Some say CinemaCon shouldn’t even be taking place this week.
That Las Vegas is a hotbed for the virus.
How the whole conference should have been virtual (actually, some studio presentations were entirely filmed).
That exhibition and the domestic box office aren’t even back to form yet, with the year-to-date total at $1.964 billion as of today, having just inched past the comparative running cume of 2020.
That no stars or top studio brass are showing up; nor are hotel suite meetings taking place between distribution and exhibition suits.
However, in the face of the most challenging time of the motion picture industry, CinemaCon will go on.
Because there’s just way too much to unpack.
“Our industry is teetering between near survival and implosion,” cried one distribution boss to me recently, who preferred to remain anonymous.
No matter who shows up, speeches will be made and lines will be drawn inside Caesars Palace Colosseum, even if the celebrity turnout is lower than the industry’s one-day May presser “The Big Screen Is Back” at AMC Century City, which drew Arnold Schwarzenegger, Jason Blum, and J.J. Abrams.
On the upside, cinemas, thanks to state and local governments, have been allowed to remain open, with 5,1K out of 5,8K movie theaters in the US and Canada currently in operation. Out of that 5,8K total, there’s been just under 400 permanent theater closures since the pandemic began in mid-March 2020.
However, the theatrical day-and-date window craze practiced by Disney and Warner Bros. this year, with others such as Universal, Paramount and MGM dipping their toes in the model either via their respective streaming services or PVOD, is seen as a colossal monkey wrench to the exhibition sector.
Studios claim they’re practicing such distribution methods out of audiences’ safety, particularly at a time when the under-12 segment can’t be vaccinated.
“Studios continue to be fluid until things get back to normal,” says Brock Bagby, EVP of Midwest circuit B&B Theatres, “You can’t blame them either. But day-and-date is killing us.”
Despite Disney/Marvel’s Black Widow being the highest- grossing movie YTD stateside with $180.2M, the pic, in its second weekend, saw a 68% tumble, the worst ever for a Disney released MCU title. That’s no thanks to the title being available on the PVOD tier of the studio’s streaming service. The whole release plan created uproar, with the pic’s star, Scarlett Johansson currently suing the Mouse House for revenues which were siphoned from her pay and bonus based on ticket sales.
In its legal retaliation, Disney unveiled that Black Widow made over $125M on Disney+. That’s money which theaters don’t share in (like theatrical ticket sales), not to mention the entire moving forward of home revenues negatively impacts a film’s long-term monies; shattering the full-proof, decades-old Hollywood business formula of getting consumers to buy the same piece of IP at least two times or more in its life cycle.
Other examples of stunted box office and disasters with dynamic windows abound from the summer B.O., with expected event titles like Warner Bros.’ Space Jam: A New Legacy and The Suicide Squad seeing precipitous second weekend drops of -69% and -72%, respectively, given their free availability to HBO Max subscribers in their simultaneous first month of theatrical release.
Exhibition has caved on booking such day-and-date releases, given their desperate need for content after coming out of a year of closure. While big exhibition refused to do business with Netflix in the past, which had an audacious reputation in their plans to crunch theatrical windows with their previous releases of Roma and The Irishman, Cinemark, the No. 3 chain, made a deal to program the streaming giant’s movies. Zack Snyder’s zombie feature Army of the Dead, received an exclusive week of theatrical play.
“During the pandemic, the attitude was, ‘Just give us product’,” says Bagby, “But post-pandemic, we need some sort of theatrical window.”
While the event side of the business remains intact, with such movies as Ryan Reynolds PG-13 action title Free Guy seeing the best second weekend hold for a summer wide release, -34%, and Disney/Marvel’s Shang-Chi and the Legend of Ten Rings literally expected to break records over Labor Day weekend with at least a $45M start, older adult fare, especially as we enter the Q4 awards season ramp-up, remains in question. That’s due to the lingering variant, coupled with that demo’s hesitation.
Such movies as MGM’s Aretha Franklin biopic Respect opened to less-than-expected results of $8.8M, and saw steep declines in weekend 2 of -57%. Similar comped African American fare, such as Harriet, saw better starts pre-pandemic ($11.6M) and second weekend holds (-37%).
Another exhibitor shouts, “It’s unlikely that the adult audience is coming back soon. These are limited films with limited marketing budgets. I don’t even think the target audience is aware these movies are coming out in the first place.”
While there’s been some food for arthouses over the summer, such as Focus Features’ theatrical-windowed Anthony Bourdain docu Roadrunner ($5.2M domestic) and the Matt Damon drama thriller Stillwater ($13.5M), specialty cinemas are awaiting the latest from Wes Anderson, which has been long delayed because of Covid-19.
“The French Dispatch is the equivalent of Star Wars for us,” says Serwitz about the Searchlight title, which hits cinemas on Oct. 22. The last live-action title from Anderson seven years ago, The Grand Budapest Hotel, which went on to win four Oscars, repped the filmmaker’s highest-grossing title stateside and worldwide at $59M and $173M.
NRG currently reports that 67% of all moviegoers feel very or somewhat comfortable during the delta variant, +3 points for the first time in the last week after five weeks of decline. That said, sentiment is still down from July 11’s 81% high during Covid-19. Of those who currently feel very comfortable, men over 25 stand at 31%, while females 25+ trail at 22%. Among those adults over 18 who are vaccinated, 27% feel very comfortable returning to cinemas, down from July 11’s 39% for that demo.
The implementation of vax cards in San Francisco, New Orleans, and NYC didn’t seem to hurt overall weekend business for Free Guy or Paramount’s Paw Patrol. However, Look Dine-In Cinemas founder Brain Schultz says the enforcement of such cards are “a double-edged sword” for exhibition.
“For some people, it will give them extreme confidence to actually go out, because they know it’s being enforced,” he says, “And some people are very anti that. I think you’ll gain as much as you lose. But there will be a polarity.”
Buy the Dip…But For How Long?
Even though over 1,4K independent, non-publicly traded cinemas are receiving government relief money via the Shuttered Venue Operators Grant, whereby they can obtain up to $10M for any kind of use, whether it’s recouping losses or renovation, there are some exhibitors who believe that studios’ continued insistence on the dynamic window will squeeze their margins even more. An attrition of the current 5,8K cinemas is, without a doubt, in store.
B&B’s mix of leases and outright property ownerships proved beneficial for them before lenders, as the circuit wasn’t heavily leveraged in one direction or the other.
“We’ve been very fortunate. We’ve been around a long time and we always kept strong cash reserves for a bad year, though no one could ever plan for 18 months of terrible business. A lot of relationships is what has got us through the pandemic,” says Bagby.
Meanwhile, No. 1 chain AMC averted bankruptcy during the pandemic thanks to being embraced by Reddit retail investors, who hold more than 80% of the chain’s equity. The injection from new investors allowed AMC equity stakeholder Silverlake to cash out, as the chain’s stock eventually hit an all-time high of $73.
Q2 for AMC saw the chain raising $1.25B in new equity capital and soaring their liquidity to $2B, including cash and undrawn revolving lines of credit. However, clouds continue to hover over AMC as it sits on more than $5.5 billion in debt. Can AMC keep their ship together as they take over new leases from the pandemic-hurt, popular LA-based chain Arclight Cinemas?
Schultz, the former founder of Studio Movie Grill, pivoted away from that circuit to launch Look Dine-In after Studio Movie Grill sank into Chapter 11 (they emerged from bankruptcy in April).
While Studio Movie Grill sought to cut down its number of venues, Schultz rescued some of the newer locations under Look Dine-In, given his good relationships with landlords, i.e. California locations in Monrovia, Redlands, and Glendale, as well as the newly opened multiplex on the Northwest Highway outside of Dallas.
Schultz’s outlook is to grow Look from ten venues this year to 20 theaters by the end of 2022. He installed such upgrades as heated recliners, an all-fresh made-to-order menu, and distraction-free service, which he calls “Dine-In done right.“
Schultz says, “I am reluctant to say that movies have to be seen on the big screen, because our fans often have a narrow definition of which films are worth seeing in theaters. I want to expand the definition of what theaters can be and open the doors for diverse audiences of viewers through diverse content, amazing hospitality, and eventizing each and every experience. The theatrical experience allows for unparalleled connection and sense of community, which in so many ways brings us together on so many levels.”
Given the continued installation of luxury recliners by exhibition during the recession, as well as 180-degree screens like Screen X in Regal’s renovations and new sites, it’s clear that a night out at the cinema is becoming a fancy-night out. That’s the hopeful future of exhibition.
In the meantime, movie theaters continue to wait for that renaissance.
Adds Bagby about his family-owned chain, “We believe in the future. My grandfather had always said everyone has a kitchen, but people will still go out to eat. They gotta get out of the house. When we have a steady stream of content with a theatrical window and enough shots in the arms, we’ll get back to normal levels.”
There’s a moment during Mad Men season 6’s episode “The Flood” where Don Draper and his son, Bobby, head to the movies in an episode 5 that’s set against the assassination of Martin Luther King, Jr.
“Everybody likes to go to the movies when they’re sad.” Bobby tells the theater usher.
The kid’s got a point, and it can be applied to the current feeble state of the industry: Going to the movies is akin to two hours of vacation — from our lives.
It’s a slogan that exhibition and the studios should blast proudly as they move forward.