Dollars and Sense: Measuring Success in the Age of Digital Distribution

February 8, 2021
How does the film business adapt with the streaming services boom?

To the surprise of only those living under rocks, streaming services commanded our attention in 2020. Roy Morgan data found that 82% of Australians consumed a form of subscription streaming last year. Whether that was Netflix, Amazon, Disney+ or Australia’s own Stan, the pandemic forced us out of theatres and onto our couches. With such a significant period in film distribution and consumption, it may be time for new metrics of success beyond just box office data.

Like many industries last year, the global box office suffered greatly under the weight of COVID, with an estimated 66% contraction in cinema revenue through 2020 (per PwC). Conversely, the digital video-on-demand (VOD) market saw a 49% increase in April 2020 (per AHEDA), clearly revealing the impacts of the lockdown on our viewing habits.

Paul Wiegard, Madman Entertainment CEO, explained that 2020 was a year of “significant experimentation in the VOD model”, and that 2021 will hold even more. He spoke to the need for distributors and creatives to adapt to the new landscape, specifically, which films receive a full 90-day theatrical window, and which will be released directly to streaming. Traditionally, premiere titles enjoy a 90-day period where films are exclusively shown in cinemas, prior to a digital release. However, if cinemas remain restricted, important decisions about these films will have to be made.

Take some of the premiere titles released in 2020: Spike Lee’s Da 5 Bloods, David Fincher’s Mank, and Aaron Sorkin’s The Trial of the Chicago 7. All three of these films were distributed by Netflix to significant critical acclaim. These movies would typically reap the benefits of the 90-day window but instead opted for digital distribution. The recent surge of premiere titles on digital platforms begs the question: can a film released on a streaming service be as successful or even more so than a film released in a cinema?

Now, before you scoff at the idea, understand that traditionally, film success has been solely measured in terms of box office. But as stated above, box office numbers have been moderate at best, even for blockbuster titles. One such example was Christopher Nolan’s Tenet (released August 26). The film has since accumulated $453.3m, a far cry from the $1.04b the film would require just to break even against a budget of $292.5m.

The lackluster performance of Tenet did not “open cinemas” as Nolan had wished, and instead forced the hand of many distributors to postpone release dates into 2021 and beyond. So, if box office numbers will remain uninspiring for the foreseeable future, is it time for films to seek success via alternative, experimental methods?

An example of such experimentation in 2020 was Disney’s decision to release the live action Mulan exclusively through a VOD model (released September 4). Subscribers to Disney+ had the option to pay $34.99 for ‘premiere access’ to Disney’s latest remake. While Mulan pales in comparison to the box office numbers of other Disney remakes (such as 2019’s The Lion King at $2.13b), the film still accumulated $45.7m via the VOD platform.

Moreover, Disney reported a 68% subscriber increase in anticipation of the release, as well as a 193% increase in subscriber spending. $45.7m pales in comparison to the film’s lofty $200+m budget, but that was entirely net profit for Disney, who eluded traditional distribution costs by opting for a digital release.

Traditionally, Mulan would have been considered a flop by box office standards. However, in the complex circumstances of 2020, the return that Disney secured could and should be considered successful. The film proved it could draw viewers even with the added price of access, and the VOD model proved itself viable in a world where the extra costs of theatre distribution are currently not worthwhile.

If experimentation will continue to thrive in 2021, we must readjust how we define ‘success’ in the industry. For one, digital viewership numbers offer an alternative to box office data, but these numbers are scarcely reported, making them difficult to assess.

It was reported that George Clooney’s The Midnight Sky (released December 23) reached 72 million viewers in the first month it was available on Netflix. The curious aspect of this figure is that Netflix now records two minutes of watching as a ‘view’. If Netflix maintains this metric, viewership totals will be all but useless as measures of a film’s success. For marketing purposes sure, but overall film success requires more substantial and transparent data.

A preferable measure of success could be the numbers of new subscribers/app downloads. If these numbers can be shown to increase with new releases (as was the case with Mulan), then the VOD model can prove to generate revenue outside of the box office. Netflix, Disney+ and Amazon all enjoyed subscriber increases through 2020, the key is to pinpoint the peaks to the dates of premiere releases. Unfortunately, these new metrics require transparency, something streaming services are unlikely to provide.

Despite their tendencies toward secrecy, streaming services will have to become more transparent as the market becomes more competitive. But we too will have to adapt. Film distribution is evolving beyond the box office; our metrics should evolve as well.



  1. Sam Maclean

    What baffles me is the segregation of titles based on your preferred subscription.

    Could you have imagined having to choose between Hoyts, Greater Union or Dendy, permanently?

    I want access to ALL the titles in one spot. Without subscribing to Netflix, Stan, AppleTV (wtf is that sh*t?) Stan, Vudu, boohoo, woochoo, moo moo etc etc etc!!

  2. Al Webster

    Thought-provoking piece Liam! I think ‘Box office’ will always be the ultimate measure of success because it reflects the realities that drvie this world of fantasy: how much money does the film make. Regardless of what sort of box is involved – the one in the office … the one on top of the TV, the one connected virtually to your computer/tablet/phone etc. or the ones yet to reveal themselves! Studios (e.g. Disney) that control VOD channels can cut themselves some slack by using premium releases as ‘loss leaders’ to secure new subscribers who promise a larger lifetime value, and extract incremental revenue from existing subscribers. We might not get the transparency you quite rightly suggest we’d like to see, but ultimately revenue streams will dictate the flow and evolution of the movie business. Money talks … and ever since the arrival of the ‘talkies’, that’s been the sub-plot of every production every made!! Whatever happens next, we can expect some fascinating and entertaining plot twists!

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