Movie Theater Owners: We're Not Dead Yet!
Suppose you owned a movie theater — and nobody came?
It’s not an existential question, like the sound of one hand clapping. Instead, it’s the very real predicament exhibitors have faced for most of the past two years.
Few national businesses were as decimated by COVID as movie theaters.
Three years ago, domestic box office receipts totaled $11.4 billion. If you take out the pre-pandemic first quarter of 2020, revenues for the rest of that year were basically zip. Total sales from last year weren’t stellar, either. Entire chains and mom-and-pop venues closed for good. Thousands lost their jobs.
And that’s why this year’s CinemaCon, an annual gathering of movie theater owners in Las Vegas, felt a little like a reunion of Titanic survivors.
Owing to the pandemic, CinemaCon was canceled two years ago and had a fraction of its usual attendees a year ago. But this year’s edition was filled with thousands of exhibitors, and every studio screened clips (and sometimes entire movies) from their coming releases.
At the very first business session, exhibitors chanted “We are back, we are back, we are back” as if it were a locker room rally before a big football game.
But will the multiplex ever be as crowded as it once was?
Some CinemaCon attendees said yes.
“I would say the business doesn't survive but actually thrives,” said Tom Rothman, chairman and CEO of Sony Pictures Entertainment's Motion Picture Group. “Not only can it survive, it can overcome a global pandemic, which it's in the process of doing. So does the business change? Does it evolve? Of course, every business changes, and every business evolves.”
There’s at least one major data point that helps make his case.
On Dec. 17 last year, a day when more than 170,000 new coronavirus cases were reported in the United States amid the Omicron surge, Sony Pictures released Spider-Man: No Way Home.
The Sony-Marvel movie has grossed more than $800 million in domestic theaters so far. Without adjusting for inflation, Spider-Man: No Way Home is now the third highest-grossing domestic release ever.
And its performance certainly lifted the CinemaCon mood.
At CinemaCon, movie studios bring in stars like Dwayne the Rock Johnson, Viola Davis and Keanu Reeves and show hours of film clips — and sometimes entire movies like Paramount's new Top Gun sequel — for theater owners, hopeful their upcoming releases will lure audiences back to the multiplex. For the first time, Disney showed footage from one of the year's most anticipated titles, the first Avatar sequel, coming in December.
I would say the business doesn't survive but actually thrives
“The attitude in the hallways, the conversations with the members who operate motion picture theaters around the country and around the world, then versus now is dramatically different,” said John Fithian, president and CEO of the National Association of Theater Owners, which stages CinemaCon.
"Man Can't Live By Batman Alone"
That said, the current box office results look a lot like income inequality — the rich are getting richer, and the poor are getting poorer.
Three years ago, the top three highest-grossing movies accounted for about 16% of all box-office revenues — meaning there was a 84% long tail for smaller films, including adult dramas, documentaries and foreign-language releases.
But last year, the three highest-grossing films accounted for nearly a quarter of all tickets sold.
As director Baz Luhrmann said, “man can’t live by Batman alone.” He was at CinemaCon promoting his upcoming movie about Colonel Tom Parker and his famous (and heavily exploited) client, Elvis Presley.
Theater owners need movies like Luhrman’s Elvis because the studios can’t release a would-be blockbuster every week. And if most new releases are geared to that kind of movie’s young adult/teen audience, other types of people will stop coming to theaters because there isn’t enough for them.
One of the biggest topics of conversation at CinemaCon was something called windows. It’s the period of time, historically around three months, from when a film hits the multiplex to when it premieres on streaming sites like Netflix or premium cable channels like HBO Max.
Unlike most other studios, Sony preserved that 90-day theatrical window.
But rivals didn’t follow that script, and released dozens of films in theaters and on streaming sites the very same day, or canceled a theatrical release altogether, which Disney did this March with its last Pixar movie, Turning Red.
The studios all pledged to the thousands of CinemaCon exhibitors they would open their movies exclusively in theaters going forward. Yet moviegoing habits already might be irrevocably transformed.
Well before the pandemic, exhibitors were steadily losing customers. And even if Netflix just reported its first subscriber loss in a decade, overall streaming growth is up some 18% from a year ago, according to one new study.
Theater owners are banking on a Hollywood ending to return to their past glory.
But like the ocean liner in Titanic, it might be very rough sailing for a long time to come.