To salvage some sort of revenue, Hollywood may have to try a release strategy that’s never been tried before
Just a month ago, studios and movie theaters felt optimistic that some part of the lucrative summer blockbuster season could be salvaged. Now, that hope has been extinguished, and without some luck and a lot of planning, the rest of 2020 could be in jeopardy, as well.
Over the past week, Warner Bros. and Disney announced that “Tenet” and “Mulan,” the two tentpole releases still clinging to hopes of hitting theaters in July or August, have been indefinitely postponed as COVID-19 infections continue to rise in more than 30 states, including California and Florida. Meanwhile, states like New York that have suppressed the virus and reopened some businesses continue to keep theaters closed.
The prolonged shuttering of theaters means that unconventional release strategies are now on the table, something that Warner Bros. hinted at its statement that “Tenet” would receive a new release date in the near future and that it would not be like a usual global blockbuster release. Disney also said that it would reassess the release strategy for Mulan as “it’s become clear that nothing can be set in stone when it comes to how we release films during this global health crisis.” And Paramount followed with the announcement that two big films that had been rescheduled for later this year — John Krasinski’s “A Quiet Place Part II” and the Skydance-produced “Top Gun Maverick” — would be pushed to 2021 instead.
One plan being considered by studios is to release films in other countries where theaters have reopened, with a U.S. opening a few weeks later. B.Riley financial analyst Eric Wold predicts that in such an unpredictable situation, this may be the safest option.
“As we believe that a ‘perfect date’ may never arrive for studios to release films under the traditional model, a gradual release plan would allow for the studio to begin monetizing the film theatrically in a way that would not be cannibalistic on potential box office revenues (and help to build buzz for when the film opens into other markets,’ Wold wrote in a financial analysis brief on Monday.
One distribution head told TheWrap on condition of anonymity that while an overseas-first release plan is worth a shot, there are no truly safe options for Hollywood at this point. “There simply isn’t a formula for how to release a film in these kinds of situations. There’s no stability and the situation with the pandemic is changing literally as we speak,” the executive said. “No matter how well anyone plans, the virus could get worse at the drop of a hat. But we have to keep trying because both studios and exhibitors need to get things started sooner than later.”
That’s because international theater chains are in need of support. While some major markets have their own home-grown studios and production entities to provide films to screen, Hollywood is still producing the blockbusters that bring the biggest revenue.
China, which started steadily reopening theaters this week, announced the release dates of two new American films from earlier this year: Paramount’s “Sonic the Hedgehog” on July 31 and Sony’s “Bad Boys for Life” on August 14. Those films, alongside repertory releases of Disney films like “Zootopia” and “Big Hero 6,” could provide a much needed boost to a Chinese exhibitor industry that has been shut down for six months and provide some information for cinemas worldwide on the effectiveness of COVID-19 safety protocols in theaters.
But most other countries have already screened those early 2020 blockbusters and need new films like “Tenet” and “Mulan.” That’s why MKM Partners analyst Eric Handler thinks it will become harder for studios to wait much longer for the U.S. to get theaters back open. “At this point, I think the industry is looking to get some revenue on the books,” Handler said. “Europe and Asia are clamoring for content and China is coming back online.”
But even that plan comes with some hurdles. Once a film is released in any market, studios want to release it in other markets not long after to avoid losing revenue to online piracy. Handler said that this would mean that even under an overseas-first release model, a major blockbuster would have to come out in the U.S. no later than three weeks afterwards. “Biggest question for the U.S. remains whether a studio would launch a big new film if L.A. and NYC won’t let theaters open,” Handler said. “Someone may be willing to be the test case to see if middle America can support a film.”
But would smaller American markets even be able to have theaters open any time soon? With the exception of the Northeast and Hawaii, infections and hospitalizations have risen over the past month. An average of 66,000 daily new cases nationwide have been reported over the past week, far worse than in the early months of the pandemic this past spring. It is expected to be at least several more weeks before the surge even begins to plateau, which means it could take months for hospitalizations to drop to the point that officials in many states will allow theaters to reopen.
At the same time, there’s no telling how long studios will have the opportunity to capitalize on the progress other countries have made on containing outbreaks to release movies there.
Just last week, officials in Barcelona, Spain announced that all business in the country’s Catalan region must close after a severe outbreak in the area. While the U.S. is still in its first wave of COVID-19, the specter of a second wave still looms over much of the rest of the world, and there’s no telling if or when a country may have to lock theater doors again.
“There are going to be some hard decisions ahead for all the studios and no plan is going to be perfect,” Boxoffice analyst Shawn Robbins said. “It’s clear now that the industry’s hopes of a nationwide theatrical reopening this summer won’t happen. Virus spikes and the government response to the pandemic have just made that impossible, and the possibility of a second wave domestically and internationally is a lingering concern. Studios and exhibitors have an enormous challenge trying to work around so many moving parts.”