With the increasing competitive advantage of streaming services over movie theaters, it is no longer feasible to overlook the influence that streaming services have on the distribution of movies in the film industry. The most recent major acquisition of a streaming service, Netflix’s acquisition of Warner Bros. Discovery’s studios and streaming services, has brought back to the fore the question of whether movie theaters will survive in their current state.
There is an increasing threat to the financial viability of movie theaters due to the reduced number of cinema screens and the unbalanced box office performance. Thousands of movie theater screens were shut down due to the pandemic, and this has further reduced the viability of movie theaters as a production outlet.
The COVID-19 pandemic has had a substantial influence on the traditional production, sales, and distribution of movies. Many movie theaters had to shut down and sold fewer tickets due to this return to reopening and the changing consumer behavior due to the lockdown of many countries around the world. Many movie theaters that shut down due to the pandemic never reopened even after the end of the COVID-19 pandemic.
Although many major Hollywood movies have had successful box office performance for their theatrical release in the U.S., the total box office revenue generated from every movie that was released in the U.S. has declined substantially compared to the peak year of the industry (2019). To put into perspective the amount of revenue that the industry is losing, the total box office revenue generated in the U.S. in 2019 was about $11.3-$11.4 billion. However, for 2025, the U.S. box office is expected to generate a total box office revenue of $8 billion, which is less than that of 2019.
While this post-COVID-19 revenue bounce is certainly a positive thing, it also shows how far below pre-COVID-19 levels the entire market is. As such, the studios are moving with a great deal of caution in their decision-making processes regarding the release of films with more extensive windows of exclusivity for theatrical distribution.
The exhibitors believe that the value of the theatre experience cannot be measured, but that the economy of the theatre has suffered. The exhibitors are forced to shut down under-performing theatres and invest in more expensive auditoriums such as IMAX, recliner seating, and premium food and sound, where the increased ticket price offsets the reduced number of ticket sales. The mixed results of AMC in 2025 reflect the conflict that exists between the need for 'event cinema' and the poor financial condition of the average theatre. AMC has reported that it has beaten revenue projections with the success of several films, but has also reported substantial losses and the continued closing of under-performing theatre locations, while also investing in its high-end theatres.
Despite the common perception that movie theaters are on their deathbed, there are a number of reasons why they will still be around for a while, even if their impact may not be as great. Firstly, movie ticket sales are still an important source of revenue when it comes to blockbuster movies. The revenue generated from blockbuster movies is used by the movie studios to create expensive sequels and moments that are sold through merchandise, spin-offs, and even online subscriptions. Blockbuster movies usually create more hype than those created through online streaming services.
Secondly, the experience of theater is unique. Film festivals, award marketing, and film enthusiasts regard theatrical releases as the pinnacle of film distribution. Indeed, for films that are likely to be nominated for awards, there is an expectation that they will be available in theaters. In fact, the prestige of a theatrical release may result in the long-term value of that particular film and the film studio that produced it (through Variety).
Lastly, the loss of revenue that comes with theatrical releases means that film studios are no longer dependent on selling DVDs or Blu-ray discs to make profits. Sales of discs have fallen below $1 billion in the U.S. as of the mid-2020s (as seen by the millions of people who shifted from buying discs to subscription services and digital downloads), and film studios can no longer depend on a rebounding DVD/Blu-ray market to compensate for the revenue that comes with box office sales. The home entertainment pie has been reshaped, with streaming dominating the market (Industry reports).
Then comes a smaller and more specialized theater environment. There will be fewer screens, fewer suburban multiplexes, but the existing ones will be in high demand. There will be more IMAX and large format films, more luxury seating, and improved concession stands in existing theaters. The existing theaters will be programming big franchise films, event films, film revivals, and film festivals. More mid-range films and small niche independent films will bypass the theater altogether or use hybrid release patterns. The studios and streaming services will mix and match their strategies, with some films getting full theatrical releases, some premiering on streaming services first, and others going to streaming services after a short theatrical run.
This shift will not occur without a struggle from the existing exhibition industry. Industry groups have already begun to lobby for legislation to protect the existing theatrical window and ensure that regulators do not allow anticompetitive practices in large mergers and acquisitions. As a result, lawmakers and consumers may demand that the major streaming services provide a guaranteed minimum number of films produced or released theatrically. However, legislation will not be enough to reverse the trend, as the existing theatre debt crisis, the physical media market collapse, and consumer behavior will be far more important in the future than any new legislation (As reported by Reuters).
In conclusion, there is a very high probability that theaters will continue to exist, but they will undergo a change in their overall role in the film industry and will not be used as the main venue for all film releases. Rather, they will become more specialized in serving only large group gatherings, and not so much on the number of new films that are being made available at that particular time. If managed properly, theaters will continue to play an important role in the film industry, even if they no longer occupy their former role as the main means of film distribution. The future of film distribution, specifically in the distribution of theatrical films, will be driven by the emergence of video streaming services such as Netflix, Amazon, Hulu, and others. These video streaming services are only the beginning of the new film distribution paradigm that will be seen in a post-streaming world. (Reuters, Variety, Deadline)
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