Hollywood studio filmmaking in the age of Netflix: a tale of two institutional logics

Abstract

Online streaming services are challenging long-standing decision-making processes in the traditional motion picture industry, thus placing Hollywood major studios at a crossroads. We use the institutional logics perspective to examine how both traditional studios and online streaming services make strategic decisions on which films to produce and how these films are to be distributed. We then apply scenario analysis to explore how their interaction will likely evolve. We argue that the key criteria that studio executives use to make production and distribution decisions are shaped by what we define as a commitment institutional logic: decision-making heuristics that focus their attention on theatrical release and box-office intakes. In contrast, online streaming services follow a convenience institutional logic, the product of advanced data analytics to increase subscriptions. In the convenience institutional logic, the need to drive online traffic by providing users with an extensive catalogue of movies guides film production and distribution decisions. Whereas the commitment logic aims for mass-market hits in cinemas, the convenience logic seeks to reach a wide range of subscribers at home with micro-segmented offerings. We compare the two logics, develop four scenarios of how the interaction between them may shape the film industry, and offer recommendations.

Using Systems Thinking to Illustrate Digital Business Model Innovation

“…Netflix has been the subject of an array of scholarly work (e.g., [51][52][53][54]) as a case example of a successful business model innovation but also as a success story of an ambidextrous organization [54].…”

“…The business model innovation of Netflix had far-reaching implications for the video rental market first, resulting in the bankruptcy of other competitor companies, e.g., Blockbuster. Later on, Netflix managed to enter new markets (film industry) and competed with Hollywood studios (e.g., Warner Brothers, Paramount Pictures, Universal Pictures) [53] and also was nominated and won several awards.…”

Screen Choice: The Relations, Interactions and Articulations of Watching Film

“…As Hadida et al, (2020) note, people have watched full-length feature films of around ninety-minutes at cinemas since the 1930s, and it remains a popular cultural activity to date (UK Cinemas Association, 2020). Cinema has evolved over this period to include multiplex, boutique, and independent venues.…”

The Digitalization of Motion Picture Production and Its Value Chain Implications

“…Similarly, home cinema technology has also advanced in a fast manner, competing with movie theaters. Faster internet connections allow for streaming high-resolution movies and therefore challenge the traditional cinema distribution (Hadida et al 2020;Zhu 2004), and also the TV industry (Schauerte et al 2020). Streaming video services, such as Amazon Prime, Disney Plus, or Netflix, disrupt the motion picture value chain by offering consumers on-demand movies and eradicating the serial periodicity in the premiere of content (Izquierdo-Castillo 2015).…”