The coronavirus pandemic has threatened the future of Hollywood, as movie theaters struggle to stay afloat and the releases of big money blockbusters are either delayed or switched to streaming services.
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Movie theaters have suffered severe revenue drops amid the coronavirus-induced shutdowns, and even as theaters re-open for business, audiences have largely stayed away amid fears that going to the cinema could mean bringing home an infection. Attendance had already been falling since the advent of online streaming services, and now theaters are lacking new content to draw in the masses.
Some studios have decided to bypass theaters altogether, opting to release motion pictures on-demand or to subscription-based streaming platforms. That route also tends to be more profitable for studios; theatres and studios each usually receive half of the box office’s gross intake, while studios receive 80% of the box office gross intake if they choose to release the film digitally.
"Shares will continue to be volatile over the coming weeks as film release dates and theater re-openings remain precarious, box office estimates will likely vary widely, and early results may not be a good indicator of either the length of time or consistency of any return to normal,” according to Michael Pachter, an analyst at Wedbush Securities.
“While many are eager to return to some level of normalcy, there are still many more who we think will remain reluctant to attend the movies before there is a vaccine, or in the case that the transmission rate falls significantly before then,” he continued. “Simply stated, we do not expect attendance levels to begin to normalize until mid-2021.
"We think the relatively lackluster domestic box office for 'Tenet,' juxtaposed with the difficulty Disney has faced with 'Mulan,' underscores that releasing films is a risky business in the current environment. Unsurprisingly, Disney has pushed out its upcoming release slate even further, starting with 'Black Widow' moving to May 2021 from its latest date of Nov. 6. We expect more release slate changes over the coming weeks.”
Wedbush Securities found the 2020 domestic box office is trending down 96.4% quarter-to-date to $101.6 million, as domestic theatres began reopening at reduced capacity late in the quarter.
Last week, the heads of the National Association of Theatre Owners, the Directors Guild of America, and the Motion Picture Association addressed a letter to Republican and Democratic leadership in Congress asking them to prioritize movie theaters when considering forthcoming COVID-19 relief legislation.
The letter, signed by famous directors Sofia Coppola, Lee Daniels and Clint Eastwood, estimated that 93% of movie theater companies had over 75% in losses in the second quarter of 2020. If the status quo continues, 69% of small and mid-sized movie theater companies will be forced to file for bankruptcy or to close permanently, and 66% of theater jobs will be lost.
“The moviegoing experience is central to American life. 268 million people in North America went to the movies last year to laugh, cry, dream and be moved together. Theaters are great unifiers where our nation’s most talented storytellers showcase their cinematic accomplishments. Every aspiring filmmaker, actor and producer dreams of bringing their art to the silver screen, an irreplaceable experience that represents the pinnacle of filmmaking achievement,” the letter claims.
It continued: “As well as their critical cultural impact, theaters are economic force multipliers. In addition to the 150,000 employees working in cinemas nationwide, the industry supports millions of jobs in movie production and distribution, and countless others in surrounding restaurants and retailers that rely on theaters for foot traffic.
“Movie theaters are also leaders in employing underrepresented groups, including people with disabilities, senior citizens and first-time job holders. Cinemas are an essential industry that represent the best that American talent and creativity have to offer. But now we fear for their future.”