what constitutes box-office “success” should be redefined

The movie industry, two months after theaters began reopening in earnest with the Memorial Day release of A Quiet Place Part II, has been grappling with an existential question in that time. Namely: What does success look like?

It’s a question without an easier answer. But that hasn’t stopped the industry and press from trying to determine A) what it is and B) if anything over the last eight weeks qualifies.

Consider the following points:

  • After being pushed by a year, A Quiet Place Part II opened with $57m, the best opening weekend since widespread shutdowns in early 2020. That amount was half of what Aladdin grossed when it opened the same weekend in 2019.
  • The total box-office for Memorial Day weekend was $96.5m, a far cry from 2019’s $220m.
  • Since then, there have only been three weeks where the total weekend box office gross topped $90m and only one that cleared $100m. In 2019 only three weekends *didn’t* gross at least $150m and two were over $200m.
  • Both F9 and Black Widow opened well – $70m and $80m, respectively – only to drop by 67% in their second weekends.

Given all that, it’s clear we’re grading on a curve here when trying to score what a win for the theater industry looks like.

It makes sense. After all, we’re still dealing with a Covid-19 pandemic whose…fourth?…wave is building up speed in the U.S. as vaccination rates plateau and a more easily transmissible variant spreads in that unvaccinated population. Local and federal guidance on mitigation efforts changes regularly, resulting in a confusing situation for those who *are* vaccinated.

Add to that the availability of many titles on streaming either simultaneous with theatrical release or shortly thereafter, which is going to lead some people to make different choices.

So then why are we not only desperately judging this year’s results by outdated standards but engaging in narratives that seem inaccurate at best?

the wrong yardstick

The first question brings to mind the kind of media analysis frequently offered by commentators such as Jay Rosen. He often points out that political journalism only knows two framing devices: “both sides” and “horse race.” Regardless of the context or truth of a story, the political press will frame it in one of those ways because it helps them maintain the veneer of objectivity.

So too the entertainment press doesn’t do context very often. For instance, this past weekend was labeled “slow” and the fault was put on the movies available. That may have been part of the reason why both Old and Snake Eyes underperformed projections, but the coronavirus resurgence and continued wildfires, along with other issues going on in other parts of the country, also likely played roles.

In short, the measure of what constitutes a success needs to be not only recent but also be constantly adjustable based on conditions. While extreme events like region-wide snowstorms etc are often noted in box-office reporting this should be taken up several steps and made more specific.

an inconsistent narrative

Black Widow brought in $80 million during its opening weekend, but when it dropped 67% from its first to second weekends everyone freaked out. Hot takes were written about what might be behind that drop, one of the biggest of the MCU franchise, and what it means for the future. NATO was quick to blame Disney for that drop, citing the simultaneous release in theaters and on Disney+ Premier Access.

If that were the case, what’s NATO’s theory for why F9 dropped 67% from Week 1 to 2? After all, that movie isn’t available on any streaming or PVOD service, getting an exclusive theatrical release. Do NATO or other parties have theories on why the Week 1-to-2 drops for movies like Boss Baby: Family Business and Cruella, both of which were in theaters and paid streaming tiers at the same time, weren’t as dramatic? And why wasn’t F9’s drop greeted with similar condemnations and hand-wringing?

Also, Black Widow:

  • Had the highest opening weekend of 2021 to date, beating even the much-vaunted F9
  • Is the second highest grossing movie of 2021, a mere $3m behind F9 despite being in theaters for half the time
  • Black Widow has grossed more – about $13m more – in its first three weeks than F9 did in its first three weeks

And again, it did all that while also being available on Disney+ Premier Access, where it brought in an additional $60m.

It seems that if there’s going to be a narrative established – namely that streaming availability hurts long-term box-office success – it should be backed up by more than one example. Otherwise you’re making arguments the facts don’t support.

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.

That’s a Lot That’s Happened In the Last Few Days

The theatrical exhibition world is upside down.

It was just a few days ago that the biggest announcements coming out of Hollywood were a handful of release date changes, with major titles being pushed back by several weeks if not several months.

Since last Friday, though, we have already gone through approximately 762 news cycles, each bringing with it a handful of changes and updates, all of which were more groundbreaking and largely unprecedented than what came before.

Studios have not only punted even more major releases – including Black Widow, which had previously been the sole holdout to Disney’s other changes – but have halted production on projects like The Matrix 4, the Avatar sequels, the third Jurassic World movie and countless others.

The combination of big titles being pulled from the release schedule and guidelines from the CDC as well as many state, county and city agencies to avoid gatherings, practice social distancing, isolate at home if possible and more lead theater owners to make a sequence of decisions. First it was to limit seating at shows. Then it was to shut down some locations in select cities, usually following mayors or governors ordering such measures. Finally, AMC, Regal, Cinemark and most all others have closed all their U.S. theaters.

Also contributing to that incredibly difficult and highly unusual decision is that not only was the Covid-19 coronavirus not showing any signs of slowing down in the U.S. but last weekend’s box-office was the worst such period in 20 years. That’s good news for public health as it eliminates at least one place where people can ignore the recommendations being offered, but it means those theaters aren’t making any money, with the workers there – often among those making somewhere around minimum wage – likely suffering the brunt of the consequences given the lack of social safety net programs.

One movie that hasn’t been rescheduled is Universal’s Trolls: World Tour, which the studio announced will be available via VOD rental platforms for a 48-hour period the same weekend it was meant to hit theaters. Other recent titles like The Hunt and The Invisible Man will also come to digital home video early, following a trend begun by Disney when it released Frozen 2 to Disney+ streaming three months ahead of its planned debut. The Rise of Skywalker is also out on digital now, a few weeks ahead of time, and Warner Bros. says Birds of Prey and other recent titles will follow suit.

frozen 2 pic

That’s good news for people who are exercising common sense and staying home if they’re able to, especially if they have kids home for extended periods because of school closures. For theater owners it may not be quite as sunny a picture.

Commentary over the last few days has included how Disney’s moves could lead to an even further collapsed theatrical release window and how Universal shifting Trolls from theaters to on-demand hints at the kind of business model studios likely prefer, especially given the higher profit margins and reduced costs.

How the theaters themselves will emerge from this is the big question mark hanging over the situation at the moment. Studios do indeed have the flexibility to alter a movie’s release pattern and platforms because they control the product and can choose a different supply chain when one unexpectedly closes.

Theaters are less nimble and rely on the studios to use them as the distribution venue of choice. Box office receipts are already down six percent in 2020 from last year, and now are faced with the combination of no revenue whatsoever for anywhere from six weeks or so to three months or more and massive debt loads that make their financial situation precarious and subject to sharp downward turns given the slightest marketplace hiccup.

Just today, the National Association of Theater Owners finally put out a statement in response to all the developments of the last week, making it clear they see any deviations from the minimum 90 day theatrical release window as an aberration to be at best overlooked and they they are certain people will return to theaters once they reopen.

 

https://twitter.com/sarafischer/status/1239969760294526976

The question remaining, though, is this: What will they be reopening with? Studios are pushing their entire calendars out, so if things level out and real life commences in June it’s unclear what movies will even be available at that point. And what kind of marketing campaigns will they be supported with? So many movies have already been significant advertising and publicity pushes in support of release dates that are no longer happening or feasible, and new dates will have to keep in mind both overcoming audience hesitancy to come back out into the world and allow for enough time to make the public aware of the new date.

Both those issues are troublesome on their own. Put together they are even more problematic.

Streaming Originals Could Change How Movie Marketing Campaigns Are Run

Original content may decide who wins the streaming wars

Where were you when you found out Netflix would lose “Friends” next year? How many sad face emojis did you use when you Retweeted the news “The Office” would be leaving?

Much of the news surrounding the launch of streaming services from all the big media companies has focused on the fate of what we’ll call “legacy IP,” shows and movies that are at least a few years – if not decades – old. HBO Max will soon host “Friends” while “The Office” will go to NBCUniversal’s still-unlaunched service. Disney+ will be the exclusive home of Star Wars, Marvel and other franchises.

That these older properties still hold so much allure and potential for the companies that own them is telling in and of itself. Their continued popularity makes them pure revenue generators, their production costs long since recouped and little additional expenditure required. Better to keep selling audiences what’s old and familiar because it’s cheap to do so.

The future of media is, it seems, largely dependent on the availability of 20+ year old sitcoms. Some surveys have shown that licensed content is what people want from a streaming service. It’s likely safe to include legacy IP in that since it makes up a good chunk of that licensed content.

Despite this, each company also realizes the need for original material. Apple has a reported $6 billion budgeted for original shows and movies. Quibi has raised $2 billion for the new shows it seems to announce every other day. The $15 billion earmarked by Netflix includes acquisition as well as production. By these measures, the $1 billion Disney is said to be spending on production for Disney+ is miniscule, but given the strength of the catalog titles it has at its disposal it’s understandable it would start smaller.

So much money being devoted to producing original series and movies shows there’s an appetite for that material among the audience. That would also explain why the announcement of each has come with a list of what new content will be available. HBO Max was touted as featuring two movies produced by Reese Witherspoon and four by Greg Berlanti and just made a new Steven Soderbergh film its first major acquisition. Disney+ will offer a handful of remakes of classic films along with new movies starring Anna Kendrick, directed by Tom McCarthey and so on.

We already know that advertising for the services themselves – which usually includes snippets of highly sought-after content serving as the core proposition – has dropped recently.

While a handful of teasers and promotions for some of the series and shows coming to these services have already been released – Apple dropped the full trailer for its much-anticipated “The Morning Show” just a couple days ago – we’ve yet to see any marketing for the films and movies scheduled.

Still, a number of assumptions can be made based on the campaigns run for original films on Netflix, Amazon, DC Universe and other streaming platforms.

Trailers will likely be released on YouTube and social networks. This despite the fact that all these platforms are in many ways competitors, featuring their own original content productions and/or deals. Shows exclusive to YouTube, Snapchat, Facebook and others compete with those currently found on Netflix or coming from Disney etc for the time, money and attention of the audience. Still, the critical mass built up by those platforms as distribution hubs seems to trump any concerns about using a competitor’s infrastructure.

One has to wonder how much longer this will be worth it, though. It’s already clear that Facebook in particular actively prioritizes its own material in the content it shows users, illustrating how these platforms act in their own self-interest. For the time being, though, use of third-party video hosting remains the default and I don’t know if we’re actually headed toward a return of the days when trailers were available only as uploaded media on an official website.

Putting distribution to the side, the format of trailers may also be up for a bit of reinvention. The standard 2:30 running time is one dictated by the MPAA as the maximum allowable. While objectively a short amount of time, it’s eons in terms of online video. User preferences on social platforms are much shorter. It’s possible instead of one primary trailer and subsequent shorter shorts studios begin to create collections of :45 second promos. Each could offer a specific value proposition instead of trying to cram as much as possible into a single, longer video.

Whatever the case, studios need to stop simply cropping 16×9 videos for formats preferred by social networks. That’s terrible.

Websites themselves are even more questionable. The attention paid to them by studios of all kinds has waned in recent years to the point where the content shared is limited to a single trailer, a brief story synopsis and links to buy tickets. Some movies get more attention online than others, but the default now seems to be minimum viable effort, just enough to justify securing the URL.

That shift reflects changes in the overall media landscape in the last half-dozen or more years. Many media companies no longer see “drive traffic to website” as a primary goal of their online marketing, choosing to produce content that lives solely on one or another social media profile. Asking people to click from Twitter to a website in order to buy tickets isn’t as efficient as simply putting the ticket-buying link in a social update where it can be immediately acted upon.

It’s likely at least some of the streaming services will follow Netflix’s lead and simply abandon the standalone website altogether. That company, with a couple high-profile exceptions, hasn’t even bothered to create sites for its movies, a tactic that makes sense given the call to action for them is “watch now” or “subscribe now.”

Social media, for that reason, is more likely to continue being a tactic consistently implemented. This is how studios are going to increasingly reach modern audiences who live on their mobile devices and use those networks for news, personal connections and work.

Hints as to how those networks could be activated are likely found by looking to not only Netflix but smaller studios like IFC Films. Both rarely create standalone profiles for their films, preferring to support them on the brand channels. The level of that support varies from film to film, though. IFC recently paid little attention to Vita & Virginia since it was busy promoting The Nightingale. And Netflix props up its original shows much more frequently than it does the movies it debuts.

You can see that brand-centric approach already being taken by Disney+, which recently made headlines after debuting its Twitter account and engaging in conversation with all the IP it manages.

The reality is that creating Facebook and other profiles for every individual movie has never made a whole lot of sense. Movies are products whose expiration date is clearly displayed on the label, so devoting significant resources to building up an audience for each one – and audience that is then abandoned within months of acquisition – seems wrong-headed.

Posters are also a format that may not be long for this world. While Netflix and other streamers have continued producing them over the years, in a world where theatrical distribution is reserved for only the biggest of the big releases there wouldn’t seem to be much rationale for creating the 24×36 one sheets designed to fit in backlit cases in theater hallways.

Studios are already producing promotional graphics formatted to work well on social platforms, so why not drop the facade of needing to create a “theatrical poster?” As with trailers, focus instead on a series of images that, when released in sequence, tell some sort of story.

That’s what Netflix did on the Instagram profile for The Ballad of Buster Scruggs, posting several collections of images that on their own weren’t much. When viewed in “grid” mode, each collection showed a full picture of one of the movie’s stories, offering a better look at what audiences could expect in a way formatted to take advantage of how that platform was used.

buster scruggs instagram.png

Advertising campaigns could also be due for a shakeup. Studios usually begin paid campaigns around the time the first trailer debuts, using Promoted Posts on social networks, putting pre-roll ads on YouTube and placing banner and other ads elsewhere on the web. TV commercials are often reserved for the last month before release.

Some of that could be retained in a streaming-centric world, but general online ads are likely to be changed significantly. For theatrical movies those ads point to websites where people can buy advance tickets, but Netflix usually reserves online ad buys for *after* a movie is available to watch, not before. That’s a big shift in tactics and could have serious implications for the kinds of sites that depend on movie ad revenue.

Again, we’ve yet to see marketing campaigns for the original films from Disney+, HBO Max or any of the other to-be-launched streaming services. So it’s not clear what kind of marketing support they will receive or how tactics may change.

One factor that could play a big role in how these campaigns are rolled out is that, unlike Netflix, the companies behind these streaming services all have long histories of theatrical releases. While Netflix has battled on many occasions with theater chains, WarnerMedia, Disney, NBCUniversal, Paramount and others all have comfortable relationships with the MPAA, NATO and others in the exhibition industry.

Those groups – and their members – have previously supported the big media companies as being continued supporters of theatrical movie-going, especially compared to upstarts like Netflix. Even Amazon has preserved those relationships by giving their original features theatrical distribution prior to streaming, though that window is shrinking from months to weeks with upcoming titles like The Report and The Aeronauts.

It’s possible, then, that the campaigns for streaming exclusive films could be decided based on which feathers are or aren’t being ruffled by companies that want to continue to live in both worlds.

More clear is that the current function of movie marketing campaigns have been dictated by the form of release patterns, specifically putting films in theaters. As that default setting is increasingly no longer applicable, the function will change in ways more relevant to today’s consumers, whose media habits change daily.