Unless you’ve been living in an igloo or are part of the Trump Administration you’ve probably heard that there’s this pesky coronavirus called COVID-19 going around the world. Thousands have been infected and entire territories have come to a virtual standstill as governments and their citizens figure out the best way to combat a virus for which there is no current cure.
The coronavirus has hit our industry as well, with tens of thousands of theatres closing across China, Southeast Asia, and Italy, with seemingly new territories shuttering cinemas each day. Major events such as Austin’s SXSW have had to postpone their large gatherings as people around the world fear the continued spread of the virus.
In what might have been the most stunning movie business news relating to COVID-19, MGM/UA has decided to move the release of the 25th James Bond film, “No Time To Die,” from April 2nd to November 12, though its release in North America won’t occur until over two weeks later, on November 25th. More on that later. Sony recently followed suit by moving “Peter Rabbit 2” to August.
In specifically looking at the Bond move, it does make a modicum of sense for MGM and Universal, its international distributor, to move to November. Estimates have projected that the hit the studios will take on marketing and public relations at anywhere from USD $30-50 million. Advertising time has been bought on major television shows around the world for several weeks now, including 30 second spots on Democratic debates and Primary coverage here in the U.S. That’s money and ad-buys you can’t get back that, in an ideal world, the studios would have loved to have had running in November rather than a full seven months ahead of release. And that doesn’t even figure in the money already spent on premieres and PR tours that will never happen.
However tough of a hit that is, that USD $30-50 million pales in comparison to the financial hit they’d take if they released the film to half empty or closed theatres around the world. Over 77% of the revenue from the last Bond film, “Spectre,” came from the overseas market, with a large chunk of that from countries such as China and South Korea. Losing that by releasing the film in April would be a gut punch from which the studios would never recover.
In the case of “Peter Rabbit 2,” far less has been spent on pre-advertising nor was there a major international PR plan that had to be scrapped at Sony’s expense. Plus, as is the case with “No Time To Die,” Sony’s animated tale grossed slightly more than two-thirds of its global take from international territories. As a rule, an animated film that enjoys most of its success from international audiences rather than domestic find that percentage actually increases for its sequel. The original “Paddington,” for example, took 73% of its global total from international* while “Paddington 2” snagged a whopping 82% of its overall box office from overseas. The same was the case with each subsequent installment in the “Ice Age” series. Therefore, Sony looked into its box office crystal ball and understood that, even more so than the original “Peter Rabbit,” its sequel would live or die based on international audiences.
So what does this all mean for the film business? Are these just the first shoes to drop among the year’s tentpoles? Below we list some of the major questions surrounding the 007 and Peter Rabbit moves and the effect they will have on the movie industry along with a guess as to what the answers to those questions will be.
Question 1: Are these moves a harbinger of things to come?
It’s hard to imagine the Bond move causing a cascading domino effect, influencing all of the major titles planned for release between now and summer to suddenly pull up their tents and move to a spot on the release schedule that, at this point at least, appears “safer”.
First off, who really knows when that “safe” date will be? Will the virus be what can reasonably be labeled as “under control” by next month, three months from now, or not until later in the year? Also, because 70% of a film’s revenue comes from overseas, studios have to keep in mind that the virus may have run its course in some areas of the world well before it does in other territories. Releasing a global appeal film under those circumstances is akin to throwing darts at a dartboard that’s been spun at 60 miles an hour.
Secondly, and this is the most important point, there are only so many release dates between now and the end of the year to go around. Unless you’re talking the second week of September or other lag weeks, then a studio will certainly have company on those alternative playdates that they didn’t have on their original dates in March, April, or May. It’s great for a studio to say they’re going to delay the release of a film, but to where? If you’re “Furious 9” do you really want to back up your male-skewed actioner onto a date that may already have the new “Top Gun,” “Free Guy,” or “Godzilla vs. Kong?” And you can forget about Thanksgiving, that week just got taken. There are only so many moviegoers of a certain demographic to go around on release weekends and trying to shoe-horn too many demographically similar films into a too-tight playtime is a recipe for disaster.
Question 2: Does this mean films may move to streaming channels rather than direct to theatres?
The guess here is not immediately. Unless the theatre business begins to take a sizable, prolonged hit, studios keenly understand that a combination of whatever theatrical is out there plus ancillary revenue from streaming is still more financially beneficial to them, especially in this day of dwindling virtual print fees. Simply put, it doesn’t cost as much these days to actually release a film theatrically as it used to.
What might be worth watching is if any studio attempts to do a half-pregnant type of release by making their film available to both movie theatres and streaming services, perhaps a couple of weeks apart or perhaps day-and-date. Exhibitors, for the most part, have pushed back successfully on the shrinking of theatrical windows but if a couple of major studios decide that’s the only way they can make their money back on expensive tentpole films during this challenging time will exhibitors grant a special dispensation?
Question 3: What impact will the coronavirus have on exhibitor share prices?
Obviously if more studios follow the lead of MGM and start moving their tentpoles back into fall and winter then it could have profound effect on their share prices, which have already been affected by the general global collapse of the markets. But as discussed above, those films that move back on the schedule several months may very well be the exception rather than the norm.
And this brings up an interesting point to consider. 2020 was supposed to be a down year at the box office, especially with no “Star Wars,” “Avengers,” or Pixar sequels. If business is slowed down by the coronavirus then the focus of articles on this box office downturn will indeed revolve around the virus and, here’s the key, not around how cinema is dead because everyone is staying home due to streaming offerings.
A couple of further points about the Bond move specifically. Though the UK release is now slated for November 12th, the US release is November 25th. I get the allure of Thanksgiving week here in the States and not being able to secure IMAX screens on the 20th because of the large format company’s commitment to “Godzilla vs. Kong,” but try to think of the last time that a projected USD $1 billion film opened in North America two weeks after the rest of the world. Go ahead and check, I’ll wait.
Needless to say these are strange and unchartered times in the world and, specifically, the movie business. The effect of COVID-19 on the film industry will have to be assessed release by release. How are tentpole films being affected? Is the effect on animated titles, like this week’s “Onward,” larger or smaller than on more adult fare? Who else is moving their releases, to where, and what does that mean for the global industry? Does the preponderance of streaming channels that can effectively reach a global audience without them having to “brave” their local cinema, facemasks, Lysol and Purell in tow, prove too enticing for some studios?
Stay tuned. These times, as Bob Dylan sang, are a-changing. And they’re a-changin’ by the moment.
*All box office figures courtesy of Box Office Mojo
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