THB #131: Summer Begins... What's Next?

And so… the first season of real opportunity for movies in theaters in 2 years has officially launched.

Dr. Strange and the Multiverse of Madness will open to over $180m domestic and perhaps $400m worldwide. (Sunday edit: $185m/$450m)

Yay.

And then we have 3 weeks until the early-hyped Top Gun Maverick, with only one film in counter-programming that can do any serious business in between (Downton Abbey).

In 2019, the Marvel movie pushed into April, but we still had another 3 $100m grossers in May (Aladdin, Pikachu, Wick). In 2018, early Avenger, plus Deadpool 2 and Solo: A Star Wars Story. In 2017, another TWO Disney movies in May (Guardians 2, Pirates 4), and others that didn’t deliver but were seriously chasing included Alien: Covenant, Baywatch, King Arthur: Legend of the Sword, Diary of a Wimpy Kid: The Long Haul (different meaning back then), Everything, Everything, and Snatched, so bad a movie with so little box office that my brain won’t recognize the title as having existed.

Point is, while certain false prophets will continue to lead with comparisons of year-to-date from 2019 vs this year, smart people are catching up with the truth… distributors are the biggest problem for exhibition now… not COVID… not lost moviegoers… not too much to watch on TV to ever leave the house again… Mars Needs Movies!!!

With a limited number of big titles coming, what will the studios do if their hits are hitting? I have a weird feeling that Multi-Strange will be mostly played out by the arrival of Top Gun Maverick and it will lose one superpower in this post-COVID theatrical business… premium screens. But how long will Maverick play? Will Universal pull the plug on Jurassic World: Dominion at 30 days, regardless of how it’s playing? If Elvis plays, it is likely to play slow. Etc…

And after all the pronouncements about what they have decided to do without consulting their partners in exhibition, Universal is making no commitments to streaming dates on any of their summer movies and Paramount isn’t willing to discuss their windows for the summer.

Of course, Cruise is already in a legal fight with Paramount over the theatrical window for Mission: Impossible, not Top Gun Maverick.

As for the U, 20% of the domestic gross for Get Out came after 5 weekends in theaters (aka 30 days). But for US, that was down to just under 3%. Of course, it is impossible to measure whether this was caused by the ongoing push to front-loading every movie, the reputation of Jordan Peele, or an inferior movie. The 2 films made almost the same amount domestically, so maybe that’s just the market for Peele’s films and Universal is right to just plain maximize value in any way they can. Nope is coming.

Flip side, Sing 2. Universal released the film on Premium VOD 17 days after its December 22 theatrical release with $99.7m in the domestic bank. It added $29m at the box office in the next 17 days. And another $35m since. But Sing 2 has not yet landed on a streaming subscription service, exiting theatrical only last weekend… 135 days/19 weeks/4.5 months into its theatrical and VOD-only run.

Third side, Marry Me, Ambulance, and The 355 all went day-n-date with Peacock and none of them could get past $22 million domestic.

So what is the right answer for Universal? Still unknown.

I think the answer is probably not a single idea. What would a 60-day-to-Peacock streaming window with a 30-day VOD window do? Would it help or hurt theatrical… Peacock views/sign-ups/VOD?

This weekend’s overall domestic box office was $218 million. It is not an exaggeration that next weekend could dip back under $100 million. No new wide releases. Strange is likely to drop 60% or more - the norm for a huge open - taking it down to $74 million. The rest of the Top 10 added $32 million to the box office this weekend… if it averages drops of 40%, that’s $19.2 million. And that will leave us short of $100 million.

And the weekend after, with Strange off another 35%, that’s $48 million. The first Downton opened to a lovely $31 million. Unless it beats that, we will be short of $100 million again in the 2 weekend hammock between mega-movies.

It is time for distributors to seriously think about the streaming choices they have made.

Obviously, if there is a significant uptick for streamers when a new theatrical movie arrives in 30 days or 45 days vs 60 days or 75 days, no one can expect these companies to work against their financial bottom lines.

But the one thing that hasn’t really been tested is this… how do subscribers value content based on when it lands on streaming? Because once there, it is on digital forever. Movie theaters are done with them. That revenue stream is dry.

For exhibitors, 10% more squeezed out of every big picture can be the difference between in staying in business or not.

How much is lost when people know it’s coming to a subscription service in 45 days? How much is lost when it goes to Premium VOD in 30 days?

If a movie grosses $60 million domestic and the last $5 million would have come out of the long-legged run, that $5 million seems minor, no? But if there are 5 or 6 of those playing in multiplexes around the country, it not only adds up, but it also sell concessions and fills up the margins in a very narrow margin business.

And here is the kick… if those marginal dollars disappear, those multis will get smaller, because they aren’t getting discounted rent and staff costs.

Before long, the $185 million open becomes $150 million open because seeing the mega-open becomes that much more difficult for opening weekenders.

Is that hurting yet?

Exhibition needs to do its heavy lifting too. We need more premium screens. We might need some lower seat count theaters with nice sized screens so indie films feel like a premium event too.

Until tomorrow…