Introduction
Nowadays the digital world has become a part of our lives and our lives have revolved around digital technologies, and digital platforms from dawn to dusk. Without digitization, our life has become incomplete as from 8 to 80 years old everyone seeks its help to go ahead in life. Starting from education, office work, meetings, transactions, competitions, refreshments, shopping, and pleasing appetites, digital platforms, and apps have evolved the world of people. As a result, it has disrupted many organizations, and industries which have been highly affected due to the emergence of digital platforms so rapidly. Hence, the paper will argue about the disruptions facing the incumbents from the digital platform. Then, by using the conceptual framework before and after the disruptive effect of technology will be discussed. Along with the strategies of the disrupters, the response strategies of the incumbents vs the disruptors. Then, it will also focus the light on the ongoing repercussions of the disruption of the stakeholders including the social responsibility.
Discussion
An infant has been growing up with video games, even outdoor games like cricket, and football, and indoor games like ludo, chess, table tennis, and so on have been found in the form app. This involvement of digital platforms has decreased the importance of instruments for playing those games and has given opportunity to everyone to play these games without even moving from their place. This has become a great opportunity to spend time, especially for the old people who have to spend time alone at home in many cases and it has become a refreshment for the office goers and playing partner for the children. After the appearance of COVID-19 digital platforms became the only medium of communication, entertainment, education, and office work to maintain the guidelines of social distancing. This paper will focus on the disruption of movie theatres due to the emergence of Netflix and many other OTT platforms.
Identification of the organization or industry under disruption
Netflix is a subscription streaming service in America that has gained popularity worldwide since 2022, the emergence of COVID-19. This platform was launched in 1997 and then television titles and movies were mailed to the customers in the form of DVDs. But in the present era, web series, movies of different languages, and dubbing movies have been streaming on this platform and their popularity is skyrocketing. By 2010 it has started streaming TV shows, web series, and movies through the Internet, and by 2016 they have extended its service to almost 190 countries and territories. In this way, in 2021 it has touched a mark of success with more than 200 million subscribers and generating the biggest revenue (Britannica, Netflix, 2022). Growth of the digital platforms like Netflix is inversely proportional to the growth of movie theatres. It has become the cause of the complete disruption of the theatre industry, as people start to get everything at home, without stepping outside of the home.
The reasons for the disruption of the theatre industries are the penetration of smartphones, and laptops, convenience of services, cost effectiveness, and availability of international content to individuals. After the worldwide shutdown all movies have started to be released in OTT and along with the availability of cheaper smartphones, greater bandwidth function, and competitive data have shifted the focus of the people towards OTT platforms like Netflix, Amazon Prime, Hotstar, and so on (Salvador, Simon, et al, 2019). As per the survey, about 39.9% of people like to visit theatres once a month and 28.5% of people hardly visit theatres. From this, it becomes clear that the majority of people prefer OTT like Netflix (Varghese and Chinnaiah, 2021).
Figure 1: Percentage of visits to a theatre
(Source: Influenced by Varghese and Chinnaiah, 2021)
Along with that another thing that has disrupted the theatre industry is the watching time as people like to watch movies late at night after work at their convenience, which is completely impossible in the case of the theatre industry.
Figure 2: Preference of watching OTT platforms
( Source: Influenced by Varghese and Chinnaiah, 2021)
OTT platforms like Netflix, Amazon Prime, Zee 5, Hotstar, and others have become one of the most successful digital platforms and it has been predicted that this market will grow to $1.039.
Figure 3: Growth of OTT by years
(Source: Influenced by Uscreen, 2022)
Netflix has become one of the most revenue-generating OTT platforms as its revenue rose nearly 50% to $1.2bn which was just $837 in the previous year. During the period of lockdown, 1.69 million users took subscriptions when there was no way but to shut down the movie theatres and those users became 50 million in 40 countries (BBC News, 2022). The catalyst of this major rise of Netflix among the other OTT platforms is the release of Netflix originals whereas Netflix has earlier bought TV series from different sources. As soon as this platform was launched worldwide the business of the theatre industry started to decrease and the emergence of social distancing because of the coronavirus in 2022 worked as a catalyst in the rise.
Figure 4: Rise of Netflix
(Source: Influenced by BBC News, Netflix pioneer to Powerhouse, 2022).
In this time as per the report of 2021 of EY-FICCI the entertainment segment has slipped by 62% and the revenue of the theatres dropped by 80% in 2020. The number of investors to acquire new content has been increasing day by day and there was no one to promote the theatre industry.
Figure 5: Digital platform vs box office revenue
(Source: Influenced by Brand Equity.com, 2022)
Even after the post-lockdown period when the movie theatres opened, the government has asked to curb the viewers to 50% which was nothing but a huge loss to the industry after a worldwide lockdown. People also get afraid due to the spread of the infection and that has slowed the revenue of the theatre industry whereas the increase the revenue of the OTT platforms.
Before and after state of disruptive effect of technology
The term disruptive technology identifies the technology due to which the existing market where technology has not intervened hugely has been severely affected. It creates its market properly by replacing a well-established industry or market and OTT platforms like Netflix are one of the biggest examples of ‘disruptive technology’ that has destroyed the market of the movie theatre industry.
Position of theatre and Netflix before
Conceptual Framework
Figure 6: Conceptual Framework
Although Netflix was launched in 1997 it could not make it to market properly before 2018 and then movie theatres were the only place of entertainment, to get a chance to have a taste of good movies amid a hectic schedule. Before 2020, the emergence of COVID-19 restrictions related to capacity, maintaining social distances, and wearing masks to prevent the spread of the infection were not there. People loved to spend time in the hall with their friends, and family members together which has been disrupted by the emergence of OTT platforms like Netflix. According to the words of Mark Twain, the big screen industry has been threatened from the time of the invention of television, then by home video, computer games, illegal downloading of movies, and most recently by the OTT platforms (Tripathi, 2020). Till 2019 revenue of the theatres was much higher and their revenue generation was also good which cannot be regained as per the survey shown below.
Figure 7: Revenue of theatres before disruptive technology
(Source: Influenced by Tripathi, 2020)
Before the lockdown, OTT was a phenomenon of small groups of people who were able to afford the internet and the charged show of the OTT. Even just before the pandemic, the subscription number was 32 million which has almost doubled, to 62 at the end of 2020. Even when people started to get the product with an affordable internet price, and also in the regional language from that point it started to push the theatre backward forcibly (The Economic Times, 2020).
Position of theatre and Netflix in the later period
In the year 2020 total revenue of the theatre the whole world was $80.8 billion which was the lowest since 2016 and it declined by 18% in comparison to 2019. If this had been plotted in number then it would have been jaw-dropping as the revenue of the theatres has dropped from $42.3 billion in 2019 to $12 billion in 2020 (Forbes, 2022).
Figure 8: Position of OTT before and after
(Source: Influenced by Tripathi, 2020)
The focus on digital entertainment has started to accelerate from 2020 and generated revenue was $61.8 billion which shows an increase of 31%. Netflix was in the position of leader as it streamed nine out of ten originals that have been ranked. Secret Lives of Pets was the most streamed film on Netflix and it has occupied third place from the top. Due to the top of the shooting of serials TV serials have been stopped, then various originals have been launched, which are shot with fewer people with the use of technology the effect of shooting from home can be managed and that place, Netflix became more profitable (Forbes, 2022).
Strategies of the disrupters
When a new endeavor wants to make a market and compete with the existing market then the first and most important thing is to survey the tastes, and choices of customers. Netflix has done the campaign through social media like Facebook and Twitter successfully to get the knowledge of the viewer’s choice and started producing content according to those parameters. The strategies that Netflix has taken are:
Unrestricted access of the subscribers
This platform has given unrestricted access to the subscribers to view the whole catalogue and also allows them to watch the content without advertisement which has been a basic source of annoyance among the people. It allows the subscribers to cancel their subscription whenever they wish and along with that provides an option to download the content to watch it offline at per viewers’s convenience which is completely impossible in the case of movie theatres (Fernández Gómez and Martín Quevedo, 2018).
Watching time
The schedule of television soaps, and theatres can clash with the working hours of people and for that reason, the working people miss out on watching the programs. Netflix has stopped this problem permanently (Fernández Gómez and Martín Quevedo, 2018).
Creation of Content
It has been found that the content of the so-called daily soaps, and movies that have been launched in the theatres are based on the old monotonous stories, and for that reason, youth were not attracted to these contents. Hence, Netflix like OTT has started to stream movies, and web series that are thought-provoking, radical, possess reality, and can be related to the new generations. As a result, a bunch of youths have started to switch over to the OTT platform and disconnected themselves from DTH. The real stories that have been happening in the towns, crimes, and the way to resolve the problem have been widely scripted and this has become a huge strategy to draw the attention of the market. In previous movies, the actions that have been showcased were equal to impossible but in the present era, the content shows real possible ways to defend oneself, and that have taken place in the bedroom of the people. These things have been attracting people so heavily that people have started to make time at night to derive the essence of the content (Tripathi, 2020).
Figure 9: Growth rate of OTT(Netflix) vs Cinema
(Source: Influenced by Tripathi, 2020)
Way of Marketing
If someone has ever browsed Netflix’s Twitter account Netflix will start to send tweets, with full humor. Even Netflix accounts for all the actions of the subscribers like who prefers to watch it late at night, who is sharing the password, and recommending an offer based on that which has attracted people to enhance subscribers. Netflix has also created a portal of feedback where the users can put their feedback and this OTT has viewed that immediately and tries to reach the customer and also tries to satisfy his wish if possible (Umetric, 2022).
Figure 10: Strategies of Netflix
(Source: Influenced by Fernández Gómez and Martín Quevedo, 2018)
Hence, after analyzing all the strategies of Netflix it has been found that not a single movie theatre has ever provided this kind of advantage to viewers starting from setting watch time to sending feedback. In these cases, it has drawn all the attention of the viewers like a magnet.
Way of Platform monetization
In the case of making strategy related to money, Netflix has set three plans thinking of the subscribers like basic, standard, and premium which will enable people to make subscriptions from every type of financial background as per their wish. In the way of maintaining a platform managing network is another strategic action that has been performed by Netflix. The growth of the network is one of the most important things in the process of creating profit. Netflix has also used data networks to analyze which help it to analyze and collect data regarding how viewers have been using it and also analyze their feedback. Along with that With the help of Artificial Intelligence and network, it has been able to enlarge the quality, creating proper content that has helped in the growth of this platform (Gregory, Henfridsson et al, 2021).
Response strategies of the incumbents vs the disrupters
Response strategies mainly focus on the mitigation of the risks that have emerged due to the emergence of the covid-19. This risk response strategy focuses on retaining the market that has been disrupted by disruptive technologies. In this aspect, the market that has been disrupted is the movie theatre industry and the disruptive technology is Netflix, the OTT platform. Here, to mitigate the risks various strategies, new technologies, and expertise need to be employed to cope-up with the process (Gwebu, Wang, et al, 2018).
After surveying the contents of Netflix it has been found that the tastes of viewers have changed and they have now started to watch regional movies, and Hollywood movies and for that reason, the theatres have started to showcase those movies with subtitles. They have also focused on changing the timing of the showtime of every movie in a rotational way so that the viewers can watch the movies at their convenience, and they have set a different time on the weekend. Along with that theatre owners need to do the marketing like an OTT platform strategically. Where OTT has chosen social media the theatres need to target online and offline newspapers to draw the attention of people. Along with those short films, event movies need to be played in the theatres as their content matches the tastes of the youth and can be a great way to attract audiences (Forbes, things to do by theatre owners, 2022).
Another way to get back the audience in the hall can be done by maintaining the norms of COVID-19, like measuring the temperature of the viewers, and sanitization the seats after every show is mandatory as all these things will enhance audience retention in the theatre in a huge number. These things will curb the tension of getting infectious among the people and will help them to enjoy the movie freely (Gaunce, 2018). The audience has an emotional and sentimental attachment to them as they are acquainted with the environment from their childhood and people will also get the chance to go out of the house after spending almost more than a year in the house.
The repercussions of the disruption on the stakeholders
Due to the disruption of the digital platforms stakeholders have been affected highly as OTT platforms like Netflix have disrupted the stakeholders too. Lots of stakeholders were there when the business of the theatre industry was at the top. Stakeholders are needed to reach the motto of the theatre to the audience, but the emergence of the OTT has involved a technique ‘do-it-yourself’ approach to reach the target audience directly. In the theatre, lots of things need to be done, like setting the screen, maintaining the quality, setting the ambiance, and providing tickets and all have been done by the stakeholders. Thus, due to the hit of the disruptive technology it has been stopped and stakeholders have been severely affected. Another work of the stakeholders is to create a proper survey of the other existing theatres and based on that quality needs to be managed. Hence, the emergence of the OTT platform has disrupted the whole industry as well as the stakeholders (The Sunday News, 2022).
Through the shutdown of the movie theatres stakeholders have been highly affected on the other side in social media marketing, network operators, providing broadband, and maintaining the personal information of the subscribers need to be maintained by the stakeholders. One of the most popular broadband applications consumers are social media applications sharing files, access to audio and video content, and web surfing, and all these things have been done with the help of the stakeholders. When some complaint has been logged by the viewers it is the work of the stakeholder to take care of the whole thing and along with that to mitigate the problem. In the case of social media marketing the main focus of the stakeholders is to provide proper advertisement and by making important communication with the customers they have to make the product renowned to the people (Punchihewa, 2015).
Hence, it has been viewed that due to the intervention of disruptive technologies, the stakeholders have been affected both in positive and negative ways.
Conclusion
Thus, after analyzing the whole paper the position of the cinema theatre and the OTT platform like Netflix has been understood. It has been widely discussed in the paper how after the emergence of COVID-19 and worldwide lockdown Netflix has completely backfooted the movie theatre. The whole paper has focused on the identification of the theatre industry that has been under disruption. In this portion, the emergence of the OTT platform and its way of making businesses have been widely discussed. Along with that many graphs, and statistics have been used to show the disruption in numbers. Then, in the second point, a conceptual framework has been provided where the before and after disruptive effects of technology have been discussed. Then, in the section on strategies of the disrupters strategies like unrestricted access to the subscribers, watching time, creation of content, and way of marketing have been discussed and besides this how Netflix has maintained the platform monetization has been focused. After that repercussions of the disruption of the stakeholders due to the disruptive technologies, their positive and negative effects on the stakeholders have been thoroughly discussed. In the paper preference of the audience regarding the content has also been focused on, and the demand for the content that has attracted them towards the OTT platform like Netflix has been discussed. And, thus to attract the audience again towards the cinema theatre what strategies will work for the owner of the theatres have also been mentioned.
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