Binge-Viewing Is Turning Hollywood Into Broadway. Here’s How.

It’s a common weekend ritual: we settle down on the sofa, cue up the DVDs or Netflix, and rip through entire seasons of TV shows — lost weekends devoted to so-called “binge-watching.” This is the often preferred way of to watch, and the practice is altering the dynamics of the media landscape, and changing the way content is being created and distributed.

Call it the evolution of Homo Televisionus: first there were couch potatoes, who would sit for hours while a parade of shows spooled across the screen. Then came channel surfers, who clicked through hundreds of cable stations fighting for fragments of their attention. Now there’s a new kind of watcher: the binge-viewer, who inhales an entire season’s worth of shows over marathon DVD sessions or, increasingly, streaming video services like Netflix.

Some neuroscientists say binge-watching as a neurological compulsion — great storytelling produces the chemical equivalent of a trance in the brain. Emotions provoked by stories, whether through books or on TV, create protracted emotional states, inner experiences that viewers want to sustain, causing them to hit “next” and “play” the next episode to find out what happens next.

Others attribute the growth of binge-watching to viewing habits made possible by an irresistible cocktail of technological influences: the cheap availability of streaming content, combined with the growth of broadband and lightning-fast mobile connections. After all, who wouldn’t want to take advantage of the convenience, especially when it’s a lot cheaper than renting or buying DVDs?

However you explain it, more and more viewers are indulging in lost weekends of marathon TV sessions, and the results are changing the face of the television business in ways no one can predict.

Long before programmable VCRs and DVRs became a reality, watching TV used to be a cultural ritual, a mass media experience that fueled talk around the water cooler and in late-night talk show monologues. People tuned into television at a set time and place, eager to find out who killed J.R. Ewing or what was going on in the Bunker or Cosby families. They had no choice but to tune in at a particular channel, at a specific time, or else miss out on the conversation the day after and wait for reruns or DVDs, weeks or months later, to catch up.

The TV industry, of course, structured its business around network broadcasts, and based on the ratings and audience numbers, the model succeeded, drawing in advertising from companies eager to deliver their messages to a highly-targeted audience.

And it worked: TV profits surged, becoming one of the most effective mass-media formats. One only needs to look at the phenomenon of the Super Bowl to see the power of TV at its highest.

But programmable VCR started a slow shift in viewing habits, and people began to record their favorite shows for later consumption. Then DVRs made the process easier, ushering in the habit of “hoarding” episodes to view at a more convenient time. Ever so slowly, the urgency of the original broadcast date began to wane.

Industry executives call it “time-shifting” — the ability to delay an episode to a later time that’s more convenient to watch — and insiders began to worry it would influence a drop in audience ratings and ad revenue. Healthy revenues from strong DVDs sales reassured them — a false reassurance, as it would turn out — because time-shifting would be the beginning of the end for the traditional TV business model, picking up pace with viewers with the advent of streaming video.

Of course, not many people saw it coming. No one took Netflix and Hulu seriously at first, seeing them as small fish in a big pond. Many in the industry felt confident that their bigger TV screens would overwhelm streaming video due to an inferior experience. Who would want watch a show on a computer screen, on spotty connections with constant interruptions?

As it turns out, a lot of people. TV executives sat back, astonished, as Netflix’s streaming experiment grew into a subscriber base of over 23 million. Rivals like Hulu and Amazon Prime began attracting numbers, as well.

More worrying, TV ratings began stagnating, DVD sales started plummeting and, worse of all, TV advertising began dropping. According to research firm Kantor, the TV industry had one of its worst ad revenue levels in 2009 — not coincidentally, at the beginning of Netflix’s peak of success — and though TV recovered slightly in 2010 and 2011, it has yet to reach its former strength.

Netflix and other streaming video outlets have altered the media industry in ways no one could have foreseen. They’ve succeeded in large part because: 1. broadband and mobile infrastructure grew; 2. large investments smoothed out the streaming process; and, most importantly, 3. large quantities of content, particularly TV, became available to viewers right at their fingertips, all at a very low cost.

That last point was critical to the phenomenon of binge-watching: whereas before it was expensive to buy entire seasons on DVD, now it’s much more affordable to watch an entire season on Netflix — at about the price of one big-screen movie admission. Call it extreme time-shifting, if you will: now you can miss entire seasons of a show and just wait for the whole thing to come out at once.

And it turns out, people are taking advantage of this — Netflix has long noted its most active users tend to view marathon sessions in a few rounds. Take “Breaking Bad,” one of the most binged shows on Netflix. Nearly three in four members streaming the first season finished all seven episodes in one session, according to Netflix. And seasons two and three, each with 13 episodes, boast an even higher binge-watching rate, with completion rates of 81 and 85 percent, respectively.

Even noted TV producers and writers are binge-viewing. Scriptwriter Aaron Sorkin told the Wall Street Journal he devoured seasons of “The Office” and “Parks and Recreation” in just a few intense sessions. And David Miner, producer of “30 Rock” and “Parks and Recreation,” finished three seasons of “Breaking Bad” while exercising daily on a treadmill — and lost 25 pounds in the process.

Binge-viewing is affecting TV culture, and business, in several unexpected ways. Due to the intense marathon nature of TV-binging, shows with particularly complex storylines like “Lost” are finding a second life, as fans new and old continue to watch it well after it’s been taken off the air. In addition, obscure shows, often from overseas, are resonating with U.S. audiences, who often stumble upon them on Netflix and devour them in just a few viewings.

Old shows are getting new life, too: the availability of “Arrested Development” on Netflix is giving the Bluth family another run, and the video streaming giant is now producing an exclusive season of the off-beat comedy classic, available exclusively to its subscribers. Marathon viewing even helped boost the ratings of network shows like “Mad Men,” whose viewers were able to catch up on past seasons before new ones premiered on AMC.

As a result, ratings for “Mad Men” and “Breaking Bad” have soared with each new season, fed in large part by an active run on Netflix — going against the grain of traditional expectations. AMC president Charlie Collier said: “With Mad Men and Breaking Bad, each year has been better [in the ratings] than the year prior, and that’s not the norm in historic TV-watching trends.”

Of course, Netflix, Hulu and streaming services are reveling with the rise of binge-viewing, which is now an unexpected weapon in the battle to keep subscribers. For example, Netflix released a “post play” feature this summer to encourage binge sessions. As an episode ends and credits roll, a pop-up menu prompts viewers to play the next show.

The timing is carefully calibrated by an algorithm that determines when you’re most likely to click off. If you do nothing, the next episode starts automatically — and if it’s a well-written, well-produced show, you’ll likely be hooked in the initial episode teaser, just like you are on TV.

Viewers may love marathon TV viewing, and video streaming services may love it even more, but the practice has TV executives in a tailspin. On one hand, the passionate appetite for their content reassures them that their assets are in high demand, and prices for their product can only go higher. After initially selling content to Netflix and Amazon at cut-rate prices because they thought digital streaming would go nowhere, TV executives now have a great ace in the hole, and are making digital licensing pay off.

But on the other hand, binge-watching leaves little room for all-important advertisers. Broadcast TV’s entire structure, from the rhythm and pacing of the shows to the type of programming approved by networks, was centered — for better or for worse — around advertising, which simply doesn’t generate the same revenue online as off.

And the appetite for binging is disrupting the traditional pecking order when it comes to syndication — rebroadcast rights and other highly-profitable secondary revenue streams for the TV industry. Viewers naturally want the latest material on services like Netflix, but cable and satellite providers pay hefty licensing fees to syndicate the latest shows and movies soon after their original broadcast. This window is one of cable’s key advantages, justifying their high-priced subscriptions.

For the most part, TV networks have respected this hierarchy — Netflix doesn’t get the latest seasons of “The Walking Dead,” or other AMC shows until a year after they’re aired. Meanwhile, cable and satellite partners offer episodes on-demand the next day. But cable is wondering why it pays such high prices when Netflix pays such relatively small sums, and the pricing difference has become a huge point of contention in the industry, prompting cable to shed channels in protest.

Pay-TV provider Dish Network, for example, dropped AMC from its service, citing in part AMC’s deal to make its entire library of past “Mad Men” episodes available to Netflix. DirectTV claimed deals like that devalues content overall, and dropped Viacom channels like MTV and Nickelodeon in part over price disputes, pointing Viacom’s deals with Netflix as part of the conflict.

Overall, the industry has yet to strike a balance between traditional business practices and the changing dynamics of new media. And the back-and-forth is making for dissatisfied cable customers, who expect channels like AMC and MTV as part of their expensive cable packages.

Beyond business, the people who create and write shows are grappling with the effects of binge-watching, video streaming and the changes to their medium. Netflix, in developing its own original programming, is releasing entire seasons of shows like “Lilyhammer,” and the forthcoming David Fincher political drama “House of Cards,” instead of following the episode-by-episode model.

The move surprised many industry stalwarts, who expected Netflix to replicate the broadcast network model. But considering its subscriber base increasingly favors binge-viewing, the best way to keep them hooked is to cater to those habits.

As a result, streaming-only shows are helping to pioneer new forms of serial entertainment. Episodes no longer need to hew closely to the teaser-dependent story structure that accommodates ads. And marathon viewing sessions are making more complex storylines possible, for example, with subtle nuances and details more apparent, and creating and rewarding audiences that can watch more closely and intensely.

The possibilities are exciting: for instance, horror director Eli Roth and Brian McGreevy think of their upcoming Netflix series “Hemlock Grove” not as a series of episodes, but as a “13-hour independent film.” It’s being released as an entire season, so more than a few viewers, to say the least, will likely watch it as a 13-hour movie, with perhaps a few breaks in between.

In addition, Netflix plans to release its new season of “Arrested Development” by building each of 10 episodes around one character. Each show will unfold simultaneously with the others, overlapping here and there for a new approach to storytelling.

The comedy’s creator, Mitch Hurwitz, said the challenge of making a show for binge-watching upended the creative process. “We’re sort of driving into the next episode rather than wrapping things up,” he said. If Hurwitz and his team executes on the promise, the results will keep you clicking “next.”

Purists, of course, decry binge-watching, saying it takes away from the reflection that makes TV watching so rewarding. Others, meanwhile, claim it takes away from the sense of community. In addition, binge-watching disrupts timelines in sync with viewers, according to Slate — after all, isn’t watching Charlie Brown’s Christmas better when it’s actually Christmas? Of course, other critics counter by highlighting that complex storylines are more possible when the memory of previous episodes is fresh in viewers’ mind, and the debate will likely continue over binge-watching’s consequences.

In an age where “distraction” is derided as a consequence of technological process, the trend towards binge-watching is a reassuring sign of a continued appetite for TV entertainment. The most intriguing story of all, however, is whether the media industry as a whole — from executives watching ratings to writers and producers ironing out storylines — can harness the appetite demonstrated by binging. But industry watchers will have to sit through this sea-change the old-fashioned way — and let time play out.

Hollywood has a big problem: no one’s going to see movies anymore. There’s help on the horizon, but getting it requires a major overhaul of how the movie industry normally does business.

The motion picture theater is a relatively recent development in the history of visual entertainment. Until the 1910s, movie houses were independently owned, showing clips around 10 minutes in length and costing about a nickel. Then, innovative technologies soon brought Technicolor and stereophonic sound, and Hollywood quickly adopted them, adding to the immersive experience of movie-going. Over the next few decades, Americans everywhere began to flock to the cineplex, which made one-stop entertainment, complete with popcorn, a national pastime.

The major studios, in fact, controlled a large majority of the national theater chains, building out their distribution muscle because they realized they needed to first get them to viewers’ neighborhoods to sell movie tickets. By the time the Supreme Court broke up their vertical monopolies in 1948, theaters dotted every town across the country, making going to see a movie one of the most accessible leisure activities in the nation.

But that was Hollywood’s golden era, and now is its era of decline.

Going to movies has been a longtime social ritual in American life. Catching a flick on the weekend with some popcorn has long been a leisure-time staple, reliable date option and favored form of entertainment with audiences, ever since the first movie theater opened on June 19, 1905, in Pittsburgh, Penn.

But movies are becoming more and more expensive — the average price for a single ticket is at an all-time high at $8.12, up from $7.92 at the beginning of the year. Higher prices, coupled with a fragile economy, are making streaming video ever more alluring to cash-strapped consumers. The result: theaters are limping behind — audience attendance is declining with no uptick in sight.

Sure, blockbusters like “The Dark Knight Rises” are commanding higher profits than ever, largely on the strength of more expensive tickets and higher-priced 3-D and IMAX showings. But in terms of numbers of actual bodies in seats, audience sizes are getting smaller. Summer movie attendance declined by 100 million viewers this year alone, compared to numbers from a decade earlier.

Last year, movie attendance fell to a 16-year low, according to the Los Angeles Times. More recently, Hollywood had one of its worst weekends ever, pulling in a measly $51 million for the top 12 movies combined — the lowest cumulative levels since September 11. Industry insiders are debating over the reason for decline, but a number of factors contribute to pull-down attendance: growing advances in home entertainment, higher ticket prices, an over-reliance on blockbusters and a general sea-change in the consumption of media.

The film industry in a tailspin and it’s being forced to reconsider a decades’ old business model dating back to the 1930s, Hollywood’s golden era. As the financial and marketing crown jewel for Hollywood, movie-going and the business of getting movies into theaters has created a very large pie, with several parties grabbing a hefty slice.

A host of players rely on attendance to keep business healthy: movie studios rent their films to exhibitors like AMC and command the majority of ticket revenues, while the theaters make profits on concessions. A strong theatrical run also fuels subsidiary showings of a movie, boosting the amount of money that cable, broadcast TV and streaming outlets will pay to license the material.

But audiences are increasingly going online and mobile for their movie fix, and Hollywood has yet to offer a compelling answer for this segment. Meanwhile those outside the industry — such as streaming video giant Netflix — are gaining power. Hollywood-backed initiatives like UltraViolet, which offer digital copies of movies stored in the cloud, haven’t become industry standard or picked up momentum.

The result is that, simply put, Hollywood executives don’t know what to do as entertainment transitions into the digital era. “The issues that keep me up at night about moviegoer attendance and our audience are certainly not lack of appetite for the movies,” said Brad Grey, Paramount’s chairman and CEO. “There’s an audience for everything — it’s going to be about how we make up for lower sales at the box office and with DVDs through digital distribution. I wonder what the next incarnation of distribution is.”

Hollywood doesn’t have much of a clue, but Silicon Valley is coming up with compelling solutions to move film and TV into a new era. Some, like Netflix, have created viable models for delivering entertainment to willing and eager audiences. And now others, like newly launched subscription service MoviePass, are looking to reinvent “analog” entertainment by making it more competitive to digital alternatives, especially at a time when talk of “cord-cutting” and the rise of streaming video have execs nervous.

For a $25 to $40 monthly fee, depending on location, MoviePass promises all-you-can-watch movies in theaters. The service, still in beta-only, excludes 3-D and IMAX movies, but it’s still a major deal for movie lovers. MoviePass is going against the technological wave, instead trying to be the “Netflix for movie theaters” to make old-fashioned movie-going more competitive in the age of streaming video services.

Subscribers reserve and pay for tickets using a smartphone app, and then pick up tickets with a special debit card at their local theater. The card must be used in the same vicinity as the app, and geolocation prevents customers from sharing it with multiple parties, using it more than once a day, or swiping at locations other than those where bought their movie ticket. The service simply extends the Netflix-like model to movie-going.

It has mobile-payment elements, but its primary innovation is applying a different business model to an old entertainment pastime. At a time when going to the theater is increasingly expensive, MoviePass is promising to pack the seats again, and it now has 70,000 potential customers on its waiting list.

“It gives moviegoers the opportunity to see the movies they want, at the theaters they want,” said Stacy Spikes, CEO and co-founder of MoviePass. “We’re dedicated to driving traffic back to theaters and reducing the friction of movie-going.”

Earlier tests pegged pricing too high at $50 a month and the kinks to its technology has yet to be worked out. In addition, the company didn’t give advanced notice to theater chains and studios, who now view the service as a threat with open hostility. But to its credit, MoviePass retooled and rebooted, now requiring printouts and targeting only independent theaters. But audience sizes are proving limited.

Still, it’s slowly gaining momentum and generating a buzz among film buffs, many who are finding it cheaper than paying for each ticket. But the service has had a rocky road to date, and looks to have an even rockier road ahead, as Hollywood, and the theaters themselves, continue to fight keep their old way of doing business.

MoviePass is gunning for enthusiastic movie-goers and serious cinephiles, but questions remain over its success. Can an outsider go without an entrenched entertainment industry? The company is leveraging the power of technology to help it get around the Hollywood machine: it claims that its debit card will work at any cinema that accepts credit cards, and the app keeps the service from being abused, which should allay studio concerns.

In addition, the company is selling itself as a powerful movie industry ally, helping to solve a growing problem. Spikes said theaters are still paid full price for the ticket, even if customers see a movie every day. And by making it easy for people to go to the movies and more often, theaters will get a boost in the all-important concession sales. MoviePass expects to generate profits by finding a middle balance between serious buffs who go often and those who go once a week, as well as through add-on services it plans to offer.

MoviePass is making a strong case for itself too, claiming subscribers increased their attendance by nearly 65 percent after joining, and concession purchases rose by over 10 percent. Numbers like these bolster its case that it helps, not hurts, the industry.

Yet despite the numbers, Hollywood is reluctant to jump onboard, at a time when it’s clear their current model is losing steam. Major players like AMC aren’t cooperating either. The chain issued a terse statement to The Hollywood Reporter, saying “We have no affiliation with MoviePass, and we’ve had no discussions with the company about participation.”

Without full participation, consumers will be reluctant to try it out. In the end, all parties need to coordinate and get onboard to sustain success beyond initial customer interest, though, judging from industry reaction so far, that seems unlikely.

The biggest obstacles facing MoviePass are ultimately beyond its control. Hollywood has never been open to outsiders — one only needs to look at Netflix’s rocky path to understand how reluctant, suspicious and hostile movie and TV studios are to outside influences and powers it can’t fully control.

And there’s the intangible issue of quality: a year’s subscription to MoviePass would run on average about $360 a year, requiring subscribers to see around 40 movies a year to make it a value — and many wonder if there are really that many movies worth watching, especially when Hollywood is releasing fewer films for broad audiences. In the wake of higher prices, home and online entertainment will continue to be a competitive alternative: digital is becoming mainstream, and cable, though expensive, remain stable, even though the industry is showing signs of a shift.

But in the end, the movie industry may not be that interested in keeping audiences in attendance, at least not in the way that it used to. Many executives privately think movie-going will go the way of Broadway and become an increasingly marquee, “premium” experience. Its growing reliance on 3-D and IMAX show its willingness to boost picture and projection technology itself. Meanwhile, experiments in reserved and elite seating, as well as broadcasting one-time premium events like concerts, demonstrate theaters are trying out ways to “upgrade” the show experience and justify rising tickets costs.

Sure, Hollywood can address the bigger picture — reverse the steepest decline in movie attendance figures in years by making better movies to lure people back. It can lower ticket prices to stimulate sales — after all, movie-goers flocked to the cinemas during the Great Depression, making Hollywood one of the few profitable industries during a dire time. If studios and theaters are truly forward-looking, they can partner with companies that actually have their fingers on the pulse of technology and see how it’s radically changing the way people consume entertainment.

But in the end, Hollywood — rather than adopting technologies like it did in its golden era — will settle for the simple solution of raising prices for the few that still go to the cineplex, as it kicks and screams while being dragged into the digital age.

I Want More Stuff Like This!

We're on a mission to show you why technology matters. Sign up to our daily e-mail and see for yourself!

Best of 2machines

Hey, Parents. What That IPad Is Doing to Your Kid Is Kind of Shocking.

Hey, Parents. What That IPad Is Doing to Your Kid Is Kind of Shocking.

Why Reading On Paper, Scientifically, Makes Us Happier People.

Why Reading On Paper, Scientifically, Makes Us Happier People.

Why Would Someone On Food Stamps Have an IPhone?

Why Would Someone On Food Stamps Have an IPhone?

Some Know Hedy Lamarr From Her Hollywood Days. Everyone Should Know What She Invented.

Some Know Hedy Lamarr From Her Hollywood Days. Everyone Should Know What She Invented.

What Facebook Is Doing to Your Brain Is Kind of Shocking.

What Facebook Is Doing to Your Brain Is Kind of Shocking.

The True Story Behind the Rise and Fall of BlackBerry.

The True Story Behind the Rise and Fall of BlackBerry.

See How Bitcoin’s Mysterious Founder Destroyed the Need for Paper Money With a Single Click.

See How Bitcoin’s Mysterious Founder Destroyed the Need for Paper Money With a Single Click.

If I Told You Gadgets Make You Sick, Would You Be Surprised? They Do — And Here’s the Cure.

If I Told You Gadgets Make You Sick, Would You Be Surprised? They Do — And Here’s the Cure.

This Nigerian Prince Is Getting a Makeover, And You’ll Never Guess Who He’s Impersonating Next.

James Cameron Was Right. This Dirty Little Secret Will Bring Machines to Life.

James Cameron Was Right. This Dirty Little Secret Will Bring Machines to Life.