In the past eight “Fast and Furious” installments, Vin Diesel has defied gravity and the rules of the road as street racer Dom Toretto. But his next lap may prove to be his most arduous: Can he help restore a sense of normalcy to the movie theater business?
This summer will prove to be a litmus test for the future of movies in more ways than one. As a result of COVID-19, it’s been a turbulent year for films, culminating in seismic shifts in the way movies are released. Studios have shrunk the theatrical window and embraced streaming — even for some of their blockbusters. Yet Hollywood hasn’t fully witnessed how its industry-changing decisions will play out in the real world.
Enter this year’s summer slate. Studios and cinema owners won’t just be waiting anxiously for opening- weekend results for would-be hits such as “F9,” “Black Widow” and “In the Heights.” They’ll be meticulously taking notes on their performance as a way of gauging the direction of the film industry. Among the lessons to be learned: Does making a movie available to stream the same day it debuts in theaters (or a few weeks after) significantly hurt its box office grosses? What about when several high-profile films are playing in theaters at once?
The stretch between May and August, in any year, is vital because it’s among the most profitable for the film industry. It accounts for roughly 40% of annual revenues, which can amount to as much as $4 billion. But that was when the world wasn’t busy recovering from a life-altering pandemic with catastrophic consequences. In 2020, cinemas were almost entirely shuttered for much of the summer as studios delayed nearly all of their major movies. With little to show aside from moldy “X-Men” spinoffs like “The New Mutants” and the Christopher Nolan head-scratcher “Tenet,” total box office revenues for the summer shrank to a meager $176 million, according to Comscore.
The United States can’t yet declare victory when it comes to the pandemic. People are still getting sick, and vaccine hesitancy is making public health officials concerned that herd immunity is unreachable. However, we’re much closer to returning to a semblance of normalcy than most people thought possible just a few months ago. That’s good news for a movie business trying to regain its mojo. But even as exhibitors look hopefully to an upcoming slate of potential crowd-pleasers, they are also grappling with a vastly different distribution landscape, one that’s seen studios bolster their streaming services and home entertainment revenues by shortening the amount of time their films play exclusively in theaters.
Those tectonic changes will fully play out once movie theaters are in full swing. Universal’s public spat — and then make-nice — with major theater chains, as well as Warner Bros.’ decision to put its entire 2021 slate simultaneously on HBO Max, were made in virtual conference rooms at a time when most theaters were shuttered and many weren’t confident they’d even make it through the COVID-19 crisis. It’s one thing to cook something up in the lab; it’s quite another to launch an experiment that could shake the foundations of a multibillion-dollar industry.
Already, there’s growing confidence that people are ready for a return to theaters. Recent films such as “Godzilla vs. Kong,” “Mortal Kombat” and “Demon Slayer” brought in substantial ticket sales (by COVID-19 standards), despite the first two titles being available on HBO Max at the same time they opened in cinemas. In the coming weeks, “A Quiet Place Part II,” “Space Jam: A New Legacy” and “Cruella” are expected to incentivize audiences to part with the TV remote and make their way to the local multiplex.
“When you look at this summer, it’s a great test for Hollywood because it’s a sustainable lineup,” says Jeff Bock, a media analyst with Exhibitor Relations. “That’s the first time [since the pandemic began] we’ve had that.”
For the time being, it might be tricky to assess what constitutes a success. So far, the biggest opening weekend of the pandemic belongs to “Godzilla vs. Kong,” which debuted on March 31 and generated $32 million during its first weekend of release while simultaneously playing on HBO Max.
Analysts believe Paramount’s “A Quiet Place Part II” (May 28), a thriller that serves as a sequel to the 2018 box office smash starring John Krasinski and Emily Blunt, has a shot at earning between $40 million and $50 million on opening weekend. That would be significant because the first film, which became a sleeper hit, debuted to $50 million in non-pandemic times. The same weekend sees the release of “Cruella,” which analysts believe could gross around $30 million to $40 million. Figures for the latter come with a caveat, because the film will also be available on Disney Plus for a premium fee.
In the past 12 months there were more release-date changes than there were actual movies being released as studios pushed back their biggest titles in hopes of outrunning the coronavirus. That left film exhibitors high and dry. To wit, beloved cinema chain Alamo Drafthouse filed for Chapter 11 bankruptcy, and legendary movie palaces such as the Arclight’s Cinerama Dome still face an uncertain future. Others, like AMC, managed to renegotiate their debt and sell equity to get through the pandemic, but that’s left them with heavily leveraged balance sheets. In short, there’s not much room for error.
As for the studios, particularly Disney, Warner Bros., Universal and Paramount, each is grappling with its own corporate pressures — namely, a need to service and promote newly launched Netflix challengers such as Disney Plus, HBO Max, Peacock and Paramount Plus. The success of those platforms is often what Wall Street is assessing when it looks at their parent companies’ financial performance, meaning a conglomerate’s share price is tied to its streamer’s subscriber numbers. For now, studios publicly say these streaming services will not cannibalize the theatrical business, but if forced to make a decision between big-screen offerings and feeding the new digital platforms, it’s clear what choice congloms will ask their studios to make.
With theaters still struggling to draw crowds and studios turning to digital platforms to bolster numbers, this summer will be the ultimate test of the long-term sustainability of those decisions.
“I think this summer will be surprisingly strong,” predicts Eric Wold, a senior media analyst at B. Riley. “There are a variety of titles that will be telling as to whether demand for [moviegoing] is real.” But Wold and other experts don’t expect attendance to reach pre-pandemic levels until 2023.
The key in getting people back to theaters, Bock says, is giving audiences something to talk about. All of the COVID-19 safety protocols in the world — and theaters have implemented many of them — won’t bring customers back to theaters if there’s nothing they deem worth seeing that will move them to part with their hard-earned cash.
“It’s fair to say consumer confidence is nowhere near pre-pandemic levels,” Bock says. “You have to have that product that makes people talk.”
Chris Aronson, Paramount’s head of distribution, believes the major obstacle will be getting people to feel comfortable resuming normal activities such as going to the movie theater. To aid in that, the studio is planning live Q&As with the film’s talent that will be broadcast in theaters. And, Aronson hints, “I wouldn’t be surprised if [John Krasinski] makes surprise appearances in theaters.”
“I think we’ll be the barometer,” Aronson says of “A Quiet Place Part II.” “By the time you hit the end of June with ‘F9,’ that begets the steady diet of movies. To me, that will be normal times.”
If the summer box office sizzles, the holiday season could build on that momentum by fielding a number of theatrical hits that might end the year on a high note. The second half of 2021 will see the release of Marvel’s “Shang-Chi and the Legend of the Ten Rings” (Sept. 3), Denis Villeneuve’s “Dune” adaptation (Oct. 1), the James Bond movie “No Time to Die” (Oct. 8), “Top Gun: Maverick” (Nov. 19), Steven Spielberg’s reimagining of “West Side Story” (Dec. 10) and “Spider-Man: No Way Home” (Dec. 17).
“You may see minor tweaking, but through the year, I think major studios’ release calendars are pretty much set. It looks robust,” says Jim Orr, Universal’s president of domestic distribution. He’s optimistic, particularly about “F9,” the latest entry in a franchise that’s hugely popular across the globe. “We have such an enthusiastic audience,” he says. “It doesn’t get more cinematic than ‘Fast and Furious.’”
In the meantime, movie theaters have been generating enough business to scrape by. B&B Theaters, a family-owned cinema chain with 50 locations in the South and Midwest, began reopening its doors last June, attempting to entice audiences with a smattering of art-house dramas, sci-fi thrillers and kid-friendly animated adventures. Nearly one year later, attendance has started to pick up again, but it’s hardly close to pre-pandemic levels.
“We go to the grocery store and people ask, ‘When are you opening?’ And we say, ‘We’ve been back for a year,’” says Brock Bagby, B&B’s executive VP.
Part of the issue, Bagby argues, is that the lion’s share of the media coverage is about theater closures and capacity restrictions in Los Angeles and New York City. “Everyone assumes that means everyone is closed,” he laments.
But in a sign of optimism, New York City has indicated that businesses, including movie theaters, will be able to reopen to full capacity by July 1. Once venues in New York and California, two hubs for cinemagoing, can operate without having to limit the number of patrons, studios may be more eager to keep release dates for big films.
Sean Peel, who operates Rodeo Cinema in Oklahoma City, has spent downtime during the pandemic figuring out new ways to get locals back to the big screen. That includes revamping the popcorn recipe (his secret: double the amount of oil) and arranging themed events that feature local celebrities such as Shaun Weiss and Aaron Schwartz from “Mighty Ducks” and Marty York from “The Sandlot,” as well as a screening of “Pumping Iron” with Lou Ferrigno. “They’re not big people,” Peel says. “But we like them.”
At this point, Peel is doing anything he can to convince his customers that the best form of entertainment is still found on his screens. In March, he had his best month since the pandemic started, and he’s noticed more foot traffic from people stopping by just to see what films are on his marquee. But if COVID has taught him anything, it’s that any progress can be met with painful slides backward. The disease is unpredictable, to say the least, and if a fourth or fifth surge were to take place, it could be fatal to a moviegoing recovery. That’s why as much as he’d like to see his cinemas full of people, he’s hoping that capacity restrictions aren’t lifted too soon.
“I would say we’re cautiously out of the woods,” Peel says. “There’s an end in sight. We’re all afraid if everyone takes the mandates away, it will flare up again. It’s scary out there.”