After Movie Theaters’ Summer Revival Plans Fizzle, Hollywood Asks, What Now?

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Showplace Cinemas in Evansville, Ind., opened its doors for the first time in two months on June 14. But just two weeks later, the movie theater was forced to turn off its marquee again.

It wasn’t the government that shut the business down — it was the law of supply and demand.

“We weren’t making any money,” says Mick Stieler, president of the company.

The state limited theaters to 50% capacity, yet even with a steep discount, ticket sales didn’t come close to filling those social-distanced venues. Stieler found he was losing more money with the theater open than with it closed.

“I thought we’d do twice as much as what we did,” he says. “Who knows how long it’s going to take for the public to feel OK to go out. They’re not ready yet. I think maybe September or October.”

Stieler isn’t alone. Panic is setting in across the exhibition industry as coronavirus cases surge around the country. Each day that passes, bringing with it news of fresh centers of infection from the Deep South to the West Coast, seems to diminish hopes of a grand, national return to moviegoing. Now, the unthinkable appears to be happening. Theaters could remain essentially dark through most of 2020, a scenario that has grown more likely as one tentpole picture after another has shifted into 2021 or beyond.

“When we can go out again, movies, theaters and moviegoers will reunite as a classic experience,” said Greg Foster, a consultant for Apple and CJ Entertainment. “But for now, goodwill and hopefulness are not enough.”

Christopher Nolan’s “Tenet” and Disney’s “Mulan,” previously scheduled to debut in August, were intended to kick things off, but both films have seen their openings delayed several times. The Nolan film is forging ahead with its release, looking in particular to international markets that have been able to curb the spread of coronavirus. “Tenet” will begin its staggered rollout in 70 overseas territories on Aug. 26, followed by select cities in the U.S. on Labor Day weekend. It’s unclear how willing audiences will be to leave their homes during the health scare. But if “Tenet” proves successful, it will be a boon for foreign exhibitors who haven’t had much new product to show as they’ve started to restart business.

“They’re ready for business, but they need Hollywood product to survive,” says Chris Aronson, domestic distribution chief of Paramount Pictures.

Theater owners across the globe are hoping other major studios will follow suit. Part of the problem, however, is that studios are loath to release these hugely expensive films when public health officials in major markets such as New York and California won’t allow cinemas to reopen. Exhibitors are prevailing on studio executives to move forward anyway.

“If any distributor of a major movie wants to wait until 100% of markets are open for business, they’ll be waiting until a vaccine is widely available,” says John Fithian, head of the National Assn. of Theatre Owners. “That means that there won’t be any theatrical revenues for at least a year. They need to embrace a whole new business model. We’re living through a pandemic.”

But Fitihian’s plan is risky. With budgets in the $175 million to $200 million range, “Tenet” and “Mulan” would each have to take in roughly $700 million globally to make a profit. For a film like “Tenet,” which is shrouded in secrecy and depends on twists to keep viewers engaged, a staggered global release raises the likelihood that it will be pirated and have its mysteries revealed in a way that impacts its popularity. Other studio executives are scrambling to respond to the constant delays and pushbacks, because when “Tenet” or “Mulan” moves, that has prompted other major studio releases, from “A Quiet Place Part II” to “Top Gun: Maverick,” to change their plans.

“We’re not going to be the first one out,” Aronson says of “Quiet Place” and “Top Gun” sequels.

Some suggest the exhibition industry should be looking to smaller movies that have set their sights on opening during the pandemic, like Solstice Studios’ “Unhinged” with Russell Crowe and Sony’s romantic comedy “The Broken Hearts Gallery.” They carry smaller budgets, so they don’t need to break box office records to turn a profit. For multiplexes, it would be the opportunity to have fresh content to show for the first time in months.

But theater owners aren’t convinced audiences will venture out of the house for just any movie.

“I’m not so sure that’s a winning model for us,” says Nic Steele, founder and owner of Eclipse Theaters in Las Vegas. “Smaller films don’t pay the bills.”

For that reason, Steele opted not to open his location, even when Nevada officials gave the go-ahead for cinemas to resume business. Spending the resources to hire back employees, restock inventory and make the venue COVID-compliant only to shut back down again, he says, could be disastrous.

“I don’t expect us to reopen until December or 2021,” he says. “I don’t think the environment will be welcoming enough or profitable enough. There are a lot more hurdles beyond the state government allowing us to reopen.”

In the meantime, major chains such as AMC and Regal, which have billions of dollars in debt, are getting desperate. In some cases, they’ve renegotiated the terms of their debt agreements. Even though that’s given them more runway and allowed them to pay their leases and insurance, they can’t operate indefinitely by getting deeper and deeper in hock without the prospect of revenues coming in soon. The result may be a cascade of Chapter 11 filings, similar to what’s happened in the retail space with the bankruptcies of J.Crew and Brooks Brothers.

“The industry that comes out of the pandemic is going to look very different,” says Hal Vogel, a veteran media analyst. “These are heavily indebted companies, and they’re not going to be able to get out from under all that debt. That means that a business that was already shrinking is going to get even smaller and more consolidated.”

The pressure is even more intense for smaller operators. Thomas Wienholt kicked off the spring with high hopes. Horizon Cinemas, the theater chain he runs with his father and brother in suburban Maryland, opened its fifth location on March 6, and Wienholt was feeling good about the mixture of superhero movies and franchise fare that Hollywood was set to send to his screens. Ten days later, disaster struck, and the state ordered cinemas to close up shop.

“It’s tough when you’ve built something up for a lifetime and you’re told you have to close down,” says Wienholt. On Horizon’s website there’s a link to a petition urging Maryland Gov. Larry Hogan to let cinemas open up, but Wienholt recognizes that’s only part of the issue. The movie business won’t work if he doesn’t have new blockbusters to screen.

“You can play older movies, and there’s some interest,” he says. “But when you’re running seven days a week, it’s a lot of seats to fill.”

In Vidalia, Ga., Sweet Onion Cinemas reopened shortly after Gov. Brian Kemp lifted the statewide ban. Only a few dozen people came to shows each weekend — a fraction of the typical number.

On July 5, the theater posted on its Facebook page that after a lot of prayer, the owners had decided to close the theater permanently.

“This afternoon and tonight will be our last set of movie show times,” the owners wrote. “It’s been a great 19 years and we’ll miss seeing you. Stay safe and God bless you.”

City Base Cinema in San Antonio, Texas, also attempted a reopening in May, but had to shut down again. “It just doesn’t make sense from a public health perspective,” says Jim Hampton, a spokesperson for the company. The owner, he says, “wants to encourage others to be safe and stay in and shelter in place.”

Cinemark Theatres, the third-largest theater circuit in North America, has reopened five venues in Texas and Florida. In a court declaration filed in federal court last week, the company’s executive VP for operations, Steven Zuehlke, said that he was unaware of any COVID transmissions at those theaters, or at any other theaters in those states.

But many patrons — and health experts — still see it as a risk not worth taking.

“I will not be attending a movie anytime soon,” says Shawn Gibbs, dean of the School of Public Health at Texas A&M University. “My family and I are not exposing ourselves to situations that increase our risk. I’m going to the grocery store. I don’t have to go to the movies.”

Gibbs notes that theaters are dry and cool environments without exposure to sunlight, which means the virus could survive longer there. He says anyone going to a theater should wear a mask, and should only go to venues where masks
are required.

Paula Cannon, associate professor of microbiology at the USC Keck School of Medicine, says that she would mandate wearing masks for the duration of a film — that is, no exceptions for eating popcorn. She noted that air conditioning units have been shown to spread virus droplets around, and wearing a mask is the only defense against that.

But if a theater did make the requirement, and mandated that filmgoers sit at least six feet apart, then it might not be as risky as other indoor spaces, she says.

“I’d be more comfortable in a movie theater where the customers were spaced apart than I would be in a restaurant,” she says. “Movie theaters are uniquely situated. It’s easier for them to set up and maintain some regimented spacing.”

She adds that the sooner people adopt mask-wearing in all public spaces, the sooner more theaters and other businesses can reopen.

“If we want nice things like movie theaters, we have to pay the price,” she says. “The price is that people do what’s necessary when they’re not in the theater to make it safe enough to go to theaters.”