Box office drought drives media executives and Wall Streeters to take stock of post-pandemic film business

For months, the optimism that the national box office could easily return to pre-Covid levels has given way to a new sense of pragmatism about the world of cinema.

This year’s figure will far exceed last year’s $ 4.5 billion, but it will certainly be billions below $ 11.4 billion in 2019 and all bets are open for 2023. Date uncertainty, Wall Street analysts and media executives are sharpening their pencil and checking. books. His general point is that there is still money to be made, especially on the studio side, but the old methods will no longer be enough.

Tony Vinciquerra, CEO of Sony Pictures Entertainment, was asked this week at the Bank of America investor conference if he thought the box office would return to pre-pandemic levels. “I hope so,” he said. “I think it will be close.” Despite the infighting, he noted, “the rest of the world is still turning into a movie. There is a great challenge in China, a great challenge in Russia and Ukraine, of course, but areas like Korea, Indonesia and India “are still doing very well”.

Shutting down Covid manufacturing months ago is causing a current drought of viable new stocks, Vinciquerra added, and a strong fourth quarter and shale of 2023 inject much-needed energy. “Next summer is going to be absolutely crazy,” he predicted. “It will go back to where we were before the pandemic, where there are a lot of films on the market, a lot of marketing will promote those films and you will see a significant and significant box office.”

Studio owners are adapting their operations to reflect the new landscape. Even before the fight against Covid began in 2020, the rise of streaming was changing launch window strategies and profit sharing formulas. The difficulty will likely only increase. And that’s only at the end of distribution: For the show, this week’s details on the bankruptcy of Regal’s parent company, Cineworld, underscore the difficulty of reviving a company that has long relied on the Hollywood product.

Jason Armstrong, Comcast’s executive vice president, deputy chief financial officer and treasurer, described the world of film as “balanced, less risky” than it was before the pandemic at the BofA conference. “There are more options and more places to distribute content,” he explained. Control of both Universal Pictures and the Peacock streaming service gives the company “incredible options.”

The theater window is “important” to us, he stressed. “It may not be historically significant in 90 days and in the traditional theatrical context, but it is incredibly important to us.” Jurassic world: domination Y Minions: The Rise of Gru The summer releases that grossed more than $ 2.1 billion worldwide are invaluable streaming assets thanks to Universal’s revamped window approach. New movie releases move to Peacock as the first stop after theaters. After streaming exclusively there for four months, they move to Netflix and Prime Video before returning to Peacock as library titles. Over time, in such a dynamic environment, Armstrong said, “You can adapt. If there is a more active window to sell, you will always have a chance. “

Exhibitors have announced the summer box office as a turning point after the brutality of Covid, which closed cinemas in many markets for nearly a year. Adam Aron, CEO of AMC Entertainment, in a recent profile Bloomberg Business Week, was surprised by the intensity of the period. “Do you know what they don’t teach at Harvard Business School?” she said. “The case of zero income”. Omicron’s option in late 2021 and early 2022 caused further headaches.

MKM Partners analyst Eric Handler said in a recent note to clients that the lack of new releases has led to a “slower than expected recovery” in theaters. In addition to lowering its revenue estimates for the third and fourth quarters, Handler said he has “questions about the growth trajectory for 2023,” which he expects would see 8% growth to around $ 8.3 billion per year. ‘year. Other forecasters predict the total amount will exceed $ 10 billion.

“Positively,” he wrote, “viewers have shown a willingness to return to theaters when the product has depth, as evidenced by the July gross surplus of $ 1 billion for the first time since the start of the pandemic. they hit a wall in August and the trends are expected to remain unchanged until the second half of October “.

Eric Wold, analyst b. With Riley, who has been on the show for a long time despite the pandemic’s paycheck, he sees an “attractive setup for the show in the future”.
In the fourth quarter and the strongest films of 2023. In a final note to customers, Wold highlighted “positive support and dynamics of spending per user over the past 6-12 months”.

Sony’s Vinciquerra sought revenue-generating opportunities to license select films. The multi-year streaming agreement with Netflix until 2021 includes a co-production component and a first look at the direct-to-air titles. Unlike its major studio peers, Sony does not own a general entertainment streaming service, although it does have two profitable niche platforms in Crunchyroll and PureFlix.

Despite its continued involvement in film production, Sony’s output has shrunk to roughly half of the two dozen titles it brings to theaters each year. He won gold last year. Spider-Man: There is no way to go home ($ 1.9 billion and worldwide, third largest launch ever) and recently we had some less spectacular (though still strong) releases. where the crabs sing Y High speed train. However, achieving these results is an increasingly difficult process, says Vinciquerra.

“The biggest challenge in cinema right now,” says the executive, is assessing the “level of theatricality” of a given project. The bar for what works in theaters “has risen dramatically, and of course that line is completely subjective. You have to trust the people who make these films to make that decision, and it’s getting riskier. … You’re taking a huge risk now with these movies and you just don’t know what’s going to happen because audiences are reluctant to get them out of their homes, get them out of SVOD services. They are focused on shopping to go to theaters, parks, popcorn and everything that goes with it. So you have to have a really good product and that bar is higher than ever. “

Speaking at the Codex conference in Los Angeles this week, former Disney boss Bob Iger said the pandemic has left a “permanent scar” on the movie business. “It won’t go away,” he said, “but it won’t go back to where it was.”