So what now?
That seems to be the common refrain from most cinema industry followers as this past week we watched more high profile films moved back to 2021. As cinemas reopen in some parts of the world, and as others prepare to do the same, they are increasingly faced with a crippling problem: they have nothing to play in their sanitary auditoriums.
Things may not be that bleak—at least not yet—but it’s difficult to remain as optimistic as we were just a few months back when we thought we’d be up and running and welcoming moviegoers to summer blockbusters by now. Yes, we knew many of the big summer titles would be delayed but we thought we’d still be able to salvage a bit of the summer and, more importantly, the rest of 2020. There was even a school of thought that whatever we lost during the spring and summer we’d make up for with a robust fall and holiday season. Enter the bitter realities of our collective coronavirus responses, especially in parts of the United States where wearing a face mask is apparently some kind of left wing liberal hoax (please save us, citizens of the world), which has dealt exhibitors a massive blow in their fight to remain viable.
If you missed it, and the guess here is that you didn’t, last week Disney removed “Mulan” from their release schedule—along with announcing delays for “Star Wars” and “Avatar” sequels—after Warners did the same with “Tenet”, and Paramount moved “A Quiet Place II” and “Top Gun: Maverick”, yes that last one was a December title, to 2021. Just for good measure, Orion moved “Bill and Ted Face the Music” to September 1 with a distribution plan that includes both theatrical and VOD, the first non-animated title of any substance to do so.
In an odd way that last bit of information may end up being the most important. It’s obvious that studios don’t have the stomach to release billion dollar franchises during this COVID uncertainty but would they be interested in this distribution hybrid for their next level titles such as the new “Bill and Ted” (and will exhibitors get a cut of VOD revenue as was the case with other titles such as “Scoob!”?) This may be the Hollywood life preserver that they foresee being offered to cinemas to keep them afloat until we return to some semblance of (new) normal, whether that be late 2020 or, as it’s looking increasingly likely, 2021?
But the key question here is whether or not the cinema industry can even survive the rest of 2020 with a diet of midrange movies that are also available to customers in the relative safety of their homes. Are we really at the point where we are writing off 2020 for blockbuster cinema releases? And if studios are waiting until 2021 to release their tentpoles theatrically then what kind of theatrical landscape will they be returning to?
Does Bond Hold The Key?
As of this writing, the “Top Gun” sequel is the most recent example of a late 2020 tentpole moving into 2021. But the film that we should all be watching is actually “No Time To Die”. As far as the latest Tom Cruise vehicle is concerned, there’s a fairly decent chance that much of the editing and other post-production work on that film couldn’t be completed in time for a December release, considering the rise of coronavirus cases and deaths in California and the backlog of projects that would require access to post-production facilities. However, with Daniel Craig’s final James Bond outing, that film was only weeks away from release when it was moved earlier in the year so, theoretically, the film should be ready to go.
If “No Time To Die” moves to 2021 it will be an indictment on the state of the moviegoing world rather than a case of whether the film could be finished in time. And if the latest Bond outing leapfrogs into 2021 then watch the rest of the tentpoles follow their lead which will lead to further panic in the exhibition world. If that doesn’t indicate a conceding of 2020 at the box office then at least it proves that Hollywood has the white flag in its hand, ready to be raised.
Commenting on how all of this chaos is affecting cinema owners,, Richard Daughtridge, President and CEO of Warehouse Cinemas in the U.S. states, “When most of the big films seemed to move from 2020 to 2021 in a matter of days it sort of felt like Hollywood pulled the rug out from under us. I really believed we would continue to move film opening dates back to later this year and/or get creative with how to release movies. It doesn’t make sense to me.”
If North American theaters feel like Hollywood has abandoned them then just imagine how circuits in the rest of the world feel. While American theater owners watch their cities and towns continue to close up shop as cases spike, cinemas in the UK, EU and much of the rest of the world took the virus far more seriously from the start and are watching entertainment venues opening back up. Cinemas in those markets are included in that group but without Hollywood titles being made available they have very little to play. They have a point in wondering why, if they are 75% of a film’s overall revenue, that the remaining 25% is the market that’s driving the release schedule bus.
There was some ray of hope that slipped out over the weekend courtesy of a Variety article indicating that Warners has spoken to European exhibitors about a possible August 26-28 launch for “Tenet”. There are no indications that US exhibitors have received the same call and, as we have seen, any proposed playdate for the film, even for its release in EU countries, should be always be considered tentative until we see the film’s logo actually appear on cinema screens.
Return to a Ghost Town?
If the rest of Hollywood’s big budget titles do move to 2021 and studios don’t provide some quality content for exhibitors in 2020 then they may very well find their primary revenue stream drastically altered when they return in February or April, tentpoles in hand. It would behoove anyone who follows the movie industry not to believe anyone who tells you that worldwide theatrical revenue can be made up via the VOD and streaming route. There’s no reality based business model whereby studios can replicate the $1 billion that many tentpoles can gross worldwide just with VOD purchases. So moving major titles to 2021 may seem a “safe” bet for studios but it may turn out to be fatally short-sighted.
Studios can hail the VOD revenue from recent titles like “Trolls: World Tour” and “Scoob!” all they want but that landscape will be drastically different when there’s more than just one film available for PVOD. Perhaps a family can justify spending $25 once a month but that VOD model isn’t sustainable if studios are dependent upon that same family making multiple pay-per-view purchases in an economy that is trending downward, especially if citizens are no longer confined to their homes.
Where We Are Now?
Cinema chains around the world have begun to reopen with varying levels of success. The most interesting news of last week from an international perspective might be that Sony decided to move up, yes up, their local Spanish language film, “Father There is Only One 2” in Spain from August 7th to July 29th. It’s a curious move, especially for a studio who, in what might indeed have been a visionary move, early on moved much of their domestic 2020 slate to 2021.
It’s also interesting that they made the move in a territory which last week saw a significant spike in the number of coronavirus cases. But as we are painfully aware, the international COVID response has been far superior to what’s happening here in the US, so many countries, and by default many circuit chains in those countries, around the world are in a far better place than those of us in North America. But as with everything associated with this crisis, that one step forward was quickly met with one step back in the form of the announcement over the weekend that, due to the aforementioned rise of cases in Spain, the U.K. would impose a 14-day quarantine on any travelers from that country. To quote John Lennon, strange days indeed.
Circling back to the “Tenet” move, it appears that the film may open on a staggered release plan with much of the world opening before North America. To anyone who truly understands the movie business circa 2020 that’s not a surprising move at all as international box office accounts for upwards of 75% of a film’s global take. Christopher Nolan’s 2014 epic “Interstellar” saw 72% of its global box office haul come from international markets and, in general, the percentage of revenue generated from international has been increasing over the past few years as emerging markets ramp up their cinema industries and existing markets’ cinemas receive much needed facelifts and upgrades. No one is saying that North America isn’t important, indeed it is still the highest grossing territory in the world, but it isn’t the only territory and no longer the be-all-end-all it was as late as 10-15 years ago.
There might be no better example of that than “No Time To Die”. The film was one of the first to move off the release schedule when we realized the devastating effects COVID would inflict on the world. The first three Daniel Craig Bond outings netted roughly 71-72% of their global revenue from International. That percentage increased to a staggering 77% for 2015’s “Spectre”. There’s absolutely no guarantee that “No Time To Die” will stay on its November date but if it does there’s also no guarantee that North American cinemas will be at full speed by then and part of the global release plan. If that sounds crazy then consider whether we would have thought back in March that we’d have only a handful of cinemas open in the US as the calendar turns to August. Would they adopt the rumored “Tenet” staggered release plan? Don’t bet against it.
The View From Exhibitors
So what does this all mean to North American cinemas? Those who have opened have been playing classic films in an effort to maintain some revenue stream and to assure hesitant moviegoers that the cinema experience will be a safe, enjoyable one. But they can’t hold out until 2021, that’s for certain, and the resurgence of drive-in business around the world has begun to taper off.
To put it bluntly, many cinemas are teetering on the brink of extinction. “There is no doubt the lack of big movies in Q3 and Q4 is going to be a huge challenge,” Rich Daughtridge adds. “There is only so much revenue repertory content and curbside popcorn can create to help pay the bills.”
Many exhibitors are holding out hope that if things improve socially in the US over the coming months that some studios who have moved their titles to early 2021 may be enticed to shift them back to late 2020 as they watch other studios, like Paramount, move theirs out of prime holiday moviegoing time, creating a Christmas void on the release schedule. That’s certainly wishful thinking but considering how the movie industry has changed since February nothing would surprise anyone at this point. Would the lure of the best 10 days of the moviegoing year prove too much for studios to ignore? If they have a finished film ready to go by Christmas then the answer may be yes and at least the holiday season at the box office may be able to be salvaged.
The picture is a bit rosier in other parts of the world and this weekend’s news about “Tenet” possibly looking at a late August release is probably the best news that international markets have had in weeks. But that won’t help North American cinemas. “The task at hand for us in exhibition is getting creative and doing what we can to tread water until content returns,” states Mitchell Roberts, CEO of EVO Entertainment who runs a circuit of seven cinemas in Texas. “However, the unfortunate reality is that a devastating number of cinemas, particularly small and independent cinemas, are unable to hold out much longer without assistance.
In an effort to remain solvent, the National Association of Theater Owners has initiated the #SaveYourCinema campaign, which provides movie fans a form letter to send to their local congressmen and congresswomen, urging them to support the RESTART program which gives movie theaters access to partially forgivable seven-year loans covering six months of expenses. NATO calls it “a lifeline for theaters that have been left behind by existing loan programs.” Most exhibitors would agree that while forgivable loans and other assistance would be appreciated what cinemas in North America truly need is content, and soon.
If studios decide to hold their content until 2021 will they return to a theatrical landscape that bears a resemblance to the way it did at this time last year or will there be tumbleweeds blowing through cinema lobbies? The point is succinctly driven home by Roberts who adds, “I have plenty of peers who walked a thin line coming into this crisis and without a lifeline most, if not all of them, won’t make it through to the other side”.
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