Summer Box Office Meltdown: Why the Movie Business Is Running Scared

Late Night Godzilla Men in Black International
Courtesy of Amazon Studios/Warner Bros./Sony

It wasn’t supposed to be like this.

Heading into the new year, box office analysts were bullish that 2019 would beat, or at least match, the record-breaking success of last season. Followups to “Avengers,” “Secret Life of Pets” and “Godzilla” combined with reboots of storied franchises such as “Men in Black” and “Shaft” would elevate ticket sales to new heights, theater owners and studio executives predicted. Alas, it was not to be.

Sure, everyone showed up to “Avengers: Endgame” to bid goodbye to Iron Man, but many of those other sequels sputtered out. They were derivative, shoddily constructed, and poorly reviewed. Midway through summer, things are looking decidedly bleak. Ticket sales are pacing 7% behind last year’s popcorn season, according to Comscore, putting the year as a whole nearly 10% below the same frame in 2018.

“When you put all your eggs in the sequel basket this is what happens,” said Jeff Bock, an analyst with Exhibitor Relations. ” Most of these movies feel like they came off of an assembly line. They’re not diving any deeper into the story. They’re not upping the ante. They’re not moving the needle as far as moviegoers are concerned.”

Much of the blame has been pinned on franchise fatigue, the age-old diagnosis that stems from audiences growing tired of movies with endless Roman numerals tacked on the end. But that’s not entirely the case. People will still show up for franchise fare. “Toy Story 4” has cracked the $500 million mark, “John Wick 3” is the highest-grossing entry in the action series, and “Spider-Man: Far From Home” is poised to dominate the July 4th box office. Moreover, sequels, reboots and spinoffs soared at the box office last summer as revenues for “Avengers: Infinity War,” “Incredibles 2” and “Jurassic World: Fallen Kingdom” set the stage for a new benchmark in North America. People don’t hate sequels. They avoid bad movies.

“I think everyone is trying to figure out what is the new normal for the summer box office,” said Paul Dergarabedian, a senior media analyst at Comscore. “Maybe right now you need a really strong marketing hook or a tagline. If it feels like, ‘I’ve seen it before’ — that’s not good.”

This summer, “Godzilla: King of the Monsters,” “Dark Phoenix” and “Men in Black: International” all suffered series lows in large part because they weren’t very good. Being part of a well-known franchise wasn’t enough to save these turkeys, particularly when there are buzzy television shows such as “Game of Thrones,” “Big Little Lies,” and “Stranger Things” beckoning viewers to stay home. Indeed, analysts suggest that ever-growing options for entertainment have made audiences more discerning when it comes to shelling out for a movie ticket.

“There’s so much content available at everyone’s fingertips,” said Kyle Davies, Paramount’s president of domestic distribution. “There is healthy competition for everyone’s entertainment dollars, but people love the theatrical experience. You just have to give a compelling reason to go. It’s causing everyone to raise their game.”

The indie market has also slid steeply, with some indie players reporting that ticket sales in the specialty space are down more than 30% through the first six months of the year. Movies like the Mindy Kaling comedy “Late Night” or “Wild Rose” may have been hits at film festivals, but they failed to convert that buzz into butts in seats when they opened to the general public. That could turn around with the debut this week of “Midsommar,” a twisty horror pic that should do for the image of Swedish villages what the “Wicker Man” did for the reputation of Scottish islands.

“What the studios have been trying to do is go against conventional wisdom and release smaller films in May against big blockbusters,” said Dergarabedian. “This summer it’s like we reverted back and we’re in the ’90s again where counter-programming in the summer is just getting run over.”

Only Disney has reaped big profits while its rivals falter. The studio has fielded the four biggest movies of the year so far and controls nearly 40% of the Stateside market share. It has made nearly seven times as much as Sony or Paramount, almost triple what Universal has racked up, and more than double what Warner Bros., its next closest rival, has generated. Now that Disney controls Fox, and with it the keys to hit series such as “Avatar” and “Deadpool,” it looms even larger over the movie business. However, Fox’s film studio hasn’t proved to be as profitable as some had hoped. The studio’s first major summer release, “Dark Phoenix,” was an unmitigated disaster, one that leaves the X-Men in series need of a reboot.

“It has to start with quality storytelling, That’s our focus,” said Cathleen Taff, Disney’s president of global distribution. “If we deliver movies people are going to enjoy, they are going to come back. You can’t fool them.”

As the box office has nosedived, stock prices for theater chains such as AMC and Cineworld have surrendered to a gravitational riptide. Investors are worried that the movie business is being undone by the revolution in streaming content, one that is leaving it vulnerable and unlikely to recover its former glory. Movie executives have a different view, noting that people are always falsely predicting that the theater business is about to die off.

“Back in 2017 there were so many stories that going to the movie theater was done,” Jim Orr, Universal’s domestic distribution chief, recalled. “A couple weeks later, ‘It’ opened to $123 million. It’s a cyclical business. It’s always been that way.”

Analysts predict the summer could still have a few hits in store. Following “Spider-Man: Far From Home,” Jon Favreau’s stunning photorealistic remake of “The Lion King” looks to have audiences young and old humming to “The Circle of Life.” In August, Universal is teaming up Dwayne Johnson and Jason Statham in the “Fast & Furious” spin-off “Hobbs & Shaw,” with a big potential pay-off.

Even if this summer falls short, industry prognosticators are confident that the year is peppered with enough potential breakouts to salvage the box office. There are signs that studios are relying less on the summer season to account for the bulk of ticket sales. That was the case in 2018, where a handful of sleeper hits came from traditionally slow months at the box office. A number of highly anticipated titles are due in fall and winter, including “It: Chapter 2,” “The Joker” with Joaquin Phoenix and “Star Wars: The Rise of Skywalker.”

“Moviegoing isn’t seasonal anymore, you have to look at the whole year,” said Jeff Goldstein, Warner Bros. president of domestic distribution. “It’s no longer about just summer or Christmastime.”

Eric Handler, an analyst with MKM Partners, thinks that 2019 will have a robust third and fourth quarters, one that will leave ticket sales roughly flat with the previous year. However, he thinks that 2020 will be a soft year and notes that many franchises are entering a transitional phase. Star Wars is wrapping up the Skywalker clan saga with “The Rise of Skywalker,” the Avengers has ushered out some of its most popular characters, and there are only so many time dinosaurs can escape from Jurassic Park.

“I don’t see any mega-hits coming in 2020,” said Handler. “It could be very challenging.”

Some analysts think that the challenges the business is facing won’t be overcome by a few hit movies. Disney, WarnerMedia, and Comcast are all devoting enormous resources to the launch of streaming services. They are readying themselves for a digital future, one in which the theatrical business represents a smaller share of their profits. There’s a sense of urgency among all of these companies, one that has only grown more pronounced as the summer box office has been thrown off its axis.

“Bells, whistles, red lights should all be going off right now,” said Bock. “Look at all these huge players switching gears towards streaming. If that’s not a sign of where we’re going right now, I don’t know what is. Things are only going to get harder for theaters when there’s more and more streaming content out there.”