Editors’ Note: As Deadline continues its Coping With COVID-19 Crisis series on the struggles of people in the entertainment industry impacted by the coronavirus-related shutdowns and layoffs, today we continue our latest series, Reopening Hollywood, focused on the incredibly complicated effort to get the industry back on its feet while ensuring the safety of everyone involved. We intend to examine numerous sides of the business; if you have suggestions about things to consider, please leave a comment.
A year ago this Friday, a lot of you stood in line to catch a sold-out opening-weekend screening of Marvel’s Avengers: Endgame. After standing in another line for concessions, you found your reclining movie seat, sat down and swung over your tray, put your popcorn and soda on it and reached down to your right to find the plastic buttons that make the seat recline. Your hand came back up to dig into that communal popcorn tub you shared with a date, your kids, or your friends. Up goes that hand, toward your face, and…
A breakdown of the rituals of pre-pandemic moviegoing can be as scary to think about as anything you might see onscreen. At least that is the case in a moment when the coronavirus is so easily spread that it has shut down the world.
It isn’t lost on anyone that this Friday will be the anniversary of the release of Avengers: Endgame, the film that launched last summer’s season and which went on to become the top-grossing film of all time with $2.79 billion. Out of the gate, Endgame charted unprecedented and mind-blowing domestic ($357.1M), international ($859M) and global ($1.2 billion) opening-weekend numbers, all on account of exhibition working on all cylinders around the globe with hourly showtimes. Before The Lion King opened last July, Endgame was the widest release ever for a major motion picture in the U.S.: 4,662 theaters.
Nobody is thinking about breaking records this year, but rather to simply open and hang in with the hope that moviegoing will slowly return. When movie theaters do reopen, there will be an overhaul of rituals in order to respect social distancing and to eliminate physical contact, with others and with surfaces, as much as possible. An outbreak traced to a theater could invoke the classic Bill Paxton line from Aliens: “Game over, man!”
Just as their moviemaking counterparts are drilling down to anticipate vulnerability and enforce wholesale changes in the way movies are shot to make them safe, the brightest exhibition minds are re-evaluating every aspect of watching a movie in a theater.
Deadline canvased numerous owners of theater chains big and small to get a sense of what their playbook will look like. Reconfiguring all the angles is as mentally exhausting as a chess game, literally: a map of movie theater seating will resemble a chessboard.
“We have to learn to live with the virus in regards to what makes sense in a safe way,” says Kentucky and Delaware independent theater owner Rick Roman. “We can’t shut down forever.”
The configuration being contemplated by AMC and other chains, sources said, begins with the chessboard seating chart, with customers only sitting in the black squares. So there’s nobody next to you, nobody in front of you, and the nearest person is off to an angle behind you and in front of you. That’ll keep you at a fairly safe distance, if someone coughs or sneezes.
Multiplexes will also have its workers make a big showing of cleanliness. Staff will be visible disinfecting seats, armrests and swinging trays between shows, along with everything from communal condiment stands to restrooms. In addition, all patrons will be given cleaning towels to disinfect their personal spaces. You will also self-scan tickets, because it eliminates one point-of-personal contact.
The short-term goal, until simple and fast testing occurs or a vaccine wipes this thing out for good, is to restore customer confidence as much as possible. The problem with the chessboard strategy is that it can diminish capacity by half.
None of this is good, especially in the third and fourth quarters, when the big studios decide to release the blockbusters they’ve delayed. They will need more screens, with adjacent theaters set up in that chessboard scenario to compensate for the lost seating capacity. This will cost counterprogramming films many screens. How much screen capacity will the 007 movie No Time to Die consume?
No scenarios happen until local governments ease restrictions on the number of people permitted to gather in a space, and there likely will be inconsistencies. Chains are eyeing June, but many believe July is a more realistic expectation.
Exhibitors are engaged right now in securing stimulus funds to cover overhead during the next two-and-half months of shutdown, but the business can’t begin to heal until theaters open and studios provide good movies to fill them. Some states, like Florida, Michigan, Wisconsin and Kentucky, are looking to lift restrictions, and so a May 31 opening might be possible in that window, but why would studios release their films before they’ve got a nationwide saturation? The largest chain in the world, the financially embattled AMC, is hoping for a late-June return, while Cinemark, the second biggest circuit in the U.S., is eyeing July 1. Overseas, the International Union of Cinemas (UNIC) is hopeful that European cinemas will be opened by mid-July if health conditions warrant it.
No matter when, a 25% falloff in business is expected in the third quarter of this year, after which it is expected things will get progressively better. That is predicated on restoring consumer confidence.
How far do theater chains push this? China’s cinemas, as well as Disney’s theme parks, have floated the idea of taking attendees’ temperatures. In a CNBC interview three weeks ago, AMC CEO Adam Aron said the chain was “pricing out temperature-reading machines.”
While the theater owners we spoke with agree their employees’ temperatures should be checked daily — and that is bound to be a common practice going forward — it’s another thing to test customers. As one exhibitor said, “I find it invasive, especially with everything we’re doing with social distancing.”
Cinemark CEO Mark Zoradi told investors on a call last week that the chain “doesn’t anticipate” taking the temperature of moviegoers. While theaters want to show customers they’re entering a clean environment, there’s concern about walking the line between reassuring consumers and scaring them.
“You don’t want to attract people to movie theaters by making it look like a hospital,” one exhibition marketing rep tells Deadline.
“When we do come back, it will be similar to how we left before we shut down with staggered seating, and hospital-grade chemicals, completely wiping down between shows,” said Arclight Cinemas president and COO Ted Mundorff.
“We are cleaning nonstop,” assured Midwest chain B&B Theatres EVP Brock Bagby.
Most exhibitors expect their staffers to be wearing gloves and masks, as local ordinances dictate. Similar to a bathroom attendant, there will be a designated person near the common condiments area, wiping down ketchup and mustard handles. Straws can be handed out at concession stands by workers. And, yes, recliner buttons, arm rests and seats will get continual wipe-downs between shows. “Employees will wipe down seats with micro fiber cloths,” adds Bagby. In addition to extra Purell stations throughout the multiplex, theater owners will also provide antibacterial wipes to moviegoers so they can wipe down their own seating area. “We’re going to train the customer on staying safe while we’re doing this,” one exhibitor says.
In some regards, there would be extra staffing, but many exhibitors tell us they could feasibly reallocate staff from cash registers to cleaning duties throughout the theater, especially in the initial weeks of opening as they anticipate low attendance.
At the end of the day, the entire goal is to ensure the most hands-off environment possible: those exhibitors we spoke with believe reserved online seating, especially using the staggered approach, is the best means to ensure social distancing, and it prevents crowding in auditoriums. That checkerboard plan of seating is a global means of thinking, from Beijing to London.
“We have the ability to control admission, to the extent that people are willing to abide by it, through [reserved] seating. There is the technology now in place to allocate seating for people to maintain social distancing,” says Phil Clapp, CEO of the UK Cinema Association and president of UNIC, the international trade association that reps exhibitors in 37 European territories.
In most cases, a couple or two friends can sit nearby, but they’d be spaced a seat apart. And as far as ripping tickets? Exhibitors stateside such as Regal, the Studio Grill, and Cineapolis, and Omniplex in Northern Ireland, have already implemented self-scanning machines and mobile ticketing. Those will increasingly become the norm moving forward.
The cleanup effort between shows will cut into exhibitor strategies to get in as many showings as possible. Estimates are this could take as much as 15-30 minutes and require extra personnel to handle it. Most exhibitors we spoke with said they weren’t concerned about that increased overhead, which would add roughly a 5% increase in monthly costs.
“It will be absorbed into the cost of doing business, it won’t be absorbed into ticket prices,” said Mundorff about new costs from COVID-19 cleaning. Roman says a box of 1,000 gloves alone costs $10.
But there are aspects of re-opening that some exhibitors haven’t even begun to think about, ones that could carry a huge financial burdens for a low-margin, cash-strapped industry. Think about seats, for instance. One exhibition vet points out that leather and pleather seats are the best to clean, making fabric movie chairs a disadvantage. Recliner auditoriums are a plus because rows are approximately 7 feet apart. Will cinemas need to completely reupholster their auditoriums or change to vinyl-surfaced recliners? Will multiplex entrances with handles switch to sliding doors?
Any of this would further ramp up costs, but exhibs said this is not atop their concern list because they bring different problems. B&B Theaters’ Bagby said three new theaters that recently completed construction are stalled because furniture, fixtures, and film-equipment contractors are considered non-essential workers by local governments.
Another factor for exhibitors to re-consider: the configuration of concession stands. How safe are grab-and-go open heat lamp foods like hot dogs and popcorn? They may best be safely handled by gloved workers.
Which brings us to the messiest and most hallowed movie theater food staple: buttered popcorn.
Forget that it’s impossible to empty the bucket with gloves on. Should butter be completely eliminated in an effort to keep a cleaner environment at theaters? Theater owners say that employees’ hands don’t touch the inside of the popcorn bag, or the food itself. At soda dispenser stations, it’s largely the cup that touches the machine.
“If you’re going to enjoy the theater experience, you have to do the butter,” says Roman. “We’re disinfecting and giving the customers the opportunity to disinfect their seats too. Taking the butter away from popcorn is less of an experience for them.”
Even if local ordinances continue to mandate the wearing of masks in public, exhibitors tell us they’ll continue to sell concessions to moviegoers.
Theaters will willingly pay the costs of re-stocking fresh concessions, like hot dogs, which can run between $5,000-$20,000 upfront depending on the size of the multiplex. Typically, such concessions are gradually replenished. It will be a jolt to the bottom line come July.
Even though exhibitors aren’t overly concerned about the extra costs associated with COVID-19 cleaning, the question remains how ticket sales will be impacted by extra cleaning time and local governments’ capacity rules. Any time lost cleaning can always be made up for with another showtime being added to the evening, or the morning for that matter, when fewer patrons will be on hand. Both studio distribution bosses and exhibition agree that 50% capacity rules aren’t to be feared, not only because theaters average less than full their occupancy rates outside Christmas, but also because shows can be added to compensate for any movie’s surging demand.
Indie theater chain exec Roman said that in a nine-plex, a popular movie may play on six screens in a given 50% capacity situation, in order to make money. What may ultimately happen in these survival-of-the-fittest situations as more wide releases are booked is that the number of holdover weeks will get shaved arguably by a week, that is if capacity caps remain in effect. Cinemark CFO and COO Sean Gamble said recently that profitability for the circuit can be achieved “on occupancy levels of 20% to 30%.”
Exhibitors are bracing for moviegoers’ slow crawl back, not only because of their jitters but also the lack of new studio product. In a recent exclusive study from Edward Norton-owned movie analytics firm EDO published on Deadline, 45% of those polled said they’d take a few weeks to return to the movies once the coronavirus calms down. To fill holes on the marquee, many circuits like B&B are planning to play big catalog titles like the Harry Potter series, promoting them as events, selling butter beer and holding costume contests.
For many, the big event film to get business rolling is Warner Bros’ Christopher Nolan feature Tenet on July 17. Should 50% capacity rules still be in effect then, studio distribution heads say a $100 million opening weekend is possible. But for the box office to fully power back, movie capitals Los Angeles and New York City need to be firing on all cylinders. Is that a reasonable expectation? New York State continues to battle the most COVID-19 cases in the world with 247,512 as of Monday.
Also, if big territories like China and Europe remain closed, that too could spur another round of re-scheduling late-summer event films like Mulan and Wonder Woman 1984. Despite the shifting of event titles to later in the year and 2021, studios are expecting a 25% fall-off at the domestic box office during the third and fourth quarters.
Big chains like AMC are re-negotiating leases with their landlords, and studio distribution bosses expect an attrition in the U.S.’ current 5,000 theater count. Distribution heads believe there’s already a surplus of domestic screens nationwide, and a downturn to 4000 won’t hurt business. But exhibs are on their own, and studios aren’t waiting to rescue debt-laden companies even with AMC worth only $334M in market cap. At present, the Justice Department is waiting for a federal court judge to approve its motion to terminate a ruling that would allow the majors to own movie theaters. Even if that happens, studios aren’t in the head space to take on a brick-and-mortar distribution business, we hear.
“The studios have their own financial problems because of the virus, and to ask them for help with our financial problems isn’t fair,” Roman said. “They are taking their own financial hit; look at Disney shutting down all its parks.”
Even with Universal’s last-minute pivot before the U.S. COVID-19 outbreak to take DreamWorks Animation’s Trolls World Tour into homes (The Lovebirds and My Spy come next), exhibition isn’t threatened that major studios will move event films directly into homes during the shutdown. Studios have instead delayed several tentpole releases such as Black Widow, No Time to Die, F9, Minions: The Rise of Gru and Morbius. Studios with billion-dollar grosses in their eyes need the big theatrical release to start those revenue waterfalls.
“Universal came out very clearly and made the decision when we were closing our theaters,” said Cinemark’s Zoradi. “They felt like they spent so much in marketing money and putting commitments like McDonald’s, that they had no choice. We don’t see any systemic change from all major studios when it comes to their major motion pictures because theatrical is so important to them.”
Still, should exhibition’s bleeding continue in a longer-than-planned shutdown, there have been worried whispers that a worst-case scenario could see those films go right to the home. In the future, it seems that if the day-and-date streaming platform The Screening Room ever had a chance, it’s now, because most of the $50 it wants to charge for viewings will be split between exhibs and studios. That is much needed revenue coming mostly from the 25-39 demo, which doesn’t attend movies with any level of reliability. Universal only charged $20 for Trolls World Tour and grossed an estimated $40 million-$50 million in premium VOD last weekend (80% of that going to Universal, 20% to digital and cable providers).
Broken windows are small concerns right now; the emphasis is to save the house. Even if they lose money at first, exhibitors know they have to re-establish the love of the communal experience of moviegoing that so many of us cherish. It can only return if customers feel safe.
“At some point, we have to go back to some normalcy,” says Bagby. “For 96 years, the way we’ve been doing it has worked and no one has gotten sick.”
Deadline’s International Editor Andreas Wiseman contributed to this report.