Oct 24 • 8M

THB #242: It's All Over - State of Cinema, Pt 1

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David Poland
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My brain is going to explode.

I’m usually pretty comfortable projecting where the next year or so is going in the film/tv industry. Those who seek to position me as wrong tend to lean on specific guesses that went wrong. But in terms of the overall perspective, I’ve been a lot more right than wrong. And I’ve almost always been 6 months or more ahead of other journalists in seeing trends.

But right now… I don’t know.

I do know that most of what is being speculated about is wrong, because it doesn’t really look past the surface of any given day or week. Media covering this industry have become madly reactive and seem to be more concerned about being right “right now” instead of right.

I spent the weekend chewing on this weekend of box office rationalizations by the trades. “It’s a great opening for Dwayne Johnson!”

And “The 29th best opening of 2022, in year with only 79 films in wide release (both to date) is a triumph for two former leading movie openers… and if you compare it to the $30 million opening of The Lost City, you are just a neg-head!”

Or “Don’t you know that rom-coms no longer have a theatrical audience? After all, there have been 4 whole rom-coms released this year, the other two (besides The Lost City) being a day-n-date studio dump and another movie marketed as “the first gay rom-com,” apparently alienating audiences. This is a good sample of a genre.”

I’m sorry. This is nuts.

This is smartly manufactured spin by very smart studio publicists who are setting the agenda for most of what passes for industry coverage these days.

In a conversation with a friend this weekend, I started spinning out why the industry should not be rationalizing mediocre results, but really, crapping our collective pants… because these numbers are not positive.

So I sat down and started doing analysis, which I know makes many of your eyes glaze over. I hear you. It’s a lot. And not all of you are analytics people.

Here is the shaved down version. We have gone from about 900 or so new domestic theatrical releases a year pre-COVID to about 450. And from about 140 wide releases a year to about 80.

The Top 20 movies used to represent about 55% of the domestic theatrical market. This year, so far, it’s over 75% and about to get higher with the arrival of Black Panther: Wakanda Forever and Avatar: The Way of Water.

The Top 40 movies have generated $4.8 billion domestically so far this year. The next 160 titles combined have generated $624 million.

Annual domestic box office from new movies released each year was over $11 million for 5 straight years before COVID. This year, it’s looking to land somewhere around $6.5 billion, including the 2 presumed mega-hits on the way.

And here is the Catch-22.

The only people who can control the market, really, are the distributors putting (and not putting) movies in theaters. Everybody else is just reacting and trying to understand the curve.

Disney, who owns both epic releases still due this year, as well as 2 other titles that have generated more than $750 million worldwide each, should generate over $4 billion in grosses from their Top 4 movies released this year. Next step down are Lightyear ($226m ww) and Strange World (coming next month). Let’s say $500 million.

Aside from Fox movies Disney didn’t make itself and Searchlight, that is Disney’s entire commitment to theatrical. Six movies, $4.5 billion worldwide gross.

In 2019, Disney grossed over $11 billion in theatrical.

If grossing less than half their potential theatrical revenues is where Disney wants to be, no one can stop them. And if the movie theaters that allow Disney the range and flexibility to make $4.5 billion worldwide this year start closing, cutting into that gross, Disney will have actively created an even deeper reduction in their own revenues.

And remember, this includes the now-only-a-division Fox. Searchlight has its own space. But aside from Avatar and other IP rights from Fox, Disney only released 3 Fox movies this year and combined, they grossed under $250 million worldwide.

That is why we could soon be seeing the end of the theatrical business as we knew it and even as we know it today.

Warner Bros Discovery is committed, at least for now, to theatrical. They have as many as 14 movies in their 2023 line-up, though at least a couple seem destined to fall out.

Sony talks a lot about their commitment to theatrical, but they have also sold off a lot of their titles in the last couple of years. They have 9 or 10 titles due in 2023.

Paramount is loaded with IP-driven films in 2023, but it’s still only likely to have 10 releases on the year.

Universal has the biggest load of titles with 14 releases scheduled at this point.

Disney has 9 films on deck for 2023… a whole 1 of which is not in-house IP (Marvel/Pixar/Disney Remake/Reboot).

I count 31 high-gross-ambitious movies that will define the box office in 2023. In presumed order of release:

Ant-Man and the Wasp: Quantumania
Creed 3
Dungeons & Dragons
Shazam! Fury of the Gods
John Wick: Chapter 4
Scream 6
The Super Mario Bros. Movie
Guardians of the Galaxy Vol. 3
Fast X
The Little Mermaid
Spider-Man: Across The Spiderverse 2
Transformers: Rise of the Beasts
The Flash
Indiana Jones 5
Mission: Impossible - Dead Reckoning Part 1
Barbie
Oppenheimer
The Marvels
The Meg 2: The Trench
Gran Turismo
Haunted Mansion
Blue Beetle
Kraven The Hunter
The Exorcist
Dune: Part 2
Trolls 3
The Hunger Games Prequel
Wish
Wonka
Ghostbusters
Aquaman

If the average worldwide gross on each of these high-gross-ambitious movies is $500 million, which is generous, that’s $15.5 billion.

If we assume they make up 75% of the theatrical box office, as we have seen become the “new norm” this year, then the entire worldwide box office generated by “Hollywood” next year would be $21 billion. Throw another couple billion on top for world cinema… go on… doesn’t cost you anything. $23 billion.

That’s an improvement on what we hope will be a $18 billion total when we count all the 2022 releases and 2021 holdover grosses in 2022.

But it ain’t the $41 billion of 2019. (The 7th consecutive year over $35 billion.)

Does it give me hope for the return of a fully operational theatrical exhibition business? No.

And it doesn’t matter why. (Though I could write a book on just that.)

Maybe I just have to accept that this industry decided to burn its own money and 40+ years of building a very successful revenue model based on windows. This was a model that built very focused interest and revenues through a series of steps that took advantage of differing groups of movie consumers at each level of comfort (of effort and spending) in every group’s engagement.

The replacement, in many industry leaders’ eyes, is to spend a fortune on content, to let whatever floats to the top of popularity rankings find its way to the top, and then to hope people don’t tire of paying for your increasingly expensive service every month.

Moviegoing, for the most part, has always been a habit that the industry cultivated. What TV we watch, much the same. So with few exceptions, people won’t pay for specific content, so much as for a content ecosystem, which is what the broadcast networks have been and what Netflix is. But in trying to build an owned library of value, Netflix wildly overspent, not necessarily wrongheadedly. But in misreading what Netflix was doing and the significance of spending so much, others followed. That is one of the critical errors that historians will write about.

Without any financial motivation to do anything but work on that ecosystem, “special” product, especially that which costs more money, will soon be an endangered species. At Netflix and everywhere else.

This is the way of industry history. It’s the circle of life. Not my thing. Not something I can do anything but observe. Wish otherwise as we might, history repeats itself with astonishing consistency.

So if this is the new normal, what happens? That’s Part 2.

Until tomorrow…

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