As Paramount Plus launches this week as the latest entry in the Battle of the Streaming Platforms, the licensing community is still grappling with how to do business in an arena that’s been built basically on the fly during a pandemic.

Hybrid film launches
Merchandise-laden franchises and other tentpole films that were supposed to be cinema stars in 2020 are only now about to make it to some combination of theaters and in-home streaming platforms this year and next, bolstered by studio marketing muscle.

Theater owners have been challenged by closings, limited seating capacity, shrinking exclusivity windows and unpredictable release schedules, and while some have said that COVID-19 has only hastened an inevitable migration to the home, it’s unlikely major studios — despite their own heavy investments in streaming services — will walk away from the multi-billion-dollar theatrical business.

Closing the windows
Disney CEO Bob Chapek this week again voiced support for theatrical releases with franchises like Star Wars, Marvel and others continuing to receive tentpole treatment. But Chapek also hinted at the continued need for shorter exclusivity windows for theater releases. The  90-day exclusive window that theaters once enjoyed is shrinking, in the case of AMC and Universal, to 17 days. And WarnerMedia is releasing its 17-film slate this year on HBO Max at the same time the films launch in cinemas, though it’s widely viewed as a one-year test.

So what does the post-pandemic (whenever that is) feature film business look like? Are theaters reserved for only the biggest tentpoles that will draw hordes to the big silver screen, while “lesser” titles go “direct-to-streaming”? Would Frozen (a sleeper hit for which Disney didn’t have particularly high hopes or a licensing programs) have launched as a streamer?

For the numerous streaming platforms – discrete “channels” with names like Amazon Prime, Netflix, Hulu, Peacock, HBO Max and a bevy of “Plusses” (Disney, Apple, Discovery, and ESPN), each with its own pricing scheme – there’s the challenge of acquiring/developing breakout episodic content (i.e. “Stranger Things”, “The Queen’s Gambit”, “Bridgerton” and others) that drives subscriptions, but are difficult for the licensing community to latch on to before they take off.

And even then, there’s a bit of guesswork involved, since few if any of the streamers share much viewership data.  So that makes potential licensees rely on such tools as Google analytics, social media monitoring and other means to gauge rising popularity – the earlier the better. So it becomes primarily a chase business that lends itself mostly to quick turn, print-on-demand goods.

“The challenge is how does something become stable, because the streaming model is [to have] subscribers sign up, binge and move on to the next piece of content,” says Shawn Socoloff, Director of Licensing at Hybrid Apparel. “You have a less captive audience; everything is more viral. People will find good content, but the question is whether streaming services will spend money on building franchises,” long a hallmark of the theatrical business. In other words, will there be seasons Two or Three to build an ongoing merchandising effort that includes long lead time categories such as toys, collectibles and other hardlines?

And even for the episodic hits, how should licensees and retailers account for modern viewing patterns? “The question is whether the lifecycle of the content is shortening, given consumers’ ability to binge eight episodes in a weekend rather than it being strung out over eight weeks,” says Stephanie Wissink, an analyst at Jefferies & Co. “So it changes the consumption dynamic of the content and therefore the lifecycle or longevity of the related product categories.

“But it’s still too early to say, because in the last 12 months we have had dynamic changes in media distribution and consumption. The consumer seems to have loved the streaming model. But the question becomes how much downtime will remain (post-pandemic) and when major tentpoles return, will theaters make it worth the travel, time and expense to watch something in a movie theater relative to the comfort of the home.”

Yet while the means consumers employ to view films may be changing, there remains the question of whether streaming content will receive the same marketing support typically garnered by theatrical releases. So far, the streaming services have focused TV commercials and other marketing on the platforms and less on the content they carry. (There have been exceptions. Disney launched a Mando Monday promotion last fall to support the release of The Mandalorian’s second season.)

“For streaming you may never see the same kind of blockbuster marketing that you see for the big theatrical films but the flip side is that there are more opportunities to watch and rewatch fan favorites and licensors can cultivate relationships over longer periods of time,” says a licensing industry executive. “Of course, it’s also harder to predict what will resonate with consumers and that can be frightening.  The stakes are high for either too much inventory or lost opportunity.”