“We still don’t know just how long theaters will have to remain closed, how many films this will affect,” Exhibitor Relations analyst Jeff Bock tells TheWrap
There is no historical precedent for the financial drain that the coronavirus is about to do to the movie business, but multiple box office and financial analysts told TheWrap that the growing wave of theater closures and postponed film releases may sink 2020 domestic grosses to levels not seen since the turn of the 21st century.
Domestic grosses for 2020 may well sink below $8 billion for the first time since 2000, analysts said, while admissions may fall below 1 billion tickets sold for the first time since 1976.
This past weekend, overall grosses dropped 45% from the previous weekend, to $55.3 million, lower than even the box office weekends following the terrorist attacks of September 11, 2001. To find a total that low, we have to go back all the way to Halloween weekend of 1998, when overall ticket sales fell to $50.8 million before inflation adjustment. With the postponement of “A Quiet Place Part II” and “Mulan,” two films that were expected to drive springtime moviegoing, those numbers are going to sink even lower even if some theaters manage to stay open.
Others, however, said that trying to put any sort of estimates on how big the drop will be is a fool’s errand at this point.
“We are still at the earliest stages of this slump, and we still don’t know just how long theaters will have to remain closed, how many films this will affect, or what studios will do whenever this all ends,” Exhibitor Relations analyst Jeff Bock said. “How could anyone try to make a prediction when the situation changes almost on an hourly basis?”
The American movie theater industry tried longer than other countries to maintain a “business as usual” mantra. As recently as last Wednesday, theater owners and regional trade organizations were assuring the public that theaters would remain open. But as millions have been encouraged to stay home and local officials in major cities have begun forcing closures, their hand has been forced.
On Sunday night, New York Mayor Bill de Blasio and Los Angeles Mayor Eric Garcetti ordered that all bars, nightclubs, and yes, movie theaters be closed for at least the remainder of March while restaurants will only be open for delivery and takeout.
Then, after the Trump Administration recommended at a White House press conference on Monday that the public avoid gatherings of more than 10 people, Cineworld announced that all 543 Regal Cinemas locations in the U.S. would close indefinitely, joining countries across Europe and major Asian markets like China, where over 70,000 cinemas have remained dark since late January.
For the theaters that haven’t received orders to close, seating capacity has been severely curtailed. After first reducing screening capacity by 50%, AMC Theaters announced early Monday that it would cap the number of tickets sold for each screening at 50, in keeping with the guidance of the Centers for Disease Control to prevent community spread of the virus. But now that Regal has made the first big move, other nationwide chains are expected to follow suit and announce they are closing soon.
The CDC also recommends that this 50-person limit be enforced for at least the next eight weeks, a time period that extends to the first two weekends of May. That would likely force Disney to postpone the release of the Marvel Studios blockbuster “Black Widow,” a film that was supposed to kick off the summer moviegoing season, with an opening weekend topping $100 million.
If health officials are correct in their prediction that social distancing will have to continue for two months or more, domestic grosses for the box office will sink below $8 billion while estimates of financial losses for the film industry will likely spiral well above $20 billion.
The Trump administration on Monday even suggested that the crisis could last into “July or August,” which would effectively shut down the entire summer blockbuster season for the first time in movie history. Dennis Carroll, former director of the U.S. Agency for International Development’s Global Health Security and Development Unit, told USA Today that it is difficult to predict exactly how long the crisis will last as there is so little information known about the virus. Strong containment efforts in China and South Korea, the first countries to face outbreaks, have led to significant reductions in new cases over the past week, but those cases are still being reported.
“By May we could be returning to some state of normalcy,” he said. “But, again, what we don’t know about this virus is epic. Holding a May date as a beacon of hope may soothe some of the angst but who knows?”
And there’s a new wrinkle that even further complicates matters for theaters: day-and-date releasing. As streaming and video-on-demand have become more popular over the past decade, theater owners have resisted even the idea of theatrical releases hitting the home market before the long-sacrosanct three-month theatrical window. That standoff has prompted clashes with Netflix over Oscar-contending films like “Roma” and ‘The Irishman” that opened in select theaters but began streaming well before then.
But as the coronavirus has thrown out all industry norms, Universal on Monday decided to pull the trigger on Monday and announce that while “Trolls World Tour” will be released to theaters on April 10 — assuming theaters are still open — the animated sequel will also be available for 48-hour digital home rental on the same day for a suggested price of $20. Universal is also cutting short the exclusive theatrical window of current releases like “The Invisible Man” and “The Hunt” with plans to put them up for digital rental as early as this Friday.
“It can’t be a positive sign for any theater owner, regardless of the circumstances, that Universal decided to make this move so quickly,” Bock said. “‘Trolls World Tour’ wasn’t going to be a massive hit. The first film made less than $400 million (worldwide). But it wasn’t a small release either. It was going to be a strong draw for families. Not even Disney announced any streaming moves for ‘Mulan’ when they pulled it, so now it’s going to be interesting to see if any other studios see Universal’s move as a green light to try and go straight to home release with some of these spring blockbusters.”
While it could simply be a temporary, extraordinary measure for extraordinary times, Universal’s video-on-demand move shows how coronavirus has so severely damaged an industry long viewed as recession-proof. The resiliency of movie theaters through the decades has been a point of pride for owners and mentioned in speeches by leaders like Motion Picture Association CEO/Chairman Charles Rivkin, who boasted of it in his keynote speech last year at CinemaCon — the annual industry convention whose 2020 edition was canceled just last week.
“Since that first nickelodeon theater opened in Pittsburgh 114 years ago, we’ve been hearing about our demise for more than a century,” Rivkin said. “Through two world wars, the Depression, and calls for censorship and through new technologies — each one of them guaranteeing the end.”
While the immediate outlook looks bleak, movie theaters as a whole should survive this. Analysts expect a quick rebound to normal business and possibly even a boost for theaters in some regions as many Americans will be looking to finally get out of the house after weeks or months in isolation. But what the landscape of the industry will look like on the other side of this crisis is unclear.
“My best guess is that this could permanently shrink the movie theater market in terms of locations that are open,” Bock said. “It’s no secret that the theatrical industry was already on thin ice, and this is the worst possible time for any of this to happen. They will have a hard time in the short term for them to convince people to come out the longer this goes. Theaters that were already having a hard time financially might not get back up from this.”
“Larger chains like AMC and Regal might survive, but it may not make business sense for some theaters that go bankrupt because of this to be replaced. The days of having two different cineplexes across the street from each other or a few blocks apart may be over.”