Say goodbye to Hollywood: In 2021 and beyond, movie production and consumption face a total rewrite

Two of the largest film studios are moving their premium content to streaming platforms. This seismic shift in the entertainment industry will forever change the way movies and television are produced, monetized, and consumed.

Last week, WarnerMedia, the AT&T-owned parent company of Warner Bros. Entertainment Inc., announced that it would release all of its 2021 first-run movies to its streaming service, HBO Max, at the same time it releases them to theaters. 

This comes on the heels of reports that Disney's Plus streaming service may do the same with all of its 2021 releases and is also considering a merger with Hulu to boost overall subscriber reach.

This is huge: Two of the largest film studios are moving the balance -- perhaps all -- of their premium movie content to streaming platforms. The move represents a seismic shift in the entertainment industry that will forever change the way film and television is produced, monetized, and consumed.

Disrupting traditional film production

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Much of this disruption is happening due to how content is produced; as production costs decline, so will a studio's risk decline for delivering that content. This applies to both feature films and TV shows, which will soon be indistinguishable from each other: They'll be accessible on the same preferred platforms -- streaming channels and apps on mobile devices; streaming sticks and set-top boxes such as the Google Chromecast, the Amazon Fire TV, Apple TV, Roku; game consoles; and Smart TVs.

A traditionally produced, blockbuster Hollywood action film can quickly run into hundreds of millions of dollars in production costs. Disney's Avengers: Endgame, estimated to cost about $356 million, was one of the most expensive movies ever produced. The final Star Wars film, The Rise of Skywalker, cost about $256 million. The upcoming Dune, which Warner will release on HBO Max and theaters simultaneously in 2021, cost about $165 million. 

These represent enormous risks for studios to produce. A single flop can spell financial disaster. Not only are they costly to produce, market, and distribute, but even the most well-resourced and efficiently operating studio can take from six months to a year to do principal photography, as well as any additional CGI, editing, and scoring. And this was the norm before the pandemic! In COVID times, extra precautions and extended delays to keep performers and crew safe from infection extend production times even more.

To understand what the future content production model for an all-streaming movie and television world looks like, one needs to look no further than one of the most popular shows on streaming and television today -- Disney's The Mandalorian, which costs about $15 million per episode, or about $120 million per eight-episode season to make. 

The Mandalorian is not produced using a traditional film workflow, where principal photography on set and on location is done separately. Instead, the entire production occurs in a highly controlled studio environment, where the physical sets are blended with backdrop scenery, in real-time, projected onto massive LED display units. 

This purpose-made studio -- known as the "Volume" -- is 21ft tall by 75ft in diameter and is enclosed by a 270-degree seamless wall of 4K displays, which can project virtually anything, whether they are a space combat scene outside the main character's spaceship cockpit, a bustling alien city, or a planetary landscape. These virtual sets, which can have animated CGI components and move in parallax with the camera capturing the actors and physical sets, can be entirely 3D computer-generated. They can be composites of on-location shots, taken in extreme-detail with computerized camera equipment by a small "B-Roll" crew. The technology is derived from game engines used on PCs and consoles such as Xbox and Playstation -- namely, the Epic Games Unreal Engine, which has been modified for film use.

There are many advantages to filming in this fashion. For starters, everything is rendered in real-time. The results are instantly reviewable, so expensive reshoots are largely a thing of the past. Because effects on the display units are created on the fly, a significant amount of time-intensive post-production is minimized. Additionally, because the environment is highly controlled, it allows for the continuous simulation of environmental conditions that would not be possible on-location, such as 16 hours of broad daylight or stable weather.

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Disrupting monetization and distribution with streaming platforms

There are significant cost-savings and profit-driven advantages to doing things this way. For starters, this allows television and film to be produced in a much more time-efficient and cost-efficient manner. It also lends itself to producing more content in episodic formats, with shows like The Mandalorian

What is old is new again: In the 1930s, swashbuckling "serials" like Flash Gordon, Buck Rogers, Tarzan, and Zorro were all the rage. Much of these were the original inspiration for George Lucas and Steven Spielberg to create Star Wars and Indiana Jones.

Episodic show formats have the additional benefit of keeping audiences hooked to a show, especially if it is released exclusively to that streaming platform. It compels them to keep watching. If you have several shows like this being produced and released simultaneously, viewers are highly incentivized to maintain their subscriptions versus watching one-off feature films. 

Producing films in this manner significantly improves a studio's output. Instead of a few big-budget feature films per year, a studio like Disney can produce eight or more different series in episodic format, stagger releases, and maintain subscribers' interest. When releasing direct to a streaming platform, movie posters and broadcast TV commercials are not required because trailers and such can be posted directly to social media. 

With streaming platforms, there are no negotiations or added costs for distribution rights, and no middlemen. And, indeed, the studios may also decide to use less expensive talent, as those budgets can easily reach 75% of an overall studio's costs on certain films. 

Also, while the technology is probably 10 years from being fully realized, it's a virtual certainty that the deepfakes we have seen used to bring historical people back to life, or even reproduce the likenesses and voices of celebrities and political figures, will also be used to produce virtual actors in films and TV shows. These actors will never get sick, don't have personal issues and personality weaknesses, always show up to work on time, and never need contract negotiations or given "points" on a film.

The investment in the "Volume" studio used to produce The Mandalorian is also reusable. With improvements in technology, it can be upgraded continuously, allowing Disney to create even more realistic and highly compelling action and adventure films. And, undoubtedly, multiple full-size "Volumes'' will be made throughout the world to film productions anywhere they are needed depending on where talent is located. 

Disney and Industrial Light and Magic could certainly license the technology for Volume, allowing other studios and production companies to build similar facilities or even allow their own studios to be rented out. However, the Epic Unreal Engine technology is fairly open and licensable, and the fundamental principles and techniques are also adaptable to other game engines and production software. It's a virtual certainty that the Volume is a model for all future television and film production, and every single major film and TV studio will either rent one out or will own their own versions within the next few years.

Building large sets and going on location to do shoots for principal photography may not become an immediate anachronism like scale models and matte paintings are in the age of CGI, as Volume-like studios aren't necessarily suitable for every possible production. But sets and location shoots will be used more sparingly as studios look to cut costs. 

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Next-Gen Streaming Platforms: The Future Isn't Just Playback

The studios' cost-saving and time-saving technologies will not be the only tech that will disrupt the movie-going and TV-viewing experience. It will also be the interactive tech deployed in the living rooms to keep movie viewers at home.

Most streaming media apps, such as Netflix, Hulu, HBO Max, Disney Plus, and Apple TV Plus, are strict "playback." They are only used for passive content review. But this is not likely to stay this way for several reasons.

First, the streaming devices themselves have computational capabilities that outstrip the simple cable TV boxes of old. Streaming apps may act passively now, but content producers will eventually look to engage the audience directly and partner with e-commerce giants such as Wal-Mart, Target, and Amazon. 

Any product shown on screen can be synchronized with the film. Notifications and links can be sent to mobile devices to interact in any number of ways. Do you love Baby Yoda? Buy his stuffed animal from Disney's store, instantly. Want to order a pizza or get theater-quality popcorn delivered? You'll be able to do that directly from the content app, hooked into Uber and Postmates

Amazon Prime Video has some of these capabilities already with its X-Ray feature, which allows you to dig deeper into the actors and what other content they are featured in, as well as the music featured, with some trivia as well, and bonus content  -- but it wouldn't take much for the company to hook it directly into actual products for purchase. I'm surprised the company hasn't done this already.

Additionally, the primary content itself will not be the only materials you'll be able to watch and interact with. Indeed, a content producer can have chat rooms, and B-side type interview content (such as Star Trek's "Ready Room" hosted by Wil Wheaton featured on Facebook Live and CBS All Access) or any other passive or interactive content deemed necessary.

And every one of your interactions will be analyzed -- every pause, every scene review, every single title that you view. All this is metadata gold for content planning and dynamic advertisement serving. This abundance of data and the accompanying analytics will make Nielsen and broadcast television rating data look like the Stone Age in comparison.

Disrupting theater audio at home

Advancements in home audio technology will also keep viewers at home. Multi-speaker surround sound used to be an expensive endeavor, requiring complex, wire-connected home component Hi-Fi systems easily costing thousands of dollars. Several years ago, Sonos began innovating wireless surround sound technology, bringing the prices down for the average living room speaker setup to under $1,000. 

But with the current generation of smart speakers, such as Amazon's Alexa, Google's Nest Audio, and Apple's Homepod, that experience can be brought down to as low as $100 per speaker or less. Apple's HomePod has recently been updated with surround sound when paired with Apple TV. However, it is currently only a dual-speaker configuration and cannot add a center channel or subwoofer. Google's Chromecast is expected at some point to have the same feature in a future update when paired with Nest Audio, and it is not out of the question for Amazon to add this capability to its Fire TV devices when used in concert with its Alexa-enabled Echo speakers. Both Chromecast and Fire TV already have the codecs built in for Dolby Digital and Atmos and can send that signal over HDMI ARC connections to conventional Hi-Fi receivers and soundbars.

Improvements in theater-grade audio for personal content consumption will also decrease attendance at movie theaters, which are known for delivering the best possible audio experience with their high output Dolby and Sony audio systems. Apple's most recent release of AirPods Max over-the-ear headphones -- including sophisticated, active noise cancellation, and computational audio reproduction using spatial processing (introduced with the Airpods Pro and iOS 14) -- will bridge the gap between theatrical quality audio and prosumer equipment. While Apple's new headphones are comparatively expensive compared to most consumer over-the-ear products, if they produce results comparable to being in a movie theater, you can bet that the traditional industry players in the upper-end audio space such as Sony, Sennheiser, and Bose will have competing products in the offering, as will Sonos and others.  

Will movie theaters will ever return to "normal" after the pandemic subsides? That existential question has mostly been answered: These venues are never returning to their previous income levels. Many of them will close permanently. And it won't be just because the home is a safer and more convenient environment for consuming content. The theater industry's ultimate disruption and destruction will come about due to movie and television production changes, overall film investment and marketing strategy, increased consumer engagement, and significant improvements in home theater technology for the average household.

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