Last week, Netflix’s (NFLX) stock hit all-time record highs — surpassing even Disney’s (DIS) market cap — as Americans turn to streaming services while on coronavirus lockdown.
In a recent research note, Credit Suisse pointed out Netflix’s unique position. The firm broke down how the platform’s wide array of content and high-purchasing power will help keep costs down once production eventually resumes.
Like the rest of Hollywood, Netflix has been forced to shut production in the wake of the coronavirus, offering the platform an unusual opportunity to capitalize on free cash-flow as revenue continues to pour in from new subscribers.
But while streaming has enjoyed certain quarantine benefits, traditional media will have to adapt in order to increase efficiency.
Workflow adjustments could include lessening the number of episodes in a singular TV season, canceling expensive projects and modernizing post-production technology to cloud-based formats, according to Credit Suisse.
Overall, costs associated with shutting down and restarting could range anywhere from an extra 10% to 75% of overall budgets.
How theaters will be affected by a restart
Movie theaters were mentioned in President Trump’s reopening the economy address on Thursday as Hollywood preps an ambitious summer timeline.
The administration recommended cinemas be allowed to reopen with certain social distancing protocols, such as capping capacity at 50% and introducing buffer seating, once the coronavirus begins to subside.
Theaters will most likely reopen as part of the administration’s “Phase 2” plan which also includes concerts, sporting events and sit-in dining.
Much of Hollywood, including U.S. theater chain Cinemark, is optimistic that theaters will reopen by the end of June or early July. However, the decision will ultimately be made by state and local government officials with an eye toward bending the curve of new infections.
Analytics platform EDO, Inc. surveyed a national panel of 6,809 moviegoers with approximately 90% of respondents saying they would consider returning to theaters after their reopening. Still, 56% of those said they’d wait at least several weeks before doing so.
As a result, studios will need to be strategic when choosing when to release certain blockbusters.
Earlier this month, Disney announced it will release its live-action “Mulan” at the end of July, while “Black Widow” is now set for a November release date.
According to Wedbush, this year’s box office is expected to fall 40% compared to last year with an estimated haul of $6.6 billion. To put that number in perspective, the last time the box office was that low was in 1998, when the industry reported $6.7 billion in total sales.
Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193
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