Theater owners and studios should brace for a box office slide next year, warns Morgan Stanley.
In a note, the investment firm predicts that ticket sales in 2015 will hit record levels, eclipsing the previous high established in 2013 by 2%. Thanks the success of blockbusters like “Jurassic World” and “Furious 7,” revenue will likely outstrip last year’s figures by 8%. Many analysts believe that with pictures like “Star Wars: The Force Awakens” and “The Hunger Games: Mockingjay – Part 2” still awaiting release this winter, this is the first year that the domestic box office will top $11 billion.
Just don’t expect the industry to keep trumping benchmarks. Even though 2016 releases such as “Batman v Superman: Dawn of Justice” and “Captain America: Civil War” appear likely to dominate multiplexes and some box office prognosticators are expecting another record year, the study argues that the overall slate does not look as strong and that these estimates are overly bullish. Ticket sales could fall as much as 5% year-over-year, it predicts.
“While the box office is notoriously difficult to predict, we believe a common-sense base case forecast should assume a flat to modestly down ’16 box following a record slate in 2015,” the report’s authors write.
The pessimistic projections were mirrored in the performance of exhibition stocks on Thursday. As markets closed, Regal was down 1.70% at $19.03 and Cinemark fell 2.91% to $33.66. Morgan Stanley reduced its price targets for both companies. Its forecast for AMC, the country’s second-largest chain, was unchanged and the company’s shares did end its day up slightly, rising 0.67% to $27.16.
Domestic ticket sales for 2015 currently sit at $8.5 billion, up 0.7% from where 2013 was at this point in its record run.