The industry is not stable enough to have a new normal in the exhibition world yet. I don’t expect we will really have one until the end of the summer of 2022.
Only 30 movies with “Hollywood” as funder, creator or first distributor have grossed $30 million+ domestic this year. By this date in 2019, there were 67 such movies.
Only 23 such movies have grossed $100 million+ worldwide this year. By this date in 2019, 65 films had grossed over $100m worldwide. So as you can see in simple terms, the “Hollywood” theatrical business has been cut by more than half in 2021.
That said, $50 million now seems a reasonable target opening for a big movie and $15 million seems a reasonable opening target for a more modest movie. Recent openings make clear that hitting these numbers is absolutely doable.
But still, none of the 7 movies that opened to $49 million or better have had a multiple as high as 3x. In 2019, 7 of the 17 $49m+ domestic openers did more than 3x opening.
An example? Spider-Man: Far From Home opened to $93 million domestic. Shang-Chi and The Legend of the 10 Rings opened to $75 million. Given where the industry is right now, I see those are pretty equivalent.
But Spidey grossed $391 million domestic by the end. Take 20% off for COVID and that should still leave Shang-Chi at $313 million. But in reality, Shang-Chi could only muster $224 million.
This is where the unknowable meets the opportunistic.
Why are these opening hits coming up short in the end? Well, media and much of the industry has been hard selling the front-loaded idea for well over a year. Many have this bizarre notion that real people - their customers - are doing math like they do… “most box office comes in 3 weekends, so add a weekend and move along.”
But people actually think, “I missed opening weekend… maybe I’ll get to it… it’s gonna be on the TV I’m already paying for in a few weeks… yeah… I can wait that long…. what’s the new movie out there?” Truth is, they are unlikely to get it for free in a few weeks… but perception is reality. And the industry marketers have been selling that perception.
Some say that consumers willing to skip theatrical shows the weakness of the theatrical market. But it doesn’t. It’s marketing 101. Don’t confuse the consumer. Don’t try to sell something that is a little pricey by explaining that you can get it for free soon. Stop screaming at your marginal buyer to not buy. Getting someone to click on something is a sale… but it is a very low resistance sale. Just because something is harder to sell doesn’t make it unworthy of selling. And there are indications that this challenge, overcome, creates a lot more value for the content.
There is a reason that the bigger movies have delayed release rather than dump to streaming. Streaming doesn’t have a direct revenue stream. And the huge offers for movies by the streamers have really been one click over breakeven. You won’t fail. But you can’t really hit a home run. No one will sell a Blumhouse production, costing rather little. Streamers would pay a big multiple of cost for those. They have great value in theatrical because there is so much upside.
So what is the benefit of releasing an unreleased title on a streamer vs one that has already been through theatrical?
The #1 advantage of going direct to streaming is not greater popularity, but that you don’t risk failure in theatrical, devaluing the content. If it launches on a streamer, there is little to no resistance by subscribers to taking a look. It’s “free.” At least in their heads.
Selling your theatrical film to streaming is for films you think you can’t sell successfully in theatrical.
There are no facts that suggest this disparity is because “audience habits have changed over the COVID era.” We are still IN the COVID era and that continues to serve as a glass ceiling. In most other areas, it is understood that habits changed because gathering was dangerous. But if you are trying to make Wall Street love you, you can go ahead and make the argument because… well… you want to.
The market’s slow recovery hasn’t been about COVID as much in the last 4 or 5 months while we have had the vaccine. It’s really been the choice studios have made to starve the marketplace. It’s self-protective and I get that. Fair enough. But the notion of exhibition being exclusively for big movies and big openings is a suicidal one. There is a reason we only have one 1000+ seat movie theater in Los Angeles.
As I have said repeatedly, there are real business arguments for prioritizing streaming over theatrical. I don’t buy the details one must believe to make the argument… but at least that is a real argument. “People don’t want to go to the movies” is not a real argument. It’s a mood.
I was happy to see the overall domestic box office top $100 million again last weekend on the power of the Eternals opening and some nice holds with 11 titles grossing over $1.5 million. It will drop back under $100 million this weekend and then it’s up to Ghostbusters: Afterlife and perhaps an overdeliver against expectations from King Richard.
But the sign of a healthy theatrical business will be week after week of $100m+ weekends. Last weekend’s was only the 6th of 2021.
The shortened windows aren’t helping. The lack of product is a bigger problem. Media has been going on about what a great October it was… well, it’s not a complicated math problem. It’s Bond and Venom and Dune and Michael Myers all in the same month. That has never happened before. But folks… it was the TWELFTH best October in history. Not some miracle. Loaded and still the 7th strongest October in the last decade.
After Ghostbusters: Afterlife and Encanto, I’d expect 2 weekends under $100 million. Then we’re at the window of Spidey, Nightmare Alley, holdover West Side Story, then the next week, Sing 2, The Matrix Resurrections, and The King’s Man. That starts December 15. All should be well for a couple of weeks.
Then it’s a dry well again until Morbius/Forever Jackass/The Black Phone/Moonfall at the end of January. Slow February after that drop until The Batman breaks all COVID-era records at the top of March. Then April starts the summer and we may see some semblance of a new normal around then.
But that’s 6 months away. Long way to Tipperary. And the schedules still aren’t really full enough. But each step will take us closer on this long, long road.