Thursday, March 23, 2023

Battered but Not Broken: Movie Theaters Anxiously Hold Out Hope For Late Box Office Rebound

When the Broad Theater, an independently owned cinema in New Orleans, reopened in April after being shuttered for 13 months, business came back with a bang. Moviegoers, desperate to see a film that wasn’t preceded by hours of scrolling on Netflix in search of something to watch, filled the art house for screenings of Emily Blunt and John Krasinski’s suspenseful sequel “A Quiet Place Part II” and A24’s awards darling “Minari.”

“We were happy,” says Broad owner Brian Knighten.

The honeymoon didn’t last long. Soon after, in late July, city government officials issued a mask advisory, suggesting but not requiring that patrons cover their mouth and nose while inside to prevent the spread of the highly contagious delta variant.

“That hit a nerve with our customers,” Knighten says. “Attendance didn’t tank completely, but it dropped off. It’s not dire straits, but it could be busier, for sure.”

Knighten’s dilemma has become reality for thousands of movie theater operators across the country, who have been struggling to adapt to the new age of moviegoing. For the first time in seemingly forever, Hollywood studios have begun to release new films and audiences have started to trickle back to their local multiplex. But the charismatic duo of Blunt and Dwayne Johnson in Disney’s “Jungle Cruise” or the return of Bugs Bunny in “Space Jam: A New Legacy” has been barely enough to justify keeping the lights on.

Operating a movie theater during a stubbornly persistent global health crisis means that returning to normal isn’t as easy as flipping a switch, rehiring employees and installing state-of-the-art air-filtration systems. Owners have made it through the worst of the pandemic, a devastatingly long period in which zero revenue was coming through the door, but they’ve emerged on the other side in a situation that remains un­certain. Businesses, especially of the indoor variety, are having to navigate a world where unpredictable spikes in COVID-19 cases will impact their ability to function.

Some cinema operators, for their part, have been willing to take financial hits to ensure their customers feel safe returning and sitting in a dark room full of strangers. At The Broad, Knighten opted to voluntarily limit capacity to 50% and require that patrons wear masks in the lobby. He’s hesitant to mandate proof of vaccination because he doesn’t want to put younger staff members in a position that could subject them to ire from combative patrons. He’s also adjusted to operating with fewer employees, having two people instead of six on a given weekday shift and cutting the number of nighttime screenings to avoid extra security costs. It’s been enough to scrape by, but Knighten knows it won’t be sustainable forever.

“If COVID stays the way it does, the future of this theater is certainly questionable,” he says.

The shifting sands come as the industry is preparing to gather next week in Las Vegas for CinemaCon, the annual lovefest between movie theater owners and studio executives. Despite concerns the delta variant would spoil plans, the National Assn. of Theatre Owners is charging ahead with a scaled-back version of the four-day event, and all major studios are anticipated to attend and show footage from their upcoming films. During those presentations, a lot of the executives will undoubtedly wax poetic about the virtues of watching movies in cinemas with oversize soft drinks and popcorn.

“We need and want to get people back together and to share ideas and network and do those things that help the business that we haven’t done for quite a while. We’re the first big public gathering of the industry in the U.S.,” says John Fithian, the president of NATO. “It won’t be the same show that we had pre-pandemic, and it won’t be the same show we have in 2022, but it’s important to have the show.”

The yearly gathering, held at Caesars Palace, may be slightly awkward. CinemaCon is traditionally an opportunity not just to rhapsodize about the magic of movies, but to openly bash streaming services. Newer Hollywood players have been notoriously reluctant to comply with the decades-long industry practice known as the theatrical window, the period in which movies play exclusively in cinemas.

Yet it’s no longer Netflix and Amazon Prime Video that are entirely upending the way that movies come out. Because of COVID, traditional Hollywood studios have rewritten the rules of releasing new films. Theaters are no longer the only place that people can watch the latest blockbuster. Recent summer releases, including Disney’s “Cruella,” starring Emma Stone; the family adventure “Jungle Cruise”; and LeBron James’ “Space Jam: A New Legacy” were each available to view on streaming services on the same day as their respective theatrical releases.

Megan Colligan, the president of Imax Entertainment, believes that innovation isn’t just good — it’s necessary to move forward.

“We spend so much time in this industry hypothesizing, ‘What would happen if we tried this?’ During the pandemic, we had an opportunity to try things with relatively little pressure to how those experiments would pan out,” Colligan says.

Any conclusions, for now, come with a COVID-shaped asterisk. However, studio executives and entertainment industry analysts have been able to get hard-and-fast data about how different distribution models are impacting box office ticket sales. As more and more movies have been released, the general understanding has been this: Big-budget films available at first only in theaters, like “A Quiet Place Part II” and “F9: The Fast Saga,” have been holding on better than those being offered simultaneously online. Marvel’s superhero adaptation “Black Widow,” the “Space Jam” sequel and other titles that have premiered concurrently on either Disney Plus or HBO Max had strong debuts only to see steep declines in ticket sales the following weekend. That suggests that movies are appealing to mega-fans but aren’t expanding beyond their core audience. Why pay to see a movie in theaters, especially one that doesn’t have especially promising reviews, if you can watch it at home as part of your monthly HBO Max subscription?

That’s partially why the box office has ebbed and flowed in recent months and has yet to return to pre-pandemic levels. At the moment, “Black Widow” boasts the biggest domestic opening weekend ($80 million) since the great industry shutdown, and Hollywood is waiting to see what movie — if any — can pull off a coveted $100 million-plus start. When that happens, it’ll instill a greater sense of confidence in those whose job involves showing movies on the big screen. Even so, many don’t expect the business to completely bounce back before 2022.

It’s not just box office ticket sales that are being affected by changing release strategies. Industry analysts point out that while purchases on Disney Plus and views on HBO Max prop up revenues in the short term, they later cannibalize the normal premium video-on-demand window in which audiences would traditionally rent a film. Disney recently reported that “Black Widow” made an additional $60 million globally on Disney Plus, while “Jungle Cruise” collected $30 million worldwide on the streaming service. Warner Bros. has yet to share any viewership data for the handful of films it has put on HBO Max.

“I don’t know if it’s profitable, ultimately, for the studios,” says Alicia Reese, a senior associate of equity research at Wedbush Securities.

Many experts who closely follow the movie theater industry believe that studios and theater owners will converge on an exclusive 45-day window for blockbusters. That’s down considerably from the standard 75- to 90-day window that was commonplace prior to COVID, but cinema operators have conceded that it’s enough to make a difference in their bottom line.

“There will be some people who got used to streaming at home, but most of the fanboy audience for these blockbuster films are eager to get back to the theater,” Reese says. “The industry can survive a while longer. The issue is the longer we’re in this situation, the more dramatically our habits are changed or shifted.”

Colligan, who spent years as a studio executive before joining Imax, is confident about the slate of movies scheduled to arrive in the fall and winter months. She’s particularly excited about “Dune” (“An unbelievable visual achievement,” she says) and “Top Gun: Maverick” (“It’s like being on an amusement park ride with Tom Cruise”).

“It’s content dependent,” Colligan says. “For a lot of people, there hasn’t been the movie that makes them want to get back to theaters. In fall, there is a greater assortment of films with big event-style moviegoing.”

After a 14-month stretch without the kind of zeitgeist-defining movies that galvanize audiences, Hollywood looks to close out 2021 with a mix of action-driven tentpoles, gritty dramas and awards season hopefuls that should encourage movie lovers who haven’t been lured to the theater for “Godzilla vs. Kong” or “Mortal Kombat.”

There are high hopes that between “No Time to Die,” the oft-delayed James Bond sequel (out Oct. 8), “Halloween Kills,” anchored by Jamie Lee Curtis’ return as the avenging babysitter-turned-grandma (Oct. 15) and Marvel’s “Eternals,” directed by Oscar winner Chloé Zhao and starring Angelina Jolie, Kit Harington and Gemma Chan (Nov. 5), there’s a little something for everyone. Closing out the year, there is “House of Gucci,” a crime drama featuring Lady Gaga and Adam Driver in haute couture (Nov. 24) and Steven Spielberg’s retelling of “West Side Story” (Dec. 10) and “The Matrix 4” (Dec. 22). It’s a formidable range of offerings, one that finally gives cinemas the kind of splashy movies on a weekly basis that they’ve been desperate to screen. That’s critical because the movie business thrives on momentum — one blockbuster feeds another as customers go to the theaters, watch previews and get excited about returning to the multiplex again. Barring another lockdown, studio executives believe that major tentpoles will arrive on schedule.

“I continue to be optimistic,” says Jim Orr, the president of domestic distribution at Universal Pictures. “More and more films studios seem to be sticking to their release schedules. We may have some ups and downs, but we’re trending in the right direction.”

At the Tampa Theatre, a nonprofit in Florida, the Anthony Bourdain documentary “Roadrunner” and the emotional drama “The Father” with Anthony Hopkins have been mainstays on the marquee. John Bell, the theater’s CEO, says he’s particularly excited to offer “CODA,” a heartwarming story about a teenager who is the only hearing member of her family, as well as Wes Anderson’s upcoming period piece “The French Dispatch,” a quirky love letter to journalism.

“People are responding to feel-good, comfort food. The feeling is ‘Please, dear God, make me feel better about myself,’” Bell says.

In the past year and a half, he’s had a renewed sense of appreciation for simple pleasures, like getting lost in the story that unspools in front of him on the big screen. As an independently owned venue, he says, his cinema can be nimbler in adjusting programming and scheduling if there’s another flare-up of COVID-19 cases that slows down attendance. He’s not worried about any potential changes to the movie release schedule, because he’s had success during the pandemic showing reliable favorites like “Pretty Woman” and “Singin’ in the Rain.” Even if he has to scale back hours of operation, he doesn’t plan to shutter his location for more than a few days at a time.

“The best way I can describe my job is to make life more cheerful,” he says. “When you’re shut down, it feels so forlorn.”

Jill Witecki, the Tampa Theatre’s director of mark­eting, chimes in: “John likes to say, given that we opened in 1926, we’ve survived the Great Depression and a world war.” Bell adds, “And all seven ‘Police Academy’ movies. If we can survive that, we can survive anything.”

Brent Lang contributed to this report.


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