After months of nearly constant bad news — theater closures, movie postponements, “Tenet!” — the film industry last week finally received a glimmer of good news: New York Gov. Andrew Cuomo announced that cinemas outside of NYC can start reopening on Friday.
Hollywood studios have made it clear that blockbusters won’t return until cinemas in New York and California, two influential movie markets in the U.S., can reopen. So Saturday’s news was seen by many in the exhibition community as a momentous step forward.
In recent weeks, movie theater owners have been pleading with Cuomo to allow them to resume operations as indoor dining, gyms and other establishments have started to welcome back patrons. They argued that New York was not an island unto itself — and having those theaters offline hindered the entire entertainment industry’s chance for a large-scale moviegoing revival.
“It has become clear that movie studios are not willing to release blockbuster product until key major markets are open,” AMC Theatres CEO Adam Aron said Monday. The cinema chain plans to reopen several theaters in the state this week. “Therefore, it is a monumental step in the right direction for our entire industry that theaters are starting to open across the state of New York.”
Yet now that parts of New York have gotten permission to turn marquee lights back on and the onus is on Hollywood, box office analysts and industry experts are still skeptical that studios will find it profitable enough to release any big-budget tentpole films during the pandemic.
“I don’t think the studios will loosen the reins,” predicts Michael Pachter, an entertainment analyst with Wedbush Securities. “Studios expected Cuomo to be tougher [when it came to reopening theaters].”
Part of the hesitation among those who make and market movies is there’s still no indication of when Manhattan, Brooklyn and surrounding boroughs will be approved to reopen. (Movie theaters can only reopen in counties that have an average coronavirus infection rate lower than 2% over 14 days and have “no cluster zones.”) New York City accounts for nearly 25% of New York state’s box office total, according to Comscore. Los Angeles, which makes up 30% of California’s overall ticket sales, remains similarly in the dark. And the theaters that can ring cash registers again come with the usual pandemic-era caveats: attendance will have be limited to 25% with a cap at 50 people and showtimes will be staggered and less frequent.
Moreover, only about 125 theaters have the potential to open under Cuomo’s guidelines. Roughly 30 of those are Regal locations, which recently closed down again for an indefinite period of time, and many more are independently owned venues, which are seriously struggling to get by. It’s a stride in the right direction, but not enough to move the needle for a major movie.
Wall Street, however, appears to be encouraged by news that some theaters in the Empire State can start the reopening process. Exhibition stocks rose Monday, with AMC shares closing up 16.5% and Cinemark up 7%.
“Although movie theaters within the key five New York City boroughs will still remain closed for the time being, we view this as a positive step toward reopening those theaters in the coming weeks,” Eric Wold, a media and entertainment analyst with B. Riley, wrote Monday in a report.
Theaters are now banking on Warner Bros. to keep “Wonder Woman 1984” on the calendar for Christmas Day. The remaining movies still scheduled for 2020 — Universal’s “The Croods: A New Age” on Thanksgiving and Ryan Reynolds’ “Free Guy” in December, to name a few — are hardly enough on their own to keep film exhibitors in business. Cinemas are in desperate need of an event-sized movie to get people off the couch and into theaters.
But coronavirus cases are continuing to rise and a vaccine will likely not be available until 2021, so audiences are still hesitant to return to the movies. That fact was underscored by the release of “Tenet,” Christopher Nolan’s latest sci-fi adventure. The movie performed modestly at the international box office, generating $283 million since August. But it faltered in the U.S., earning just $50 million in the last two months. Nobody expected “Tenet” to reach stratospheric box office heights amid a global health crisis, but those economics don’t bode well for a movie that cost $200 million to produce and many millions more to market globally.
So then it’s arguably less viable for Warner Bros. to take another bold risk given all the uncertainty. “Wonder Woman 1984” is just about the only movie left on the 2020 schedule that has the potential (at least in pre-pandemic times) to reach blockbuster status. Experts say it’s impossible to estimate how much the “Wonder Woman” sequel could make in the current market. But even it made 50% less than the first — which generated a massive $400 million at the domestic box office and another $400 million overseas — with restrictions in place, the comic book adventure would struggle to turn a profit. The sequel was greenlit with the expectation that it would earn more — not considerably less — than its predecessor.
“Cuomo opening theaters to 25% capacity isn’t enough,” Pachter said. “Studios are going to make a business decision.”
Considering the rapidly changing environment, it’s hard to make these kinds of decisions days, much less months, in advance. Warner Bros. is eager to unveil “Wonder Woman 1984,” a movie that was filmed in 2018, to the masses, but insiders suggest the studio won’t make a decision about its release for at least another few weeks to better assess the landscape.
Even if New York and California could entirely reopen theaters tomorrow, it’s almost implausible that rival studios would consider moving any titles that were pushed to next year back into 2020. For studios, there’s decidedly less at stake in the short term. Yes, most have other revenue streams. But they also have a backlog of movies, many of which were put on hold when the pandemic forced film sets to close for months.
“The gap in production means studios are super comfortable slipping things into 2021,” Pachter said.
That means even with some New York theaters open, “Wonder Woman” might soon fly into next year.