Movie theater closures and the uncertainty created by COVID-19 will have a devastating impact on the box office, according to a new note from research company MoffettNathanson.
The Wall Street analyst firm predicts that revenues from ticket sales will be cut in half, falling from $11.4 billion in 2019 to $5.5 billion in 2020. That’s a 52% plunge, and it’s a drop that could be even steeper if cinemas don’t reopen in July and if summer blockbusters such as “Tenet” and “Mulan” that are supposed to debut that month get pushed back deeper into the year.
They note that it could be difficult for the studios behind those pricey films to move forward with their release if major markets such as New York, San Francisco, and Los Angeles, which have not yet committed to a date for theaters to reopen, aren’t allowing cinemas to host patrons. “Tenet” is scheduled to debut on July 17. “Mulan” is supposed to premiere on July 24, a week later. Theaters have been closed since March.
“Given the uncertainty around the key questions we mention above, including sticking to July release dates, when key markets reopen and willingness of movie-goers to return before a vaccine, our estimates today are very much a work in process with lots of volatility in the months ahead,” the note’s authors write.
The analysts are predicting “a significant bounce back” in 2021 to $9.7 billion, which they attribute to “a stronger release slate.” However, they address that this number could also fall lower if film production can’t resume safely and if studios begin putting more of their movies on streaming services or on-demand. It still lags behind the numbers that the box office put up in 2019 before coronavirus upended society.
Studios have become more experimental when it comes to pushing movies onto streaming services they own, such as HBOMax (as Warner Bros. did with “Scoob”) and Disney Plus (as Disney did with “Hamilton” and “Artemis Fowl”). Other studios like Universal have put films such as “Trolls World Tour” and the upcoming “The King of Staten Island” on-demand instead of opting to delay their release until theaters are largely re-opened. MoffettNathanson expects that trend to accelerate in the coming months. That’s bad news for exhibitors, which have fought to preserve their exclusive access to major studio releases. But it helps studios, which have long sought to shrink the amount of time that films are held back from home entertainment platforms. Traditionally, there’s a roughly 90-day delay from when a film premieres in theaters and when it is made available for sale or rental.
“In the past, exhibitors have been able to stand their ground; however, we again think this time is different in that all of the major studios (including now Disney for certain movies) are likely to be more aggressive with windowing strategies,” the note reads. “As long as multiple studios push forward with PVOD or some other form of window changes, the balance of power in favor of studios shifts even more in their favor and reduces the leverage the exhibitors have as they would be unlikely to boycott multiple studios’ upcoming releases.”