The Hot Button
The Hot Button
THB #125: CinemaCon's #1 Issue

THB #125: CinemaCon's #1 Issue

It’s super simple.

Exhibition Needs More Movies In Theatrical Release.

The cannons are on the battlefield, primed and ready, and they simply don’t have the ammunition to win the war.

I was going to make my own chart, but this is right out of Mojo (something kinda useful that they didn’t decide to disappear).

Obviously, 2022 is still short of a full 4 months. So breaking it down further with the details to which I have have access:
In 2019, there were 57 films by this calendar date grossing over $1 million.
In 2022, there have been 41.

In 2018, there were 57 titles that grossed at least $2.4 million by this date.
In 2022, that number is 32 titles.

In other words, the number of titles that can draw an audience that have been put into theaters compared to pre-COVID has been reduced by at least one-third.

This does not take shorter windows into account. Put aside the actual cash flow.

It does not take into account that there is more content being produced right now than anytime in the history of filmed entertainment. Put aside the insanity of abandoning a cash machine for a bet on future profitability.

Put aside the studio-created headwind of every film put into theatrical release bringing in less revenue and head count (from Spider-Man and Batman on down). That is, currently, unavoidable weather.

Studios are saying to Exhibition, “Recover. We love you. Keep your doors open/rent paid/staff-engaged-and-paid for. Play the films we feel like putting in your theaters, generating cash revenue. AND do it with shorter runs, our marketing plans openly drawing people to wait to see these films on TV within weeks for “free,” and do all of that with 1/3 the amount of product to fill your movie houses.”

The resilience of exhibition is really quite remarkable. They will figure out a way around the shorter runs and the anti-theatrical marketing. Exhibition has been finding a way to survive in spite of ongoing shortened windows and the constant threat of day-n-date for more than 2 decades now.

But there is no business that can survive without having enough merchandise to create enough revenue to keep the doors open that were built for the exploitation of 1/3 more merchandise than is currently being made available. Not to put too cliche a point on it… supply chain!!!

Take 1/3 of the merchandise out of Wal-Mart - any aisles you like - and you will see Wal-Marts closing or relocating to smaller spaces because the overhead would pull them into the red.

It won’t show next month, but Bob Chapek’s current position on theatrical will deeply damage his own superstar Marvel and Star Wars brands, reducing them to television-only within a few years by refusing to release, for instance, Pixar movies into theaters and letting them run, as they do, really long.


The domestic box office for in-year releases so far is $1.38 billion. Turning Red alone would surely have added more than 10% to that number and probably around 15%.

Of the fifteen shots at theatrical release that have not been taken in 2022, compared to 2019 and before, how many hits were there? One or two in the first four months of the year can make a mammoth difference.

A wider and healthier ecosystem is what allows for The Batman and Dr. Strange to have mega-openings. We currently have just over 40,000 screens. But in the “mega-only” ecosystem where the middle class of movies is mostly eliminated, it obviously reduces down to 10,000 screens. Now figure an average of 250 seats at 5 screenings a day over an opening weekend. That could, in theory, selling every seat for just one film, allow a $375 million opening weekend… which is almost exactly the current record opening of The Avengers: Endgame. It’s possible!

But here is the problem. There were 10 other films in wide release when Endgame opened, taking up about half the screens in America. Many of those screens were not running a full schedule of 4 or 5 showings, making room for more Avenger showings. But still, say your future blockbuster only owned 75% of all showings in America. Your top possible gross is now $281 million.

Now, let’s take another 20% off the top for what I think is a very generous number of seats not sold, even during a mega-opening weekend. Top possible gross is now $224 million. Now you are under Spider-Man: No Way Home’s opening. Not a bad place to be… but a smaller opportunity.

Let’s look down the road (a couple weekends)… Endgame was on over 3000 screens for 6 weekends. Not so fast in the 10,000 screen domestic ecosystem. Where do you put Aladdin, Pokemon, and John Wick in those 6 weeks of 2019, as Endgame tries to go from $357 million to $826 million? Those smaller hits need enough screens to generate their $400 million that they generated in May 2019. Or they - and their revenues - just disappear. And Endgame hits a wall after 3 weeks because the next big movie is taking up its screening times.

It’s a death spiral. The market for theatrical gets smaller and smaller, prioritizing bigger movies and all of sudden, it a market owned almost exclusively by a dozen movies a year… and when one or two of them flop, there is even more pressure on everyone.

Some smarties argue that distribution should own theaters. Genius! So the market you just destroyed for some notion that Spielberg said out loud 15 years ago is going to work out better for you than it did for ye olde exhibitors of 2022? Why are people so unable to take an idea through the next few steps and find the cement wall they will inevitably crash into?

You know how after a mega-movie, there are often no other mega-movies clear for a week or two? In the mega-only world, when those couple inevitable big flops happen every year, the entire market isn’t just dead not for one weekend, but for 3 weekends, because there is nothing else there to make up any of the revenues.

If you want that, great. Congrats. This is where the industry is currently headed… unless Netflix changed that… which actually makes zero sense, except as a general bucket of cold water over the heads of many.

The real wake-up is not Netflix, but Disney. Chapek’s mega-only theatrical angle in favor of building streaming at all costs has led to a stock market price just about where it was before Disney+ was announced, much less acquired so many subs.

Buzz Kill!

The dump-theatrical-to-streaming thing doesn’t work well enough to make it a viable strategy.

This is not to say that theatrical is the answer to everything. It is not. Not close.

Theatrical is a business that is not tied at the hip to streaming for any logical reason. Streaming’s goals are different than theatrical. Its economies of scale are different than theatrical. Streaming is a subscription business and theatrical is an a la carte business.

Yes, theatrical releases have a post theatrical life. It used to be 4 or 5 windows deep. Those too are being eroded and likely eliminated. It’s theatrical to streaming to the end of time now. Which makes that theatrical money all the more precious.

Do the math. Don’t forget the cannolis.

Until tomorrow…

The Hot Button
The Hot Button
An inside perspective on the Film/TV/Streaming Industry from a 30-year veteran seeker of truth.