7 May 2023
One of the most well received presentations at this year’s CinemaCon in Las Vegas was not a studio slate (sorry, I mean “portfolio”) but a university professor talking – without video or even PowerPoint slides – about market economy dynamics and introducing himself by saying that he was “interested in disruption.” His message to cinemas was simple but effective, “You survived; you won. That almost never happens.” Cinema is an industry that refuses to be disrupted, whether by technology or the pandemic, or even the two put together.
The speaker was Jeffrey Cole, Director of the Center for the Digital Future, USC (University of Southern California) and his session had the title “Movie Theatres Aren’t Going Anywhere,” capping an International Day opening that included strong keynote presentations from PVR INOX’s Managing Director Ajay Bijli and Mark Viane, President, International Theatrical Distribution, Paramount Pictures. The National Association of Theatre Owners was so sure of Cole’s star power, having featured him as a speaker at the NATO Fall Summit, that he was slotted for a repeat performance at 3pm that same day in the Palace Ballroom at Ceasar’s Palace. Given the love he got from exhibitors present, he could no doubt replace Celine and Adele in the Colosseum for other cinema operators to come and hear him.
The summary preview of his talk in the CinemaCon guide gave a taste of his presentation: “If ever there was reason for the motion picture theater industry to meet its demise, the pandemic would have been the perfect culprit. Theaters would have served their last heaping of buttered popcorn, no more flickering light from the projection booth and dare we say, no more first kisses in the back row of the balcony. In this special keynote, Jeffrey Cole will focus on how theaters faced disruption and lived to tell the story, demonstrating to all their clear and essential part in the opening of motion pictures. An expert in the field of technology and emerging media, Cole serves as an adviser to governments and leading companies around the world as they craft digital strategies.”
This summary, however, did not do justice to Cole’s oratory skills, which allowed him to speak without a script or visual aides and still hold the audience’s undivided attention. We will try to bring you a more detailed summary of his talk at a future date, but really – ya’ kinda’ had to be there.
The point he was making is that industries ranging from music to automobiles have been severely disrupted. In the case of Tesla, without spending one cent on advertising. But there can be no USD $1 billion dollar movie without cinemas. In 2019 there were nine of them. Then, four months before the pandemic Disney+ and Apple TV+ launched, but they were “not programmed for the pandemic.” Meanwhile Warner Bros. “botched” HBO Max. “All of these experiments failed. Nothing worked.” It just took the studios 18 months to figure that out. “We will never see day-and-date again,” except in an extraordinary situation.
Although he did not go into such historical detail, cinema survived the most cataclysmic disruption when television was introduced in the 1950s. Overnight people stopped going on an almost weekly basis to their local single-screen theatre to get their fill of newsreels, cartoons, weekly serials, A- and B-feature films, watched in no particular order. All other technology disruptions since have been variations of TV: cable, VHS, Tivo, DVD, YouTube, Netflix and soon maybe VR-TV and ChatGPTV. Streaming has made film consumption more convenient than rewinding and returning video tapes, or popping DVDs back into an envelope to post, but they are variations of the same “glass teat” technology, as Harlan Ellison memorably christened TV over half a century ago.
The only other example of someone surviving disruption that Cole could think of was Best Buy, the US electronics retailer that has withstood the threat of Amazon and even people browsing in the store just to order the same item from a less expensive online retailer, before even having the courtesy to leave the physical store. “You were disrupted and you survived.” Streaming meanwhile hasn’t fared so well, with budget cuts, staff cuts and the introduction of advertising tiers, Cole noted.
“Theatres give films majesty,” he concluded, “while Netflix wanted to borrow and leverage your credibility.” Movie theatres are at the apex of a film’s release. His words were validated by pretty much everything that took place in Vegas for the rest of CinemaCon, from Apple Original Films showing off it’s biggest movies (“Killer of Flower Moon” and “Napoleon”) with a promised wide and windowed theatrical release, to everyone from Warner Bros. Discovery head David Zaslav to the stars of “Trolls: Band Together” promising that day-and-date was a horrible thing of the past. “Joy is a choice, Justin,” Anna Kendrick told her “Trolls” co-star Justin Timberlake on stage. Cinema owners had plenty of reasons to choose to be happy at this year’s CinemaCon. Jeffrey Cole just gave them a good reminder why.
Patrick von Sychowski
, Editor, Celluloid Junkie
Two of the world’s largest cinema operators, AMC Theatres and Cinemark, held earnings calls on Friday, 5 May, reporting markedly improved performance which should go a long way in putting an end to any remaining doubt about whether movie theatres could ever return to a financial stability, if not growth.
AMC beat Wall Stret analyst forecasts on every front, posting a loss of 13 cents per share on revenue of USD $954 million during the first first quarter of 2023. That compares to a 26 cent per share loss during the same quarter last year on revenue which was USD $786 million, a 21% improvement. Adjusted earnings before interest and depreciation (EBITDA) improved by USD $68.8 million from a loss of USD $61.8 million during the first quarter of 2022 to a positive USD $7.1 million for Q1 2023. AMC burned through USD $189.9 million in cash over the most recent quarter and has liquidity of USD $496 million in cash and another USD $208 million in credit facilities.
Cinemark also beat Wall Street expectations by reporting a loss per share of 3 cents instead of a projected 30 cent loss. Revenue for the quarter rose 32% year-over-year to USD $611 million instead of the USD $569 million that had been forecasted. The company’s EBITDA for the first three months of 2023 actually increased by 240% over the same period from a year ago to USD $86.2 million, while cost of operations for the quarter was USD $582 million. Cinemark’s cash burn is down to USD $24.4 million during the quarter. It currently has USD $650 million in cash on hand giving the company plenty of runway to continue recovering from the pandemic.
With 19 million admissions in April, cinema attendance in France is back to pre-pandemic levels. Attendance is actually 2.7% above the 2017-2019 average. Even more encouragingly, this uptick came despite the fact that there were only 59 films released in France this April, compared to 65 a year ago. This means that more people are going to see each film.
Attendance in April 2023 was up 38% over the same month last year. The strong figures were driven by the exceptional performance of “Super Mario Bros Movie” that is now approaching five million admissions in France. It was followed by local hit “The Three Musketeers: D’Artagnan” that attracted 2.7 million admissions in just four weeks of release. In third place “Dungeons & Dragons: Honor Amongst Thieves”. US films dominated, capturing a 42% market share, compared to 27% in April 2022.
[A]s Marc-Olivier Sebbag, General Delegate of the Federation of French Cinemas on BFM Business this Thursday, points out, “since January 1, we have progressed each month. We ended the year 2022 with -26% compared to the years before the crisis, on May 1, 2023, we are at -13%, that is to say that we have halved the gap that separated us from the years before the crisis, it is very positive” he says on the set of Good Evening Business.
The hope is for a month-by-month narrowing, with summer blockbusters franchises such as “Indiana Jones,” “Mission: Impossible,” “Dune” and other films accelerating this trend. The upcoming Cannes Film Festival should also provide a bounty of arthouse and local hits to boost the French box office. “There is a ripple effect which is very appreciable and… we are very optimistic,” explains Marc-Olivier Sebbag.
Data and analysis released by Omdia points to a continued recovery of the US cinema sector, with the Top 10 films in 2022 already matching the levels of 2017, though still off from the all-time high of 2019. However, for smaller films the difference is more stark and there remains a bigger gap to be bridged. This is attributed to the fact that certain customer segments have not returned to cinemas in significant numbers, despite the fact that blockbusters such as “Avatar: the Way of Water” and “Top Gun Maverick” have done a lot to attract seizable audiences, including many who had not visited the cinema since before the pandemic. Overall the number of non-returners is considered to be dwindling.
Lower film supply is a key driver of lower overall box office revenue, and importantly, pushing up film supply in 2023 and beyond is the key to returning to pre-COVID-19 levels of the box office.
David Hancock, Chief Analyst, Media and Entertainment at OMDIA
Overall premium ticket pricing together with popularity and value perceived in heightened cinema experiences (whether IMAX or recliner-with-wine cinemas) have resulted in pre-title box office at the upper end of the Top 50 high and even approaching 2019 levels. Hollywood studios appear to have grasped this, as demonstrated by the broad slate of films shown at this year’s CinemaCon, coupled with the pronouncements that the day-and-date streaming strategy from the Hollywood majors is now firmly a (failed) thing of the past.
These findings are from David Hancock’s recent Content Tracker report (part of Cinema and Movies Intelligence from Omdia).
When filmmaker James Gunn heard that Disney created 1,065 versions of “Avatar: The Way of Water” to ensure the proper playback for multiple formats such as 2D, 3D, 2K, 4K, high frame rate, etc., he must have turned to that films director and said, “Hold my beer.”
For his latest directorial effort, Marvel’s “Guardians of the Galaxy Vol. 3,” Gunn worked with Disney to create customized versions for different theatre setups, especially when it comes to providing different aspect ratios. Even Jacobs, the Vice President of Finishing & Stereo at Disney told the Hollywood Reporter that the latest installment of “Gardians” was the most complex delivery Marvel has ever undertaken, with a goal of giving “every exhibitor in the United States and in most international territories [the ability to] maximize their screen size for the audience. So wherever you go to see it, you’re gonna see the best version.”
To achieve this Marvel and Disney needed to ship 600 unique versions of “Guardians of the Galaxy Vol. 3,” including versions with variable aspect ratios in both flat 1.85 as well as 2.39. Like with the sequel for “Avatar,” the studio had to consider every format combination from 2D at 2K to 3D in high dynamic range. Of course, don’t forget about IMAX which requires at least two versions; one for 2D and another for 3D.
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