By: Shaan Bharwani
Movie theaters can’t seem to catch a break as the coronavirus continues to berate the film industry. When the virus first hit, theaters around the world were hit with severe financial losses as mandated quarantines greatly limited the attendance of moviegoers. AMC, the largest movie theater chain in the United States, reported a loss of “$2.7 billion in the first six months of 2020” while Cinemark lost $230 million in the same period. (The Verge, 2020). These financial forfeitures brought the entire industry to a standstill during the early stages of the pandemic. For months, theaters remained closed as the United States struggled to contain the virus. Once infection rates began to slow, theater chains began to inch their way back towards reopening.
Initial Reopening
In mid-August, American movie theaters felt comfortable enough to begin reopening their locations. Regal Cinemas was ready to open some US locations at reduced capacity to adhere to social distancing rules. AMC, needing to recover from previous losses, decided that an audience incentive was necessary and scheduled the reopening of 100 theaters across the country “with retro ticket prices of 15 cents per movie” (CBS News, 2020). On August 20th, AMC opened ⅙ of its locations with showings of past blockbusters like Black Panther and Ghostbusters. Moviegoers successfully followed guidelines and the industry’s future seemed back on track as other theaters began to announce reopenings. It looked especially bright as highly-anticipated movies such as Tenet, Black Widow, and No Time to Die were announced for theatrical releases in upcoming months.
Underperformance and Crippling Delays
The first release after the reopenings was Tenet, released on September 3, 2020. The projected earnings of the global box office were $700 million. Being Christopher Nolan’s most ambitious project yet, Tenet had a film budget of $225 million and marketing costs were over $200 million. In total, it needs to make $500 million JUST to break even. Over a month after its release date, it has made a total of… $200 million. This has wholly disheartened the theater industry. Regardless of quality, this expected blockbuster flopped miserably in comparison to its projection. This pushed the theater industry further towards the brink of bankruptcy as every other studio became apprehensive of their respective movie release dates. Following this, Marvel pushed back Black Widow from November 6th, 2020 to May 7th, 2021, and Warner Bros’ No Time to Die moved from November 12th, 2020 to April 2nd, 2021. Immediately, one can see why theaters would struggle to produce revenue with no large production movies releasing anytime soon. With these delays, AMC’s stock has dropped by nearly 40%. Faced with these challenges, “Regal Cinemas — with 536 theaters and 7,076 screens — will officially shut all its doors in the United States for the second time during the global pandemic” (The Verge, 2020). AMC and Cinemark remain open through these trying times but struggle to maintain stable earnings. Both have a very unlikely chance of closing soon but smaller chains have a steep battle ahead of them if they intend to stay open during this movie drought.
Subscription Services
Media services like Hulu, Disney+, and Netflix have been stealing the show and directly competing with movie theaters in recent months. On September 4th, Disney opted to release Mulan directly to its streaming service albeit requiring a “Premium Access” purchase of $30 to view. Most recently, Netflix directly released Hubie Halloween starring Adam Sandler and, at the same time, “Wall Street goes all-in on Netflix as movie theaters struggle” (CNBC, 2020). With the advantage of being easily accessible from home, these services have recently begun increasing the direct streaming of new movies as studios are reluctant to release them into theaters first. This newfound competition among streaming services and actual movie theaters because of ease of accessibility, title selection, and coronavirus has led to a very bleak future for the theater industry.
Outlook
In the foreseeable future, the outlook is not great for movie theaters. According to box office analyst James Shapiro, “‘If there’s not an effective vaccine by the first quarter of 2021, then the industry is in big trouble’” (Vulture, 2020). As of this moment, movie theaters are unarguably up against the ropes but their collective fate is not sealed. It is now a battle of longevity between how long the virus can hold out against how long theaters can avoid Chapter 7 bankruptcy: the total liquidation of assets. Regardless of the outcome, this struggle between the film industry and coronavirus will define the future of moviegoing.