Thursday, March 19, 2020

Universal Pictures' Current Reality






As our county has gone on lockdown, and many other have followed, there has been an increasing panic and worry about the state of the economy. Some businesses are hopeless as they rely on the influx of customers they would normally get, but others are attempting to adapt to our new reality by shifting their distribution models. One of these companies is Universal Pictures.

As I sit in bed everyday or sometimes move to the couch, one part of my routine stays fairly consistent: I rely on movies to help pass the time. I am a pretty avid movie/ television show watcher, meaning that I have seen most of the things that would interest me on Netflix and Hulu. I went to the library before it closed and snatched a couple DVDs, but have finished them all; so I was interested to hear about Universal's new plea.

As people are unable to leave their homes, or unwilling to sit in a movie theatre packed with strangers, Universal has given them another option: stream new movies from within their house. For $19.99, consumers are able to rent new movies like "Invisible Man," "Emma," "The Hunt," and more. They are offered on a variety of platforms, such as Amazon Prime, Comcast, and iTunes.

By completely uprooting the idea/ concept of a picture movie, Universal is showing how desperate they are. Their average total costs are seemingly falling way below the demand. A feature film typically has a budge of ~$100 million - with having to pay famous actors, directors, props, and everything else that goes into a movie, it gets expensive. But with movies coming out amidst of the corona virus panic or a week before, this budge is unredeemable.

They are even upping the typical price in order to make up for their losses. An average movie theatre ticket (not here in Silicon Valley, but) in the US is about $9. They are charging consumers about $20 to rent their movies for a 48 hour time period...

I am unsure about this. To me, it seems a bit overpriced. I would usually only go to the movie theatre for the experience; I like to go with my friends, buy snacks, and sit on the reclining (sometimes even heated) chairs. Even then, I find the $15 ticket a bit expensive - and I like movies, a lot. Due to the extreme prices of snacks and the ticket, I often wait for the movies to be released on Amazon Prime or Netflix or even my library in order to indulge in them - to me the utility per dollar is not worth it. Do you think Universal will be able to raise their demand and revenue to cover their average total cost of producing the movies - or is inevitably lost to the shelter in place and corona virus?

Sources:
https://parlaystudios.com/blog/feature-film-budget-breakdown/

https://qz.com/1819462/universal-is-releasing-its-current-movies-online-because-of-coronavirus/

2 comments:

  1. Obviously they are not gonna get the profit they would have gotten otherwise. I think one thing to consider is while Universal is desperately attempting to cover their cost and make profit, a lot of other consumers are desperate for new content. As you said you are running out of things of interest on Netflix and Hulu and other streaming services. Many people are going through the same thing, and with many people being stuck at home, they may be more willing to pay this price. However those who are staying at home, and their income being impacted, might lead to a totally different shift.

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  2. Most theaters make there money off concession sales as well this shutdown is severely impacting the entertainment industry. Pixars new movie "Onward" is being distributed at a loss and numerous theaters are closing. Its hard to see a future where all these theaters sure but it may be possible that this could lead a new wave of electronic movie consumption versus going directly to a theater.

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