Stacey Sher on the future of movies and streaming

In her three decades of producing movies and TV, Stacey Sher has seen how fast and radically the industry can change, from the rise of indie cinema in the 90s to the dominance of blockbuster franchises and superhero IP this century. Now the producer of such seminal works as Pulp Fiction and Erin Brockovich has a front-row seat to the rise of streaming and its impacts on how stories are told and consumed. Sher is experiencing this shift first-hand, producing streaming limited series such as the acclaimed Mrs. America and the long-in-development Devil in the White City. To shed light on the current evolution of film and TV, she spoke to McKinsey Executive Editor Daniel Eisenberg about the post-pandemic outlook for the moviegoing experience, the excitement of storytelling opportunities in streaming, the role of data in the entertainment business, and the state of diversity and representation in the industry. The edited conversation appears below.

McKinsey: The pandemic has had a major impact on movie theaters, and even before the pandemic the demographics of theatergoers had been changing. Do you see movie theaters regaining their key distribution roles over the rest of the decade?

Stacey Sher: If you look at the box office success of films like No Time to Die or Shang-Chi and the Legend of the Ten Rings, it’s clear that we’re already seeing theaters regain their role in the post-pandemic world. I don’t see the road to a billion-dollar franchise without a key theatrical component. But [release] windows are changed forever. Streaming is here to stay and theatrical is here to stay. And the important thing is going to be for the distributors to grow a younger audience.

McKinsey: There’s been a trend of films being released on streaming services at the same time as they open in theaters or within a week or two. Do you think that will be a blip based on the pandemic, or do you see the trend continuing? Is that a sustainable model for the industry?

Stacey Sher: I think it gives the distributors and the filmmakers a little more optionality. We pretty much know what’s going to happen by the end of Friday night for a weekend, in terms of the projections. If you’ve spent your $50 million on marketing and you realize that it’s not going to work, it would be great to have the option to capitalize on that marketing campaign and make the movie available to a wider audience.

Even within different demographics, people reacted differently during the pandemic. Free Guy was generally for men under 25, and they had no hesitancy about going to the theater. I had a film, Respect—the Aretha Franklin film, starring Jennifer Hudson—come out in the middle of the Delta variant. We had to pivot to a “premium video on demand,” or PVOD, model, as quickly as we possibly could because we were getting so many requests. There were church groups that had bought group sales that then had to cancel because they were frightened. Women over 30 were much more hesitant to go to the theater than any other demographic.

We’re in a time of flux, in a time of change, and what was on its way towards being broken is being broken in a different way.

The future of the moviegoing experience

McKinsey: How much do you think the moviegoing experience will change over the next decade?

Stacey Sher: I really hope the moviegoing experience changes over the next decade, because I think it’s important for the health of the industry. I’m a big believer in theatrical, not just because of my romantic love of cinema (though that’s a huge part of it). I believe in the process of sitting and spending two hours, uninterrupted and singularly focused, and its impact on us as human beings.

Cinema is an interactive experience. You’re sitting in the dark with 300 people that you don’t know, that aren’t like you, and you’re sharing a group experience. The only other thing that’s like that is theater, and obviously, it’s more intense because it’s live.

But that experience needs to be made more accessible and affordable for young people so that this habit continues to grow. We’re definitely seeing a graying of the theatrical audience. If you’re a teenager, it’s expensive to go to the movies. And it becomes about a value proposition. Even though the subscription film models didn’t work because they were underpriced, I think they got a lot more people under the age of 25 back to the theater.

If it becomes financially accessible and important to kids to be a part of the conversation, people see it. I have an 18-year-old and a 20-year-old, and yes, they’re my kids so they’re more interested in filmmaking, but when something’s coming out in the theater by Christopher Nolan or Quentin Tarantino, or another filmmaker that they love, they go to see it.

Because of successes like The Queen’s Gambit and Hacks, or earlier streaming shows like mine, Mrs. America, there are sophisticated audiences out there for television that is quite cinematic and as good as any form of entertainment out there. And it’s also very accessible to young people. So, they’re going to have a higher bar for what they expect.

I also think it’s important to develop new filmmakers and new voices. It’s exciting that we’re getting into truly intersectional times where we’re telling different stories because that’s the next level of innovation. It’s new voices and new perspectives.

McKinsey: What do you think the moviegoing experience will look like in 2030?

Stacey Sher: I hope that in 2030, we can kill whatever kind of electronic devices we’re using when you come into the movie theater. I hope that film becomes even more communal, more of a hub, and more of a community, because I think the more we become device-heavy, the more disconnected we become. Storytelling is about generating empathy. And I think that’s important as we become more sorted into affinity buckets.

I hope that theaters are healthy and robust, and that content is more representative and accessible because as the cost of making films comes down it will be more accessible to a broader range of filmmakers. I don’t know if I want to have some kind of digital interface talk back to the screen. I like the old-school way of offering feedback, with people yelling at the screen.

I think the most important thing is for us to continue to renew the business with new voices. As the demand for storytelling accelerates, the “farm team” doesn’t exist as much as it used to, and people are being pushed through a lot faster. Continuing to look for underrepresented voices is going to be huge for the business.

The Next Normal: Video entertainment

The future of video entertainment: Immersive, gamified, and diverse

The art and science of creativity in the streaming era

McKinsey: How do you see the role of analytics and the relationship between increasingly sophisticated analytics and creativity? Can analytics help reach niche audiences, or do you think they lead to a “lowest common denominator” effect?

Stacey Sher: Data has always been important in the film business, but it’s a guide. People in tech sometimes like to think that everything will yield to data, but storytelling is alchemy. I’ve worked on movies that have tested incredibly well that nobody shows up for. I’ve worked on movies where a third of the audience has walked out of screenings but have gone on to become some of the biggest hits of my career.

I’m hoping that one of the great innovations is that the cost of marketing comes way, way down because that is a real barrier to the kinds of films that can be made. And analytics help remind people that there are underserved audiences. Teen films used to be huge—all of the John Hughes movies, and tons of other films—and then teen television shows became really big again, with shows like One Tree Hill, and people stopped making movies for that audience. Well, Netflix certainly saw what a huge void that is. Kids’ stuff is huge because parents will put their kids in front of anything so that they can multitask.

The question is, how do you use analytics in figuring out how to make things special and how to make things cut through? Data alone could lead to greenlighting a lot of mediocre content that’s forgettable. Then you have a library that doesn’t contain things that people are going to watch over and over again, like Breaking Bad or The Sopranos or The Mary Tyler Moore Show, which stand the test of time.

McKinsey: You’ve talked about studios being forced to try to act more like tech companies to compete with the likes of Netflix and Amazon. How does that impact what kinds of things can get made and the output going forward, from a creative standpoint?

Stacey Sher: It actually becomes more important than ever to cut through. Like in music, you’re no longer competing with what comes out that weekend. You’re competing with the history of film and entertainment. So how do you cut through when there are so many choices?

HBO Max did an incredible job last summer, and it’s based on the quality. White Lotus came out of nowhere, and everybody was talking about it, and then they had Hacks. They went on a great run. Apple has its first massively talked-about hit in Ted Lasso, which just continued to build organically. Netflix definitely has a “more is more” approach, and then Squid Game comes and it becomes a thing that everybody has to see. As shows that people have depended on Netflix for continue to be taken off the service, following Friends and The Office, it’s going to be interesting to watch how much the new stuff feels disposable or like things that you’re going to continue to come back to.

The film business, like the music business, is notoriously slow, to quote Wayne Gretzky, “to skate to where the puck is going.” There should have been no reason why the record labels didn’t come up with Spotify or iTunes first, but they were trying to squeeze every dime out of CDs. Their business was broken apart. And the film business, instead of looking to make up DVD revenues by selling to Netflix, could have created Netflix. That’s a never-ending cycle in film and television, which potentially is changing.

Black representation in film and TV: The challenges and impact of increasing diversity

Black representation in film and TV: The challenges and impact of increasing diversity

The challenges of “cutting through”

McKinsey: How is the shift to streaming impacting you as a filmmaker? Is it a more appealing proposition, being able to produce quality creative output, that you don’t have to limit yourself to a single two-hour movie and can create a series of episodes instead?

Stacey Sher: What’s exciting right now in storytelling is that we have the opportunity to tell a story in whatever format fits it best, with no real stigma. When I first started out, TV had a certain connotation to it. That’s why HBO’s original motto was “It’s not TV. It’s HBO.”

I’ve been working on the adaptation of The Devil in the White City for over 10 years. It couldn’t be contained in two hours, which is why finally it’s going to go forward as a limited series. So that’s really exciting.

You can now get the cast you want. You can get the filmmaking talent you want. Everyone’s excited about telling stories. Whether you’re telling stories in something that’s serialized and is 12 minutes, whether you’re telling a story in a limited series of nine episodes, like we did in Mrs. America, or you’re telling a story in a two-and-a-half-hour film, I still believe that people will come out.

The great thing about storytelling right now is that it’s very democratic. Whether you’re going to be telling a story on television or in a streaming movie or in the theater, there’s no thumbed nose. If you’re a new filmmaker, like Barry Jenkins, you can make a masterpiece like Moonlight, and then make a masterpiece like The Underground Railroad [a 10-episode streaming series].

McKinsey: Do you think it’s getting harder to make certain films, like mid-budget bio-dramas or sophisticated comedies?

Stacey Sher: I believe that it was always hard to get mid-range movies made. It was hard to get Erin Brockovich made in 2000. If we didn’t have the biggest movie star in the world, Julia Roberts, we never would have gotten that film made. But the trajectory of my career has followed that most of the films that we’ve made have not necessarily been that easy to get made.

We fought long and hard to get $8.5 million to make Pulp Fiction. In hindsight it all makes sense, but unless you’re looking at a very specific IP, there’s always an alchemical combination of budget, star, and filmmaker to get greenlit.

Streaming has been fantastic for indie films and filmmakers. I’m sure more people got to see Nomadland than they would have had it just had a traditional release. It used to be that when a small film won an Oscar, it had a huge impact on the level of exposure and the level of release. That’s all changed a lot.

McKinsey: What advice do you have for aspiring filmmakers?

Stacey Sher: There are a lot of ways to tell your stories, but the most important thing is to know what you want to say, what your unique lens is. If you look at someone like Rian Johnson, yes, of course, he went and made a Star Wars film. But he went back to telling a story that he was passionate about and leaning into his own voice, and then you have Knives Out, which is a huge hit. I’m sure that people wouldn’t have thought it was going to be the gigantic hit it was, but it was entertaining and broadly commercial, and just a good time.

With regards to television, and with writers specifically, the system is changing. It’s starting to be a little bit more like the BBC, where it’s more like film. You’re not expected to deliver 22 one-hour episodes of television every season, which is a grind. So, it’s exciting: We’re in a time of flux, and the most important thing is to see things, know what you love, find your voice, and lean into that.

McKinsey: What about the really small screen? Reno 911! was one of the few notable successes on Quibi, the short-lived, short-form streaming service designed for smartphones. How do you view the prospects of entertainment produced expressly for the phone?

Stacey Sher: Honestly, I think everything right now is content that’s produced for the phone, much to the horror of certain filmmakers that I know. I’ve had conversations with friends of my kids when I’ve seen them watching something like Pan’s Labyrinth on an iPhone. I’m horrified by it! But that is really the change, you know?

As a parent, you used to think, “My great victory is my kids don’t have a television in their room.” But they have a television everywhere now. Reno 911! worked in 22 minutes, it worked in 12 minutes. It’s the kind of storytelling that can be shorter. But it all flows from storytelling. You have to choose a story that fits the time constraint or the structure that you’re creating.

McKinsey: There seem to be two schools of thought on the distribution approach for streaming series. Netflix and Amazon Prime release everything at once and let people binge-watch, and two years ago everybody thought that was going to be the future for all streaming services. But then Disney and HBO Max have gone back to a more traditional approach, releasing one or two episodes a week. Do you come down one way or another on those approaches?

Stacey Sher: I think it’s really interesting to consider how people approach the drop of episodes. I’ve heard there was a study showing that three episodes determine whether people are going to go further. That’s partially why the FX on Hulu and Hulu model will drop three episodes at the beginning. I think that there’s a water cooler effect. I have The Many Saints of Newark on my mind now because so many people have re-watched The Sopranos during the pandemic. I remember the rituals, and this was also true for Game of Thrones, that people would have when it was “that week.” Everybody was talking about it, or saying, “I haven’t gotten to watch it yet, don’t tell me.” So, it became a cultural moment.

As a filmmaker, I want people to be talking about the things that I do. In these times, where it’s harder to cut through, any time that you can create that buzz you want it to last longer.

Broadening representation, on-screen and off

McKinsey: You’ve produced several films or series about influential women, including Erin Brockovich, Mrs. America, and Respect. What do you think still needs to change to help the industry reach gender equity?

Stacey Sher: There’s an attitude of, “You’re just so lucky to be allowed to work.” We as women have internalized it, as “we’re just so lucky to be allowed to work.” And that attitude just tends to hang around.

When Julia Roberts became the first woman to be paid $20 million for Erin Brockovich, people made such a big deal about it, when many men had reached that level before. But why shouldn’t she? Her films were doing as well as and better than many of the men who were her peers, who were getting paid that amount of money. If Robert Downey Jr., or any of the other people from the Marvel universe, had the same experience as Scarlett Johansson [with her high-profile legal battle with Disney over compensation from Black Widow], I don’t think that anyone would be blowing it off and saying, “He’s so lucky and tone-deaf in the pandemic.”

The fact that some of those critical statements about Scarlett were crafted by women tells you how much we internalize these biases and can’t see them. I think shining a light on them is the only way to constantly keep them in check.

I was part of a search committee for a high-level academic film position. The women, and particularly women of color, started dropping out as candidates, and we found ourselves with three middle-aged white men as the main candidates at the end of the search. A younger woman on the search committee pointed out that these women felt that they could not be safe stepping away from their full-time careers and then returning, without any damage to their careers. We had to make accommodations to keep one of the women in the mix.

McKinsey: You’ve spoken about finding a peer group of women early in your career who could support one another. How do you think about mentoring and supporting the next generation of female industry leaders and creators?

Stacey Sher: While I care a lot about mentoring women, I really want to make sure that I’m not just mentoring white women. I want to make sure that I’m not just mentoring straight white women. It makes me better at my job to look at the world through other people’s lenses. It serves more audiences, and I think it’s also important for the planet.

There used to be this tyranny of relatability. When we made Matilda, we were told that boys wouldn’t go to watch the story of a young woman. And I just took it at face value. But you go back and look at some of the greatest action franchises, and you have Linda Hamilton, Jennifer Lawrence, and Sigourney Weaver in some of these great classic action movies.

So yes, mentorship is crucial. Access is crucial. Challenging yourself is crucial. When we made Mrs. America, we knew we wanted to hire women, and women of color, to direct the series, and to make sure the room was intersectional and that there was real representation: LGBTQ representation, age representation. As a result, we have a much richer story.

If we’d rounded up the usual suspects and said, “Oh well, those people aren’t available,” we would have ended up with a bunch of white men directing a story about women, and it wouldn’t have been as good.

McKinsey: Do you think Hollywood is waking up to the creative benefits of expanding who’s working on projects, both in terms of gender equity and racial equity? Is there a mindset change starting to happen, about the economic benefits of expanding audiences and expanding who’s involved, on-screen and off-screen?

Stacey Sher: I think change comes when the industry realizes that it’s good business. It’s not a surprise that a film like Crazy Rich Asians is broadly commercial, or that Parasite is broadly appealing. People are people. It’s not a surprise that Black Panther is a huge hit. It’s a great film, and it’s telling a story that everyone can relate to through a different lens. That creates empathy.

The more that we can lean into telling other people’s stories, in both commercial and un-commercial ways, the better. Reservation Dogs is a perfect example. Stories about Native communities had been pitched before, but with the right alchemy and the right creators, Reservation Dogs was authentic and charming and entertaining, and it became a big, broad, mainstream crossover hit. That speaks to the fact that this is good business.

Netflix’s international strategy has shown that it’s not just a one-way import system where we’re just exporting American television internationally. We’ve seen it with Money Heist, and we’ve seen it with Squid Game, and we’ll continue to see it. Look at how many Oscars “the three amigos” [Mexican directors Alfonso Cuarón, Alejandro G. Iñárritu, and Guillermo del Toro] have won in the past five years.

There are great filmmakers everywhere. Because of the challenges of getting films made in other countries, people have something to say. And when they take their shot, they don’t take it lightly.

McKinsey: If you could wave a magic wand and change one or two things about the industry, what would those be?

Stacey Sher: I would invest in developing film-going for audiences. When we were producing last year’s Academy Awards, we asked people their first film memory, and probably 90 percent of them said The Wizard of Oz. That’s a story that was created over 100 years ago. So, it really speaks to the enduring value of film. Star Wars has had the same impact.

I’d also like to see the industry invest in celebrating cinema. There used to be movies about movies that reminded people why they love movies. We have to figure out a way of curation, so that appreciation for storytelling continues to feed the next generation of filmmakers.

Comments and opinions expressed by interviewees are their own and do not represent or reflect the opinions, policies, or positions of McKinsey & Company or have its endorsement.

Explore a career with us