plus a nice value for consumers.

And that's part of the point-- have the content roll in along with TV shows and other sort of items to drive those subscribers. And HBO Max's deal is one of them. But it's a crowded field, and you're going to see a lot of growth in all of these streaming services trying to live side by side with a rebuilding of the theatrical box office in 2021.

BRIAN SOZZI: All right, Gitesh, and Disney has a ton of content coming out next year. As you analyze their slate of content set to come to market, what grade would you put on it?

GITESH PANDYA: Oh, I'd say-- I'd give it an A, A minus. I think they have some terrific titles. 2019 was a banner year for Disney. I don't think we're going to see that again anytime soon. They had "Avengers Endgame," "Lion King," and so on. So for 2021, they still do have major films from the Marvel universe. Obviously, 2020 was the first time in a long time-- 12 years-- where no Marvel films came out. So those fans are hungry and waiting for "Black Widow" and more films to come out in 2021.

But you also have Pixar, and you also have the main Disney animation studio coming out with films. They do have "Raya and the Last Dragon," which is a new original film coming out in March. This one will have the same format as "Mulan," meaning it will have a Disney premiere access for $30 option for people who want that. The difference is "Mulan" did not play in US theaters. "Raya" will open in US theaters. They're hoping that a certain number of theaters will be open and ready to go for those who choose to see it that way. So it'll be a little bit of a hybrid model.

But they have a lot of content in all four quarters, and a lot of the industry will be looking to Disney to sort of lead the way in this charge to come back.

JULIE HYMAN: Gitesh, really quickly-- of the movies that are coming out on Christmas, what's your top recommendation?

GITESH PANDYA: Oh, well, you know, I would say Pixar's "Soul" is probably the top one. It's one of those meaning of life kind of films, good for all ages, makes you think. And I plan to see it again. It's a good one.

JULIE HYMAN: That's definitely news I can use in my household. Thank you so much, Gitesh Pandya of Box Office Guru.

GITESH PANDYA: Thanks.

JULIE HYMAN: Appreciate it. We'll--