Movies struggle for place in changing entertainment market

The legendary actor and filmmaker Orson Welles believed that a happy ending depended upon where you stopped your story.Movies have had a long and incredible story from those early days, when they were known as “flickers” or “shadow plays” to the Golden Age of the 1930s–50s, through the New Hollywood of the late 1960s–1970s.For the last 20 years, however, the story has taken a darker turn as the industry has struggled with shrinking audiences and the rise of home entertainment, an industry that was upended by streaming services.“For two decades, movie theaters have consistently wrestled with how to get people into seats,” analysts at Bain & Co. said in a recent note. “Today, that challenge has become an existential threat.” While consumer spending on video streaming subscriptions surged from 2010 through 2024, the global consulting firm said, North American box-office revenue in real terms fell during the same time frame. Ticket prices in real terms are close to flat since 2010, but the cost of a visit has risen as the increase in concessions revenue per patron has outpaced inflation, Bain said, so that “as a result, consumers now see cinema as expensive.” Movie theaters have been contending with shrinking audiences.Image source: Shutterstock Firm says cinema must reframe itself“In 2020 and 2021, release schedules collapsed, consumer habits changed, and digital platforms gained ground,” the study said. “Although a 2025 Bain media consumption survey of more than 5,000 US consumers found that about half of them wish they attended more in-person events, this hasn’t translated into a recovery for theatrical exhibition, with domestic cinema attendance still just 64% of pre-pandemic levels.”More economic analysis:Next Fed interest-rate cut could slide into 2026Ex-Fed official faced ethics probe on illegal stock tradesFed official sends strong signal on December interest-rate cutAt the same time, major studios’ annual number of wide releases during the past couple of years remains down a fifth from pre-pandemic levels, with those studios using output from smaller affiliated studios to fill the gap.The Bain report stressed that cinema’s greatest strength is its ability to deliver immersion, spectacle, and shared experiences.“But this is at odds with people’s evolving consumption of media, which is increasingly short-form, interactive, and digital,” the report said. “Cinema must reframe itself as a premium experience, not mere content. Seeing a movie in theaters is an event, a destination, an experience that is far more affordable than a ticket to a Taylor Swift concert.”Ed Maguire, head of research at Freedom Capital Markets, suggested that perhaps “Hollywood itself may be in terminal decline at this point.”“The future of the movie theater experience is something that's at issue,” he said during the Dec. 10 edition of the Stocks & Markets Podcast. “Hollywood has been suffering over the last couple of years in the in the wake of the writers’ strike in the pandemic.” Maguire cited reports stating that the number of film and television industry workers in Los Angeles County dropped by roughly 100,000 by the end of 2024, down from 142,000 two years prior.Related: Movie theater subscriptions compared: Prices & perks at a glancePortfolio manager wonders if megaplex days are over“So, the industry itself has reached a stage of maturity where it's starting to contract,” he said. “I don't have a great read on what the future is going to be.”“I do think there is a counter to the cyclical trend where you're seeing a lot more people showing up for in-person events. Live Nation and MSG Entertainment and some smaller companies are investing in the live experiences because people do want to connect person to person. I think that in many respects that experience will continue.”The content, however, is more fragmented, Maguire said, adding that “it might be time for the indies carry the torch and we might see a new player on the scene.”“It’s obviously cheaper watching it at home and streaming it on an increasingly larger TV with greater sound systems,” said Chris Versace, lead portfolio manager for TheStreet Pro. “I do wonder, though, if perhaps the megaplex movie theater days are over. Perhaps we’ll see a return to the movie theater that has two screens or four screens. It’s easier to program and movies play for a longer period of time. Kind of like when we were kids.”Related: Movie and TV company files surprise Chapter 11 bankruptcyAnalysts at PwC see possibilities in the local, according to the accounting and auditing firm’s Global Entertainment & Media Outlook 2025–2029.While Hollywood blockbusters and Bollywood movies in India remain popular, consumers’ preferences are continuing to move towards locally produced films. Globally, the market share of the top five US studios dropped from over 60% before the pandemic to 51.3% in 2024. In Brazil, demand for local movies is booming, spurred by the success of I’m Still Here, the country’s leading streaming service Globoplay’s first original feature, which won the 2025 Academy Award for Best International Feature Film, the firm said.Related: Analysts see M&A momentum building in 2026