Moviegoing vs. New Home Media
A recent NYTimes article, “With Popcorn, DVD’s and TiVo, Moviegoers Are Staying Home” describes the decline in moviegoing:
“With box-office attendance sliding, so far, for the third consecutive year, many in the industry are starting to ask whether the slump is just part of a cyclical swing driven mostly by a crop of weak movies or whether it reflects a much bigger change in the way Americans look to be entertained - a change that will pose serious new challenges to Hollywood.”
The lack of certainty about the underlying cause is not helpful. When a business is in peril it must identify the right cause: the correct explanation leads to action that can save the business; the wrong explanation can lead to actions which hasten failure.
This problem is of interest to us because it’s an instance of a common strategic predicament: an established class of products is being threatened by the emergence of a new class of products. Is the newcomer merely a passing fad? Or is it a disruptive innovation that will render the incumbent obsolete?
We will look at these questions using our preferred tool for the job, Formal Needs Analysis. We will first deconstruct moviegoing into the the primary customer needs it satisfies, then consider how well those needs are met by the competitors, in this case TiVo-style DVRs, Netflix, the web and videogames. This will isolate the points of overlap, clarifying when the alternates are as good or better than the incumbent.
What needs are met by moviegoing?
To model moviegoing and its competitors, we’ve established a needs space of seven primary needs and four supporting needs. Primary needs are the key reasons people purchase a product. For movies, we have:
- The need to escape - to temporarily get away from the incessant stresses and pressures of life.
- The need to feel good - to be put in a happy mood, say after a difficult week.
- The need for stimulation - to be raised into a heightened emotional & physiological state.
- The need to learn things - to be left with the new knowledge or insight into the human experience
- The need for social interaction - to feel connected with others.
- The need for social status - to feel worthy within the social group. With respect to pop culture including movies, it feels good to be in-the-know and it feels bad to be left out of the conversation everyone else is having.
- The need for fun - to have a good time in the moment.
In addition, there are these supporting needs. Supporting needs help the product fulfill its primary needs better. They are like salt to french fries: salt makes the food taste better, but you don’t buy you buy the fries soley for the salt. For moviegoing, we have the following supporting needs:
- The need for affordability - other things being equal, the more affordable a product, the more desirable.
- The need convenience - another cost the customer incurs is non-monetary — the logistical hassle in using it.
- The need relevance - Relevance of a piece of content is how well it relates to you. When it comes to matters of taste or interest, different folks require different strokes. Thus for content, relevance is largely a function of the breadth of selection available.
- The need for long experience - the persistence of the experience.
Let’s walk through each of these to see how movies and the newcomers compare. We’ve assigned rough scores from zero to three to each competitor in the table below for reference.
Primary needs
Summary of needs fulfilled by moviegoing and its comparison points, rated from 0 to 3
1. The need for escape
Movies do a good job of providing escape. A darkened movie theatre away from home, interesting characters and an intriguing plot can immerse the viewer in an alternate reality.
Netflix shows the same movies, but at home. This experience is not as immersive as in a theatre, but the gap is narrowed for those fortunate enough to possess a decent home theatre. TiVo or web surfing can provide escape for hours, but today’s best videogames provide immersion to such an extent that time flies.
2-4. The need to feel good, for stimulation, to learn things
The movie industry is adept at crafting films that play directly against different emotional needs. The need to feel good is literally matched by the Hollywood “feel-good” movies. The need for stimulation, both emotional and physiological, is provided by thrillers, sci-fi, action and suspense movies. The need to learn things is met by watching characters in dramas and by documentaries.
As for the comparison points, Netflix has the same content and thus the same potential, minus some points for the less immersive experience. TiVo loses points for commercial interruptions (skippable though they may be) and for lower audio/visual quality relative to DVDs. (We could have added a/v quality as a secondary need.) Videogames can be extremely stimulating. Web surfing may not exactly be emotionally stirring, but it has great potential to help anyone learn anything about anything at any time.
5. The need for social interaction
While watching a movie is itself passive and solitary, going out to the movies is social in multiple ways. Going through an experience with friends makes it more enjoyable and gives common references for future conversation. A crowded movie theatre also provides a lighter version of the mob experience common at sporting events or huge rock concerts. Finally, if we take moviegoing to include activities before and after such as travel, dinner and drinks, there is ample opportunity for personal bonding.
Watching the same movie at home with Netflix or TiVo is rarely as social. Videogames played alone are decidedly not social. But endless hours spent playing videogames with friends is a strong bonding experience.
6. The need for social status
Coolness points are gained or lost based on how up-to-date one is with the latest trends. The movie industry plays this up well, fostering the notion of the must-see movie. You just have to watch it (otherwise what good are you?).
But while watching every top movie may necessary for hipness, but it is not sufficient. No medium has a monopoly on conferring social status. One must also be up to date on the latest TV shows, sports standings, celebrity gossip, fashion, videogames, news, technology and blogs.
We can say that the Netflix movie, arriving in the mailbox months after the playground or water cooler chatter has moved on to something new, is not so hip anymore.
7. The need for fun
The prior needs don’t completely capture the overall feeling of fun and excitement of going out to the movies, so we included it as another dimension of need. It overlaps some of the others, but that’s okay; we are free to choose the dimensions that give us useful insight.
Staying home and watching TV or TiVo or Netflix isn’t quite as fun. But high quality videogames can still be an addictive blast.
Supporting needs
8. The need affordability
Moviegoing is expensive. Aside from the ticket cost there are ancillary costs of parking and dinner. TV, Netflix and videogames are far more affordable per hour of use, and thus they get betters scores on the need for affordability.
9. The need for convenience
Going out to see a movie incurs non-monetary costs of time and logistics. One must get to and from the theatre, park and wait in lines. Staying home is far more convenient.
10. The need for relevance/choice
The Matrix and A Room With a View are highly compelling for their respective audiences, and highly irrelevant to one another’s. When it comes to content, relevance is gained through breadth of choice. The movies offer just a couple of dozen choices at any one time.
Regular TV has dozens of channels, yet there is often nothing to watch. TiVo, on the other hand, filters through thousands of channel-hours a week, leaving the viewer with a concentrated set of extremely relevant programming. Netflix offers an impressive selection of 50,000 movies, old TV programs and special-interest content findable nowhere else.
As for videogames, there is not as yet something for everyone. Many have no interest in videogames at all.
11. The need for a long experience
The moviegoing experience, fun and immersive as it may be, is fleeting. On the other hand, people can spend hours a day with TV, TiVo, videogames and web surfing.
Conclusions & Predictions
Now that we’ve broken moviegoing and its challengers into its component needs, what can we make of all this? Is the bad fortune of moviegoing due to a passing spate of poor product? Or is it indicative of deeper, long-term trends to other media? By walking through the chart above we can lay out some specific conclusions and predictions:
- Moviegoing is still a unique product. Its needs profile — its row in the chart above — is distinct from the others. None of the alternatives are a superset. This suggests that moviegoing will not be obviated by new media (the way that word processors obviated typewriters), but will live alongside them.
- Moviegoing has specific advantages. It is a better escape than home media, more engaging and more social. A night of moviegoing is simply more fun than staying home and watching the same thing at home. First release movies are also trendy and confer social status on those who watch the blockbusters early.
- Moviegoing has weaknesses relative to its competitors. It is costly, both monetarily and in convenience. The home media is far more convenient. Moviegoing is also a fleeting, and leaves discretionary time for other products to fill. The comparison points, TiVo, videogames and the web can occupy the user for hours without extra cost.
- The competitors pose real and specific threats. Videogames are an excellent escape. Netflix and TiVo let the user select from thousands of choices, thereby greatly increasing the relevance and appeal. Videogames played with friends fulfill needs for social interaction.
- All of these dynamics are about the medium of moviegoing itself, not the content within that medium. The threat is systemic, not a result of a spate of poor movies.
- Video-over-the-net has the potential to meet a superset of the needs met by Netflix. Current offerings are of lower a/v quality and limited selection, but this can change. Once it does, the DVD-by-mail model will become niche.
- While moviegoing will persist, it won’t be without pain to the industry. The competition for discretionary time is hot, leaving less of the pie for the movies than they are used to. Movie attendance can be expected to decline, even if quality recovers.
How can the movie industry respond to these threats? I will save that for another article.
[ Update 12/2/08: Learn more about this needs analysis technique at ProductVision.org. ]
[...] Other examples of needs analysis: Reusable shopping bags | Moviegoing [...]
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