THE USA JOURNALS
THE AMERICAN JOURNAL OF MANAGEMENT AND ECONOMICS INNOVATIONS (ISSN- 2693-0811)
VOLUME 06 ISSUE12
48
https://www.theamericanjournals.com/index.php/tajmei
PUBLISHED DATE: - 13-12-2024
DOI: -
https://doi.org/10.37547/tajmei/Volume06Issue12-05
THE IMPACT OF STREAMING SERVICES ON
FILM DISTRIBUTION STRATEGY
Oleksandr Bugela
Film and TV producer, Los Angeles, California, USA
INTRODUCTION
The significance of cinema in our lives is
undeniable. Emerging in the 19th century, cinema
has evolved not only into a form of entertainment
but also into a substantial cultural and economic
force. Today, there is no country unaffected by the
processes of film consumption or production.
While many associate films with leisure and
studios with the so-
called “dream factories,” not
everyone acknowledges the status of the film
industry as an economic hub capable of generating
substantial profits and contributing to socio-
economic
development.
For
industry
professionals, cinema represents a complex sector
with vast potential for innovation and growth.
However, the emergence of streaming services has
dramatically altered the dynamics of film
distribution and promotion. These platforms have
not only gained popularity but also reshaped the
ways audiences engage with cinematic content [3].
Where television once dominated, streaming now
offers convenience, affordability, and an extensive
library of diverse content, enhanced by
sophisticated
recommendation
algorithms.
Additionally, platforms like Netflix invest heavily
in original series and films, which play a crucial
role in shaping global media consumption [1]. In
the context of the new media economy, streaming
services have become a central component of film
distribution, challenging traditional film and
television markets and creating new strategic
opportunities. This article examines the impact of
RESEARCH ARTICLE
Open Access
Abstract
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these platforms on distribution strategies,
analyzes how streaming services are redefining
film marketing, reaching target audiences, and
influencing the competitive landscape of the global
film industry.
METHODS
To examine the impact of streaming services on
film distribution strategies, this study employs an
interdisciplinary
approach
that
integrates
economic, sociocultural, and industry-specific
analyses. Given the ongoing transformation of the
global economy and current challenges in the
international system, a comprehensive evaluation
of the film industry will yield critical insights,
particularly relevant for a country known for its
rich cinematic traditions. This analysis serves as a
case study for understanding how national cinema
can adapt amid growing globalization and the
dominance of streaming media [4].
The research utilizes both positive and normative
analyses to assess the evolving role of streaming
services and their influence on traditional
distribution methods. The positive analysis
examines observed changes in distribution and
audience engagement patterns, while the
normative analysis explores implications for
industry policy and future strategic directions.
Additionally, discourse analysis is employed to
investigate narratives about streaming services in
both mass media and industry sources,
highlighting the perspectives of stakeholders such
as filmmakers, investors, and policymakers [8].
This approach underscores the sociocultural
impact of streaming as a distribution tool and the
resulting shifts in audience behavior and content
consumption.
Economic data analysis further substantiates this
research, identifying quantitative trends in
revenue streams, shifts in market share, and
changes in the investment structure of the film
industry. Special attention is paid to data on global
film production infrastructure, recognizing the
necessity
for
ongoing
investment
in
comprehensive equipment and shared technical
resources to remain competitive [7]. From this
perspective, the study evaluates the extent to
which streaming services contribute to the
creation of an interconnected, collaborative media
environment where creative and technical inputs
enhance project appeal and attract investor
interest.
The literature review reveals a significant increase
in scholarly works examining the impact of
streaming services on cinema in recent years. Mary
J. Benner [1] analyzed how digitalization
influences film production, reflected in the rise of
blockbusters and long-tail films. Allegra L. Hadida
and colleagues [2] developed four scenarios for
film
distribution
on
streaming
services.
Muhammad Edy Irfandiyanto and Azzara Kubaies
[3] explored consumer-associated keywords with
Netflix, providing insights for understanding the
role of streaming services in film distribution.
Marius Ofsti [4] identified a shift towards a more
vertical strategy among distributors due to the
influence of streaming services. Wendy Su [5]
examined the impact of the Covid-19 pandemic on
global media companies. V. Tan and M. Wei [6]
discovered a trend among global streaming
platforms towards creating integrated media
entertainment and cultural services. Other studies
[7, 8, 9] investigate the effects of new media on the
film industry, including advertising, television, and
cinema as a whole.
By analyzing the aforementioned scholarly works
using analytical methods, this study aims to
provide insights into how streaming services are
altering distribution strategies, affecting content
accessibility, and driving industry adaptation.
The findings of this research highlight significant
changes in media consumption driven by global
technological advancements and an intensified
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shift towards a digital economy. The COVID-19
pandemic has markedly accelerated this transition,
exposing the limitations of traditional content
distribution while promoting the adoption of
alternative digital models that facilitate remote
delivery of entertainment. Conventional methods
of content consumption, such as direct
engagement at cinemas, theaters, or stadiums,
faced major disruptions, prompting a rapid shift to
online streaming platforms capable of delivering
high-quality content to a much broader audience.
Business strategies of streaming services like
Netflix and Tencent Video are depicted in Figure 1.
Figure 1 – Changed business strategies of streaming services [6]
Apple's success in the services sector exemplifies
the profitability and scalability of digital content
platforms. From 2018 to 2020, Apple’s m
edia
services revenue (including Apple Music, TV+, and
Arcade) increased from $37.2 billion to $53.77
billion, driven by a gross margin of 62.8%, a sharp
contrast to the revenue from the company’s
hardware division (34.3%) [2]. Similarly, Warner
Media’s sh
ift from traditional television
distribution to digital streaming, primarily in
response to competition from Amazon and Disney,
illustrates a broader industry-wide pivot.
Historically, Warner Media operated mainly
through television networks, but by 2015, the
conglomerate transitioned to streaming, spurred
by competitive pressure from new platforms. This
shift was further accelerated by the COVID-19
pandemic, as traditional venues closed and
streaming became the primary method of content
distribution [5].
The shift towards online streaming, now a key
element of modern entertainment infrastructure,
is characterized by increasing consumer
preference for digital media available on demand.
Mark Lorenzen’s research highlights the
globalization factors at play in the film industry,
identifying the globalization of film investments,
consumption, production, and organizational
structuring as critical components [3]. For
example, international co-productions have
become increasingly popular due to their financial
and creative benefits, with governments
incentivizing foreign investments through tax
credits and subsidies. Originally pioneered by
Hollywood, this co-production strategy has been
adopted by European and Asian markets to
strengthen competitive advantages and cultural
exchange, particularly as a counterbalance to
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Hollywood’s dominance. European projects
supported
by
initiatives
like
Eurimages
demonstrate how regional markets leverage
cultural cohesion for global competition.
The streaming services market, currently
dominated by a few key players, reflects diverse
monetization strategies, ranging from ad-
supported models to subscription-based options
and pay-per-view offerings. This shift aligns with
changes in consumer behavior, as users
increasingly subscribe to multiple platforms to
access a wider variety of content. By 2018, 40% of
users in the United Kingdom were subscribing to
more than one service, highlighting the strong
demand for diverse content offerings [4].
The growth trajectory of Netflix serves as a
compelling example of adaptive strategies
essential for success in the streaming era [6]. Since
its inception as a DVD rental service, Netflix has
expanded its reach to over 247 million subscribers
across more than 190 countries by combining
large-scale original content production with data-
driven marketing. The associations viewers have
with the word "Netflix" are depicted in Figure 2.
Figure 2 - Research preferences based on density visualization [3]
Netflix
’s innovative release strategy of "full
seasons at once," which introduced the term
"binge-
watching," demonstrates the platform’s
understanding of shifting viewer preferences. The
interactive content, exemplified by "Black Mirror:
Bandersnatch," further illustrates its commitment
to innovative user engagement models, receiving
critical acclaim. Netflix’s model emphasizes the
strategic advantage of leveraging consumer data to
tailor content offerings and optimize production
schedules, allowing for timely delivery of content
aligned with viewer demand [3]. The effective
implementation of this model is reflected in the
increase in net profit, as shown in Table 1.
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Table 1. Netflix Annual Net Profit Figures [6]
Year
Net Profit
2019
$1.87 billion
2020
$2.76 billion
2021
$5.1 billion
2022
$4.49 billion
2023
$5.4 billion
This model has been emulated by other platforms,
including Amazon Prime Video, which focuses on
similar themes like antiheroes and supernatural
horror, and HBO, which invests in youth dramas
and true crime documentaries.
Disney+, another major player, exemplifies
Disney’s strategic pivot towards direct
-to-
consumer models, particularly in light of losses in
its theme park segment due to the pandemic. The
launch of Disney+ significantly expanded the
conglomerate's reach, quickly attracting millions
of subscribers and solidifying Disney’s presence in
the streaming market. Content like the "Star Wars"
series "The Mandalorian" underscores D
isney+’s
reliance on franchises to drive subscriber growth.
Although Disney+ has faced some regional
subscriber losses, it continues to expand through
content diversification and strategic pricing
adjustments, including the introduction of ad-
supported tiers and bundle options with other
Disney-owned platforms [2].
The production of film content by various
streaming companies aims to compensate for a
potential decline in user interest in serialized
programming and to make inroads into the
traditional film market. The strategies of Disney+,
which focused on leveraging the established
Marvel Cinematic Universe brand with its vast
audience, are notable. Similarly, the releases of
"Wonder Woman 1984" and "Zack Snyder’s Justice
League" on Max highlight the compan
y’s attempt to
rely on the loyal fan base of DC comics and
cinematic universe films. Apple TV, on the other
hand, positions itself as a streaming service with a
focus on theatrical production, as evidenced by
streaming premieres of Martin Scorsese’s "Kille
rs
of the Flower Moon" and Ridley Scott’s "Napoleon."
CONCLUSION
Based on the above analysis, it can be concluded
that in the context of digitalization, the new model
of content distribution via streaming services
proves to be more effective than the traditional
approach. The advantages of streaming services
benefit both consumers and content production
companies. With the rise of vertical integration,
production companies gain additional competitive
advantages through reduced costs along the
"production-to-distribution"
chain.
For
consumers, the benefits lie in the ability to watch
chosen content at any convenient time on their
preferred platform. It is noteworthy that the cost
of purchasing a film or other content is often higher
than a movie ticket, while the market reach is
broader due to the accessibility of the internet. The
streaming market still holds significant growth
potential, driven by the obsolescence of traditional
cable and satellite TV, changes in consumer
behavior, and the widespread development of 5G
networks and broadband internet.
The new digital era has created numerous
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promising growth avenues, and streaming services
are leveraging this by continuously developing
new projects and expanding to build greater
audience loyalty. In comparison to the pandemic
period, the post-COVID era has seen an expected
decline in target audience interest in streaming (as
the appeal of the theatrical experience and visiting
cinemas remains strong). Consequently, the
strategic initiatives of several media companies
have focused not so much on expanding market
influence but rather on reallocating internal
resources. Netflix, for instance, has increased
profits not by changing the content themes or
distribution methods but by altering the
conditions of the service itself (such as tackling
account sharing). The return to ad-supported
subscription tiers, which were initially positioned
as a key advantage of streaming over traditional
television, also appears to be a natural
development.
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