How Streaming Killed the Film Star

Although cinemas will continue to attract audiences, their role in shaping culture is steadily declining, a trend hastened by the COVID-19 pandemic and the rise of streaming services.

Its last truly great year was 2019, when global box office revenue reached $42.5 billion. The pandemic-induced closure of cinemas slashed revenue to $12.4 billion the following year.

As the lockdowns persisted, viewers’ habits underwent a permanent change, as many have chosen streaming platforms as their primary delivery system. Projections for 2024 estimate a global revenue of only $30–32 billion—nowhere near pre-Covid levels. These figures do not even take into account the high inflation experienced in recent years, which paints an even grimmer picture of the state of cinemas worldwide.

When this downward trend is juxtaposed with the ever-increasing earnings made from streaming, the problem becomes readily apparent; though coming up with precise figures for streaming platforms is a more complex affair than doing the same with those for the box office, given the difference in accounting methodologies.

Streaming Services’ Triumph over Film Theatre

The initial success of streaming services lay chiefly in their vast selection of films, something film theatres could not offer. Streaming platforms furthermore pampered viewers by allowing them to switch quickly if one film failed to captivate, whereas in a theatre you may leave early—though the ticket is non-refundable.

Another ace up their sleeve was the advent of high quality, longform television series, which are unsuited to viewing in a cinema setting. From a marketing perspective, series are particularly potent: the more time a viewer dedicates to watching them, the greater the likelihood they will continue subscribing to the platform.

Streaming platforms swiftly grasped that the real contest was for the viewer’s attention, with commercial success hinging on the number of hours spent in front of a screen. According to a study by Parrotanalytics, for retention to be considered greater than 90%, viewers must spend a minimum of 20 hours per month watching content via streaming. For streaming services, the challenge is similar to the one faced by social networks—there is a finite audience, and one cannot watch two series simultaneously. Their objective, therefore, is to increase viewing time.

Key to Success

The recipe for increasing screen time lies in improving the quality of content. This pursuit has two primary challenges. The first are the rising costs involved in producing a single episode. In 2018, the most expensive episode was arguably the finale of the eighth season of Game of Thrones, costing $15 million.

By 2023, Amazon’s Citadel emerged as a contender for the title of being the priciest production, with its per-episode cost estimated at $50 million. Production costs, so it would appear, are rising sharply. Yet this is not the sole issue, as viewership figures prove: while the eighth season of Game of Thrones in 2018 was viewed by 46 million people in the United States alone, the first season of Citadel reportedly drew between 20 and 25 million viewers, but worldwide. For streaming platforms, the dilemma is clear: while their production costs surge, there is no commensurate growth in their audiences.

In 1971, psychologist and economist Herbert Simon introduced the prescient concept of the attention economy, which posits that in a world where information (and entertainment) is abundant, garnering and retaining attention becomes increasingly difficult.

As content reaches a saturation point, attracting new viewers with fresh content becomes increasingly difficult. Data from Kantar reveal that the U.S. streaming market has all but reached its zenith—95% of households, or 123 million, subscribe to at least one service. Further growth, at least in any meaningful sense, then can not be expected to occur.

Meanwhile, most platforms are raising their prices, forcing viewers to grow more selective; as maintaining multiple subscriptions becomes financially untenable. The numbers speak for themselves: ad-supported free streaming services are now expanding at a faster rate than their subscription-based counterparts. The sheer volume of content will only accelerate this shift.

AI’s Potential

One possible relief from this predicament is the advent of artificial intelligence. AI promises to address primarily the first challenge, i.e. ballooning production costs. While this prospect sounds appealing, it may, in fact, exacerbate the second problem: viewership could see a further decline as the AI-assisted supply of series grows.

The one streaming platform to emerge victorious will not be the one which merely utilises AI to generate content or refine recommendation algorithms. Rather, it will be the one which fundamentally reimagines how people engage with their entertainment. While AI could produce series and fine-tune suggestions, the consumer experience would remain unchanged.

According to Thomas Kuhn’s theory, revolutions occur only when a new model supplants the old. Real change will only come when technology transcends these boundaries—perhaps by adapting storylines to a viewer’s emotions in real time or by creating entirely new, interactive narratives.

Such prospects remain theoretical, as any new paradigm is hard to imagine at first. Yet, in the age of AI, entertainment itself could be redefined. Since AI is already reshaping the nature of work; altering the essence of entertainment is merely a matter of time.

Statement

While film theatres face decline, streaming has become consumers’ go-to for their entertainment needs. Global box office revenue has fallen from $42.5 billion pre-pandemic to an estimated $30 billion in 2024, while streaming revenue has exceeded $100 billion. AI promises an even bigger shake-up. The winning streaming platform won’t just use AI for content creation or recommendations but has the potential to reshape the viewing experience itself. Since AI has already affected work; entertainment is slated to be next.

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