Theaters Want to Open, But Who Will Go To The Movies?

Movie tickets? In this economy?

The latest delay – this one essentially indefinite – to Tenet seems to have unleashed a wave of pent up frustrations and other emotions.

That announcement was made by Warner Bros. earlier this week following news that governors in California and elsewhere were enacting new restrictions on public gatherings as Covid-19 cases in their states spiked yet again. Movie theaters not being allowed to reopen were among those restrictions as those governors tried to keep things from getting even worse, throwing out plans by those theaters to get people back in the door to see Tenet or Mulan, both of which were supposed to finally come out later this month after multiple delays.

Following WB’s update, NATO chief John Fithian has stated his opinion, on behalf of the theater owners he represents, that studios need to just pull the trigger already and start releasing movies again. Waiting for a vaccine to be available to the entire U.S. population is foolhardy, he says, so studios should focus on getting movies onto screens in parts of the country that aren’t on lockdown. That option allows the studios to make some fraction of the money they otherwise would have and supports the theaters that, like many businesses in the country, are struggling and face an uncertain future.

Still, Tenet seems to be the north star by which the entire film industry is being led at this point. While WarnerMedia CEO John Stankey has said that movie will definitely receive a theatrical release (of some kind), other films are going to be punted to premium VOD and other platforms. And AMC Theaters has delayed opening its locations until mid- to late-August, apparently now pinning its hopes to Mulan.

Fithian’s argument makes some amount of sense. There is no nationwide stay-at-home order in place, so theaters in some areas might be able to operate, though maybe still not at full capacity. And studios may begin to take his advice as we near what may be the tipping point where the complete erasure of the 2020 theatrical landscape shifts from possibility to probability.

Even if studios do capitulate and restart the exhibition industry, the question remains who among the audience population will want to run the risk of going to the theater in the middle of a pandemic that is speeding up its rates of serious infection, not slowing down. That reality has been at the core of the (sometimes heated) discussion around reopening schools across the country, something that seems to be up to the local officials and community. It has also led colleges to drastically alter the plans they had in place for fall semester, introducing more remote options and in some cases actively encouraging students to stay away from campus. The MLB and NBA are opening their abridged seasons either in a single location to reduce the risk of infection or play in empty stadiums.

On top of that, there’s the question of who can and will be able to afford to do so.

At the end of 2019, the average movie ticket cost $9.37.

To put that in perspective, the U.S. minimum wage is $7.25/hour, meaning an adult in a family of four would have to work five hours just to afford taking everyone to the theater. Just under two percent of the U.S. population made the minimum wage or less in 2019, but those percentages go up for part-time workers as well as those in the hospitality and service industries.

More immediately relevant is the pandemic-influenced situation we find ourselves in. There are various numbers available as to the total number of people who are currently out of work, but it’s tens of millions. New unemployment assistance claims have topped 1 million for 17 straight weeks, an unheard of streak in recent history. And despite a new White House-backed ad campaign urging people to get out there and “Find Something New,” workers have made it clear the jobs aren’t even out there to be seized. So many companies have continued to lay off or furlough current employees, few are actually hiring. That’s reflected in the most recent figures showing new claims rose after a few weeks of slight declines.

To date those unemployed individuals have been able to rely on a weekly $600 assistance bonus, something that has helped prop up consumer spending over the last few months when combined with more stores reopening after closures in March and April. That runs out this week, though, and it’s uncertain if Congress – particularly the U.S. Senate – will renew it. Conservative influencers have been urging lawmakers not to do so, afraid it will take away any chance workers will return to their jobs and unaware that making the argument that unemployment assistance shouldn’t be more than their wages implies an understanding that those wages are below the level that would support a family in addition to not offering needed health care and other benefits.

Cutting off that additional $600/week in assistance would remove $19 billion per week from the economy. Things are even more dire for people’s personal financial situation because nationwide eviction moratoriums, intended to protect housing insecure parties from facing homelessness and falling even further behind, expire soon. Like the additional unemployment assistance bonus, there are proposals to extend this but those are bogged down at the moment.

So, basically, where does NATO or its member companies in the exhibition space think consumer money is going to come from?

Theaters can open, and studios can even supply new films for those theaters to play. People may even be willing to go see those movies in theaters. But that doesn’t mean they’re going to have the disposable income to make that choice from a practical perspective.

If anyone has already solved this problem, good for them. But at the moment it seems the stakeholders and interested parties seem to be only considering one part of the marketplace dynamic. There’s a much larger reality that this operates in, one that is about to get a whole lot more unsteady than it already is.

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