Is The Box-Office Actually Warming Up?

Maybe, but let’s see if it lasts.

A significant – and significantly delayed – milestone was marked last week when Tenet, initially released last September, finally opened in New York City theaters. Unlike when it played in a handful of theaters elsewhere in the country several months ago, this time the opening was not marked by director Christopher Nolan openly decrying Warner Bros. executives, but the larger narrative in the movie industry couldn’t have made him very pleased given his dislike of anything less than 100% theatrical distribution.

See over the last week or so several studio heads and others have weighed in with their own prognostications on the future of movie release patterns given we’re now a year past when most theaters shut down for most of the rest of 2020.

Jim Gianopulos, Paramount Pictures

Exclaimed Gianopulos at Viacom’s Paramount+ Day today, “We believe in the power of theatrical releases and we have faith that after things get back to normal, audiences will enthusiastically return to theaters. At the same time, consumers have increasingly embraced streaming as another way to enjoy films,” said Gianopulos, “our strategy accounts for both.”

Bob Chapek, Walt Disney Company

“I think the consumer is probably more impatient than they’ve ever been before,” said Chapek. “Particularly since now they’ve had the luxury of an entire year of getting titles at home pretty much when they want them. So I’m not sure there’s going back, but we certainly don’t want to do anything like cut the legs off a theatrical exhibition run.”

Jason Kilar, WarnerMedia

“It sure feels like it’s not going to go back to 2015,” Kilar said, adding, “I can only speak for ourselves.”

Bob Bakish, ViacomCBS

“If you look at the curve, the degradations on most film titles, they do very little business on post-Day 30 and certainly post-Day 45,” Bakish, who was the morning’s keynote speaker at the (virtual) 2021 Morgan Stanley’s Technology, Media and Telecommunications Conference, continued. “So moving to an in-house streaming window at that part we think works, certainly for us, but also for constituents, including consumers.”

Tenet finally coming to New York theaters happened at about the same time San Francisco announced bars, theaters and other public spaces could reopen, though still at reduced capacity. That’s also good news for the movie industry as it is another major market that, with vaccination rates rising due to increased supply and Covid-19 cases dropping, is allowing businesses to get back to business.

If things continue to improve, it should mean that Disney’s decision to keep Black Widow’s May release date makes sense. And we might even see titles like No Time To Die and others this year. Indeed studios are feeling positive, with Paramount recently announcing a Memorial Day release date for The Quiet Place Part II.

[record scratch]

Of course there are still potential monsters lurking around a number of corners.

The CDC reported last week that areas where mask mandates and in-person dining restrictions were lifted wholesale have seen fresh increases in Covid-19 infections.

Over 745,000 Americans signed up for unemployment assistance last week and there are 10 million fewer jobs than there were a year ago. 10% of Americans are estimated to have given up on the job market completely, much more than the official 6.4% unemployment rate.

So not only are there still public health concerns that will impact people’s decisions whether or not to head to a movie theater (assuming one near them is open yet), but there is still the very real situation of tens of millions of people not working and therefore not having disposable income to spend on something as inessential as a movie ticket.

What Should We Watch Elizabeth Olsen GIF by Disney+ - Find & Share on GIPHY

All that is on top of the year of being solidly in the habit of watching new releases via streaming or PVOD.

That’s why it’s likely most, if not all, the studios will adopt some form of hybrid or mix-and-match release strategy for their lineups.

It may not be as ad-hoc as Disney’s approach, where some films are held back entirely while others get full-on Disney+ releases while others are “Premier Access” titles requiring additional payments. Or as one-size-fits-all as WarnerMedia’s day-and-date theatrical/HBO Max releases.

Something fundamental has shifted, though, and it may not be possible to shift it back. While Kilar and others still see a place for theatrical releases, Paramount announcing major title will come to the newly-rebranded Paramount+ just 45 days after they hit theaters shows theaters are no longer the powerhouses they were just a few years ago. Even at the height of DVD sales in the 2000s, studios would never have dared anything less than at least a 90 day window, with 120+ being the tightest it ever really got.

Some theater chains are still trying to exercise some power, though, with Cinemark’s decision to not play Raya and the Last Dragon because of it’s Disney+ availability playing a large role in that movie’s lackluster box-office.

How the theatrical box-office continues to improve after losing essentially an entire 12 month period remains to be seen given how many states are still enacting stricter guidelines and we’re nowhere near “herd immunity” vaccination levels. Adding to the uncertainty is how studios have taken to just not reporting box-office results, afraid those numbers will be taken out of the context of a global pandemic.

That means it could be even longer before we see dollar amounts reflecting wide release patterns. And when those numbers are available, they may not look like what we would expect to see a few years ago because, quite frankly, the results don’t include the number of people who opted to stream it at home now or 45 days in the future.

Looking Toward the Fall Movie Season

We should be more confident, but that’s not working out.

Last month’s grand reopening of movie theaters in many parts of the country did not turn out as expected, though that in and of itself should have been expected. Tenet, seen as the salvation for theaters that had been closed for months due to the Covid-19 pandemic, grossed an estimated $41 million in its first three weeks combined, and that was the best performing film since mid-September. Weekend box-office totals have fallen since its release without another major feature to attract audience interest.

Also falling in that time has been advertising spending by studios, largely because Tenet acted not as a savior but a warning signal to others, including Disney, which pushed just about everything on its release calendar – including Black Widow and West Side Story – by anywhere from six to 12 months down the road.

Key to all of this is that a handful of major markets including Los Angeles and New York City are still keeping theaters closed. San Francisco officials have given the greenlight for opening, but the recently-announced delay of both No Time To Die – pushed from November to April of next year – and Dune – pushed from December to October – has created even more chaos.

Looking at how things stand as of this moment, the biggest titles still on the 2020 calendar, all of which are slated for mid-November at the earliest, are:

  • 11-20-20: Soul
  • 12-11-20: Free Guy
  • 12-18-20: Coming 2 America
  • 12-18-20: Death on the Nile
  • 12-25-20: News of the World
  • 12-25-20: Respect
  • 12-25-20: Wonder Woman 1984

That list, which doesn’t include a handful of smaller titles with great word of mouth like Nomadland and Ammonite as well as streaming releases like The Prom, raises a number of questions and other points to consider.

What’s the Plan Until November 20th?

Between now and the middle of November, the major releases are all happening on Netflix while theaters only have a smattering of art-house titles to program. The Trial of The Chicago 7, Rebecca and others are all streaming, meaning unless The War With Grandpa unexpectedly breaks out into blockbuster territory theaters are going to have minimal new films to play and even fewer that benefit from any sort of mass advertising or marketing campaigns.

That landscape is why theaters are reducing hours or closing on select days in certain markets to reduce overhead during times when no one is coming to see any of the movies being shown. Regal even just announced it will be closing all theaters in the U.S. and U.K. It’s also why a coalition of The National Association of Theatre Owners, the Directors Guild of America, the Motion Picture Association and scores of high-profile filmmakers have once again petitioned congressional leaders for an industry bailout package, citing the monumental losses they’ve suffered.

Such a bailout seems unlikely, though. While the House of Representatives has unproductive talks with Treasury Secretary Steven Mnuchin on a stimulus bill that’s $1 billion less than what the House passed in May, the Senate is solely focused on rushing through a Supreme Court justice approval. And if the news that Disney Parks will be laying off 28,000 people in California and Florida or that airlines are on the verge of letting 50,000 employees go isn’t enough to spur significant action, it’s hard to imagine a strongly-worded letter will do the trick.

Some of Those Dates Are Sketchy At Best

If Disney were going to move Free Guy, which originated with Fox, it likely would have done so last week when it made other changes. And Sony seems to have revived the No Time To Die campaign in earnest, so the odds it’s released as scheduled are at least decent.

But it’s hard to believe Coming 2 America remains on that mid-December date for much longer. With October now begun, the campaign for a long-anticipated sequel starring the recently revived Eddie Murphy should have started by now. Instead there hasn’t even been a teaser trailer or announcement poster. The same goes for News of the World, directed by Paul Greengrass and starring Tom Hanks Elizabeth Marvel.

Also, of the nine titles on that list, eight of them are bunched on just three dates: 11/20, 12/18 and 12/25. That’s literally putting all the eggs in a single basket and means studios are counting on people feeling like it’s simultaneously too dangerous to visit family and friends during the holidays but also safe enough to hang out in theaters. Those are both big assumptions or bets to make.

They also assume that the attention of the U.S. audience won’t be focused tightly on what’s shaping up to be a contested election cycle. With cries of hoaxes, frauds and conspiracies already abundant there’s a good chance the end of November will still find the country watching the legal battles being threatened by a certain incumbent president. Either that, or a clear defeat of that same individual will consume 40% of the nation in planning the armed rebellion he and others like him have been encouraging for months now should he lose.

The Question of The Audience Remains

NATO head John Fithian may find New York governor Andrew Cuomo to be an easy target to blame, citing Cuomo’s insistence on keeping NY theaters closed. Financial analysts may suggest studios take one for the team and keep putting movies in theaters to help exhibitors, who are seeing their stocks take a massive hit. It may be true that Tenet simply wasn’t the best movie to lead with last month.

Even if all those things are true, it remains unclear what percentage of the audience NATO, Wall Street or anyone else thinks is coming back to theaters any time soon for two reasons.

First is simply because of health concerns. The number of coronavirus cases are rising across almost the entire country, there’s massive uncertainty because not only does the president have Covid-19 but the information coming out of the White House – which is increasingly looking like a super-spreader hotspot – is unclear and inconsistent. A lot of people are either still taking the same precautions, for a variety of reasons, they have been for the last seven months or are newly concerned about potential exposure. As Lucas Shaw said on Twitter:

Second, the economic picture has not improved substantially for a good percentage of the U.S. population. While stock indexes continue to inexplicably rise:

  • 60% of U.S. households have reported the loss of all or some of their income in the last several months, with the impact falling disproportionally on non-white demographic groups and forcing many women out of the workforce because they’re now responsible for monitoring the at-home learning of their children.
  • The number of people who have been out of work for six months – the threshold for labeling those losses “permanent” – is growing, in part because companies aren’t filling open positions, asking those still at work to do more in a push for productivity.
  • Personal spending has dropped with the ending of enhanced unemployment benefits, or because people have dropped out of the workforce.

With that all in mind, it’s unclear what disposable income the analyst quoted in the THR piece linked above thinks people have to be spending on what is essentially an outing explicitly designed to give them Covid-19.

And, as I’ve said before, it’s unclear exactly what studios are supposed to do. Any option available to them at the moment may bring in only a percentage of what a movie was expected to given a fully functioning economy and box-office. So they must decide between honking off consumers and exhibitors by holding movies back from any kind of release or honking off only exhibitors and punting titles to streaming of PVOD. Only one of those comes without putting studios in the position of the bait that lures audiences into an infectious disease trap.

Release Dates Are Moving, Impacting Marketing Campaigns

The announcements are coming fast and furious now.

It’s been just over a week since MGM announced it was delaying the release of the latest James Bond film, No Time To Die, in response to concerns over the spread of the Covid-19 coronavirus. Moving it from April to November meant taking a financial hit of around $30 million, but that was seen as preferable to putting public health at risk.

Within the last 24 hours there have been a number of other such announcements. Paramount has pushed out the release of both The Lovebirds and A Quiet Place Part II to later this year. Universal has made an even bigger move, shifting the release of F9 all the way to next year, while Disney finally broke its silence and announced Mulan and The New Mutants were being postponed, though Black Widow is still scheduled as planned.

new mutants pic

The reasons why are understandable and rational. Many cities and states have begun not only canceling their own events but encouraging private organizations to shut down mass gatherings. The NBA, NHL and MLS have both suspended their seasons. All of this is to, as they say, flatten the curve of what’s now understood to be a pandemic and slow the infection rate.

It’s interesting that this is all happening at this moment given there have been two recent cases of movies coming out after long delays, though the reasons weren’t quite as severe as this. Sonic The Hedgehog was moved several months when the initial trailers were met with poor audience reactions resulting in reworked special effects. And this week The Hunt hits theaters after a controversy over its subject matter cased Universal to pull it from the schedule late last year, waiting until the fire had died down a bit.

In both cases, the marketing campaigns were restarted when the studio put new release dates in place, after the situations in question had been resolved in some manner. And so they provide some template as to what may happen when the Covid-19 situation infection rate slows in the U.S..

Given all of these were as little as a week and as much as a month out from release, their marketing campaigns were already well underway. TV spots were running, online ads were driving ticket sales, talk show appearances were booked and happening and other promotional events were being organized.

These campaigns are big trains that don’t just come to an immediate stop. No doubt there will be a few lingering commercials and ads seen in the next few days as programmatically-bought campaigns run out the clock.

What Comes Next

Given the examples offered by Sonic and The Hunt as well as X-Men: Dark Phoenix and other movies that have come out long after they were originally meant to, it’s reasonable to assume a few things about the campaigns that will need to be relaunched:

First, expect them to restart about a month out from release. That’s the period in which a movie’s standard marketing push shifts into high gear, looking to lock down moviegoer intent and capture the general audience’s attention.

Second, expect all new marketing assets. The relaunch of the campaign will likely kick off with a new trailer, or at least a reworked version of an existing one, and a new poster or two that feature the new release date. These will be essential to educating the audience about what to expect and drive renewed interest.

Third, expect a new round of press and publicity. Many of these movies, especially a tentpole like F9, have already been featured in cover stories and their stars profiled in various interviews. So while Vin Diesel, Emily Blunt and others have already made the talk show rounds they might have to do so again in the weeks leading up to release. Again, this is an essential part of generating awareness.

f9 pic

All of that being said, there are some moments that will be impossible to replicate. The Lovebirds was scheduled to screen at SXSW, as were scores of other films, until that event was canceled. And yesterday CinemaCon, which has frequently served as a platform for studios to roll out first-look footage and appearances from major stars, was ixnayed.

It may be that such big promotional moments have simply vanished and are no longer available, so the studios may have to create their own pop-ups or simply write them off.

No Time To Die and F9 were two of this spring’s biggest releases, but others remain (as of this writing) on the schedule, but there may not be enough product in the market for theaters to remain open even if they want to. More announcements could be imminent, with additional campaigns paused and restarted. Given the pace that’s emerged in sporting leagues suspending their seasons, nothing would be surprising at this point.

There are things the studio teams can do, but they all mean asking audiences to take a second bite at the apple, hoping their attention hasn’t moved on to other subjects at a later date. Also a concern now is if the infrequent ticketbuying that’s already become evident becomes even more common with so many streaming options available.

Whatever happens, we’re looking at marketing schedules that are timed with surgical precision be thrown into disarray that’s only moderately controlled.