MCN Commentary & Analysis

Movie Content Scoreboard: Episode 3b – After The Fall, What Next?

Let’s look at the movie industry’s situation from another perspective.

*The car renters of the film business are moviegoers.
*The rental car companies of the film business are the production and distribution companies.
*The renters and owners of the parking lots where the automobile waits for pick-ups-and returns is the exhibition business.

You can’t force someone to rent a car if their travel plans have been curtailed, and worse, they fear every hundredth car might explode. They can afford to stay home, do meetings on the internet, and not rent a car for years.

The rental car companies are not used to selling the idea of people renting cars, but have been in a massive daily struggle to differentiate the quality of their company over the others. Meanwhile, they have a massive investment in cars, which are sitting there going nowhere. They could try to get people interested in renting cars with all kinds of gimmicks or they could just sell off all their cars and go into complete hibernation for a while or they could just sit on the cars they have, which are not being used and therefore not losing usefulness, and wait until people come back.

The people who own or are renting the land where the rental cars live are not making any money and will not make any money until the car renters start renting cars again. They don’t care which cars are rented or for how long or how old the cars are… They need to make some money to pay rent or their mortgage.

And here is what is screwing everyone up in this situation.

People could start traveling at any time. There’s a holiday coming. There is a study showing that the rate of exploding cars is going down in certain states. Vegas has reopened for conventions and once they have a good month, everyone will relax and the business will steadily return. Another holiday. Price cuts. Exhaustion with social distancing. Etcetera, etcetera, etcetera.

But none of that good stuff might change anything. The ground is moving under the feet of the industry. And every week is another adventure in grasping at straws.

Back to the film business.

Studios have completed films which are commodities that have no time frame required for success or failure. They also have alternative options for these commodities that are not as healthy, but are not necessarily money losers.

Exhibitors have no serious alternative revenue streams. They are just waiting around to see what the studios do. They need movies that will not only draw people who don’t worry about masks, but which are enough of a draw to bring out the not-inappropriately nervous. Meanwhile, they have serious fixed costs, no matter what they do, fairly high overhead and low margins while in operation at any scale. Unlike previous history, exhibition can’t leverage bankruptcies to improve their positions with landlords until they know to what position they want to move.

For all the talk of partnership, distributors have no motivation to devalue their expensive commodities for the sake of exhibition.

Exhibition is bending over backwards to keep things up, ready and safer than ever, hoping that distribution will find its way to taking the risk. But that effort doesn’t change reality.

The only thing that has kept exhibition’s relationship with distribution from being completely one-sided — all distributor — is that exhibition has invested in a low-margin business that gives distributors their best returns across all potential revenue streams. But if there are no moviegoers, there is no balance.

Today, there is no balance.

But that illuminates the next problem… There is this constant threat that if exhibition doesn’t lie there, bleeding out, as distribution decides whether it feels like risking a Bond movie or a Marvel movie or a Lord/Miller animated film, distribution will abandon theatrical altogether — at least for the duration of a shutdown — and start moving smaller studio/higher-range independent films into the digital world with no regard to theatrical.

Despite the fantasies floated by movie business writers, the big movies are not — unless used as specific experiments — going to the internet. With 0% interest rates, there is no financial upside to releasing an expensive movie on your streaming service or to PVOD or SPVOD. You could break even. But what distributor is in business to break even with a movie they think could be a hit? Or even a runaway hit?

The hope of Tenet swinging in like Tarzan or Lassie or Shaft and saving the day turned exhibitors into little kids trying to stay up late enough to catch Santa arriving down the chimney. But you can be sure that neither WB nor Disney is happy with the bottom line they have achieved on the releases of Tenet and Mulan

I read a quote about how exhibition needed Mulan as the second part of a one-two punch. That’s so sweet. With due respect to someone who is deeply invested in exhibition, which I love, it’s silly. All you needed to relight the flame was a second $10 million domestic opener? That is sad. Having Mulan — a family movie, making audiences even more resistant, unlike young men rushing to Tenet — do mediocre business following Tenet would only double the ugliness.

On the other hand, it might have hit exhibition in the head hard enough for them to shut down for a month or two or three or until March of 2021. That is an answer that may be better for Exhibition and Distribution, but no one wants to face yet.

Distribution and Exhibition are in a dance of injury (not death). Even if Exhibition said, “Go ahead… try anything you can think of,” Distribution doesn’t have a good answer waiting to go.

There is no source of consumer revenue that works 66% as well as the traditional windowing system. I know this hurts the feelings of some, but it’s not about your feelings. It’s math.

Even if Distribution said, “We’re going to open a new big-budget movie in your theaters every single week until the end of the year,” this would not solve Exhibition’s problem in a real way.

Twenty percent of normal revenues is better than nothing… but maybe not… The costs of being open are likely greater than that 45% of 20% of the norm.

Both Distribution and Exhibition are reliant on the third group, Consumers, to move forward. And as reluctant as industry bigwigs are to accept the painful reality, they have no more than five percent control over the hearts & minds of consumers.

I read the trade stories about this situation and all I see is bullshit and whining. (To be fair, that is all that the writers of these stories are getting… because the truth is much uglier.) Anger about how box office is being reported on Tenet? Killed by Mulan? Not enough audience education about theater safety?

Are these people fucking kidding? Are they just kidding themselves? They sound like the “send your kids back to school” maniacs. Hey… You send YOUR kids. All you like. I’m not playing roulette with my kid and my family that he would be coming home tofive nights a week. Yes, staying home is bad for him. Me or my wife getting COVID could well be worse. Much worse.

And God bless the editor who assigned a story on how Toronto found a new kind of festival in the midst of the pandemic. Bless them… but it’s an absolute lie. The festival that was TIFF this year is there every single year… but the media couldn’t be bothered to pay attention to it. In fact, there is more international… more diversity… more interesting little films that are lucky to get three or four “professional” reviews over the ten-day event. If you liked this year’s TIFF, good on you. Next year, when the stars are back, maybe you will run a review on a relatively obscure title or two.

Then there is the high-and-mighty group that just wants distribution to go ahead and give away their big investments and for exhibition to just shut up about it already.

Same answer as school: You first!

Yes, there are revenue opportunities in leveraging your $100 million or $200 million or even $40 million movie in some way other than traditional release windows. But they are all LESS than the traditional release windows, unless, of course, you have a flop.

Tenet and Mulan have been sacrificed to the Gods of Hopefulness. They may break even. More likely, one will make a very modest return and the other will lose tens of millions. (No skin off my ass, sitting on Twitter, opining.)

So…. What to do?

This is the big question. And there is no answer. Sorry. But let’s offer a few hard swings at the problem.

OPTION ONE: Shut all theatrical down until next March. Rip the Band-Aid off.

Honestly, I am leaning in this direction. Sitting around treading water for two months before mid-November releases happen or don’t won’t do Exhibition any good. Distribution sitting on dates, waiting for a COVID miracle, while not being able to do anything to make miracles happen, and planning for marketing that everyone is scared to start the money faucet flowing on, isn’t going to do Distribution any good.

Agree to this and that there will be a concerted effort come November 2021. Lay out the schedule. A new big movie every week. Don’t sweat collusion issues. If neither side is complaining, no one is complaining.

Set national standards. Promote them. Have all studios on the same page, using five seconds of every TV spot, a space on every print ad, billboards… “Welcome Back To The Movies.”

None of this toe-in-the-water crap with a long-broken New Mutants thrown out to set the stage for Tenet. Start with Soul, The Eternals, The Last Duel. Real movies. Agree to give them an eight-week theatrical window as bigger titles start playing in April.

Keep this in mind: By next March, America will have lived with COVID for another six months. We will get better at it. It is unlikely that there will be a vaccine widely available before the end of summer 2021, but another six months of this and we will all have established patterns in the world, whether mask-wearing or testing or whatever.

The great failures turned into legitimate theatrical hits in MovieLand have been failed campaigns. A reset and a relaunch hitting all the right notes… I would suggest that is an attractive option.

Would Exhibitors go bankrupt? Some might. But there is nothing big business likes better than solid, clear answers. Public-space landlords are being pressed hard all over the country. Do you think they would rather hear, “We’re hoping that Bond will change everything, though they could move it, but it depends on whether the big cities stay safe and the mid-sized cities don’t regress and…” OR “We’re shutting down for six months and then the entire industry, both sides, are going to relaunch movie theaters and we hope to do 20% in the first week and increase it by 15% to 20% every week until we are back to 100%, by which time the vaccine will be widely available, allowing us to return to business as usual.”

What would Distributors do with their considerable staffs in a six-month shutdown? I don’t know. I don’t wish for anyone to be furloughed or let go. So it’s not a one-way street for Exhibition. It’s a major challenge for everyone, including The Academy, which would have to shut down the Oscars for a year.

OPTION TWO: Exhibition accepts the idea of a hybrid business model while big markets are closed and people remain fearful.

Obviously, this undercuts the push for people going to movie theaters by offering a choice during the pandemic. Keeping a screen open — whether it’s a single screen or one of twenty in a megaplex — costs the same whether ten people are in attendance or there are 200.

So why would Exhibition keep spending that money when Distribution is pushing consumers to stay at home, since net return is better with VOD?

Some will say, “if movie theaters can’t compete, that is just people expressing what they want.” Okay. But even putting aside COVID, there is a very good reason why Distributors still want the theatrical revenue… because people pay more to go to the movies than they do to watch things at home. A lot more with a success. Enough that the 45% going to Exhibition is still more valuable than VOD with a roughly 80% return.

The delusion of giving the buyer what they want at the price they want it is madness. Maximizing revenues is the norm in every business, including the movie business. When you go to a restaurant, they make money on your drink, your appetizer, your dessert, you sides… and not so much on the entree. People buy new cars that lose value the second they leave the lot. Americans buy a ton of branded merchandise that doubles or triples the cost of the item. “What the customer wants” is a false notion. It is “what the market will bear.” $42.5 billion in theatrical last year. The number-one revenue stream for movies.

So the truth, in my eyes, is that Distribution, frustrated as it is, do not want this option. They would like more breathing room. They want to keep experimenting on Exhibition’s dime. But they don’t want to kill the goose that lays golden eggs.

OPTION THREE: We carry on as we have for the last few months.

I don’t see how this works for anyone. Magic could happen. Somehow, one, or a combination of all the revenue streams, could explode into sufficient success to make this work for either Distribution or Exhibition or both.

But right now, we are setting ourselves up for another Tenet situation in November. I don’t know who thinks this will be a win… except if magic happens.

There is a rock. There is a hard place.

Everyone started scrambling back in March, when COVID reared up and spat in the industry’s collective face before we could put on a mask. (Even beyond business, I lost four friends in that first two months but haven’t had someone I know die since June.)

I think Distributors did their best. They experimented. They analyzed. They did math. And they kept their ambitions going. Likewise, Exhibition did what it had to do.

I wouldn’t say that all of these were big experiments. But they have all arrived into the culture in a way that was unexpected at the start of the year 2020. And they should be recognized as participants in this history (in order of release).

Trolls World Tour
The King of Staten Island
The Lovebirds
The High Note
Artemis Fowl
My Spy
Palm Springs
The One and Only Ivan
Bill & Ted Face the Music
The New Mutants

Whatever answers the powers that be arrive at, it will be painful. There is no ready answer, in great part because Exhibition and Distribution have separate interests as well as profoundly intertwined interests. It is an easier road for Distribution… but overplaying that position wouldn’t be fully honest. All sides have a lot on the line.

I wish you all — all of us — wisdom and patience and perspective and luck.

28 Responses to “Movie Content Scoreboard: Episode 3b – After The Fall, What Next?”

  1. Bob Burns says:

    Option one makes sense. A coordinated public relations campaign makes a lot of sense.

    I would suggest that this coordinated response collaborate with the CDC on the reopening schedule and the steps toward safety…. without political interference….. in order to achieve credibility about safety rather than picking arbitrary dates. For example, instead of six months, say something like declining cases and deaths for 8 weeks, or whatever Fauci suggests. Credibility.

  2. Amblinman says:

    Anytime you want to admit you have gotten every thing wrong since covid, go for it, Dave. Your columns on this subject are starting to resemble Trump at his rallies.

  3. Pete B. says:

    Did you mean to leave Unhinged off your list, Dave? It’s one I haven’t seen, but I did see The New Mutants, Bill & Ted 3, and Tenet in a theater. There is an audience out there, it’s just being offered very limited product.

  4. Amblinman says:

    It’s so weird that people aren’t flocking to movies where they’re open. Like they’re scared of something. And I don’t think it’s dEmOCrAt mAyoRS. Link.

  5. Stella's Boy says:

    Yeah it’s not the limited product that’s keeping people away. Jesus. Thankfully most people are smart enough to avoid movie theaters due to you know the pandemic that’s killed 200,000 people so far and the fact that a movie theater is incredibly unsafe. Hard for studios to rely on a small audience of selfish, ignorant, and careless assholes.

  6. Pete B. says:

    200,000 when we were initially told 2 million? In a US population of 328 million? Yeah, I’ll side with my small audience.

  7. Hcat says:


    I believe the 2 million number was if we as a nation did nothing. That it is 200K so far(which is still awful, and doesn’t take into account that we have no idea of what future health issues those that recovered might have) is because we have taken these measures, not because it didn’t need to be taken seriously.

  8. Ray Pride says:

    Uncounted deaths, plus “Long COVID.”

  9. Pete B. says:

    Hcat, I wasn’t implying it didn’t need to be taken seriously. Or belittling the victims. Sorry if I gave that impression. We don’t all need to turn into hermits. If you take precautions, your chances are minimal. I’ve been to the theater 7 times, at 3 different venues, and patrons were masked & social distancing. The staff was masked & doing cleaning procedures. It wasn’t like Spring Break at Daytona Beach.

  10. Sam E says:

    IDK…Black Widow not announcing a change yet despite rumors surfacing a week ago that it was possibly being delayed points to a normalization faster than one might think. 10-million admissions and no COVID spreads linked to theaters is a pretty good marketing slogan. I’m guessing from constant cases in the news restaurants don’t have that good of a track record. Huff all you want peeps were over month now with new releases so this isn’t a timing issue. All the available data and science indicate movie theaters are safe.

  11. Stella's Boy says:

    “All the available data and science indicate movie theaters are safe.”

    Yeah this is 100% completely not true, and it is way too early to draw conclusions about the theaters and covid spreads. Your post suggests that covid is winding down or on its way out which is the exact opposite of what is going on nationwide. And there’s no reason to believe that people suddenly feel safe going to a movie theater. Maybe there hasn’t been an outbreak (that we know of) because people aren’t going?

  12. Sam E says:

    @Peter B.

    The shamelessness of these people is a bit disturbing. Casinos, bars, churches and gyms are all open in my State but it’s tens of people sitting quietly in a large auditorium that are the real theat. To be clear, I get why older people, those that have older people in their household, or maybe work in high risk fields such as healthcare might want to be more cautious. I don’t begrudge anyone doing what they think is right. The idea though that sitting in an auditorium with fifteen people that is built for 300 is somehow unconscionable behavior well let’s just say it speaks volumes but likely not what is intended.

  13. Sam E. says:

    @Stella’s Boy I think 10 million people over a month attending theaters with no known cases linked to them is pretty good data that theaters are generally safe. If you have other data I’m happy to look at it.

  14. Stella's Boy says:

    Sam are you a public health expert? A medical professional of some kind? Those folks say sitting in a movie theater with other people is not safe. Why should someone listen to you and not them? The arrogance of some people during a pandemic that’s killed 200,000 (and counting) is astonishing. Everyone is an expert!

  15. Stella's Boy says:

    Not to mention most theaters have been pretty empty. Box office numbers confirm that. Drive-ins are helping out with those numbers, too. And again it is way too early to declare that there haven’t been movie theater outbreaks. It’s way too soon to know that conclusively.

  16. Sam E. says:

    I’m a consumer who like yourself is trying to do my best to stay informed in order to keep myself, my family and my community safe. I never denied the pandemic was ongoing. Part of what we’re all trying to do is figure out what is safe and what isn’t. All the available information I’ve seen generally indicates theaters are safe. If you have data indicating otherwise I’m willing to look at it.

  17. Stella's Boy says:

    If that is the case, if you are trying your best to stay informed and figure out what is safe and what isn’t, I cannot fathom ignoring the advice of public health experts and medical professionals. That is contradictory. The data says covid spreads easily in enclosed spaces! Movie theaters are enclosed spaces! The experts say movie theaters aren’t safe. It’s way too early to definitively conclude that no outbreaks can be traced back to a movie theater. It’s possible there isn’t one we know about simply because people aren’t going to movie theaters and if they were things would be much worse.

  18. Sam E. says:

    Theaters are only allowed to operate at a quarter capacity and have generally been lower. If there were more people going to them that would definitely change my thinking about their safety but more people aren’t going as of right now. No it’s not too early, symptoms occur in two to fourteen days. Theaters have been showing new releases for over twice that time now and open longer in most cases. I’m not sure where this idea that it takes months to link COVID cases to a specific event comes from. Whenever I’ve seen news reports of events that spread COVID they seem to be within a week.

  19. Stella's Boy says:

    Within a week? That hasn’t been what I have seen. But either way if no one is in movie theaters it stands to reason that they will not cause covid outbreaks. Not sure why we’d want more people going to the movies right now when covid is still raging and poised to get worse as the weather gets colder.

  20. Sam E. says:

    1. People aren’t making noise in theaters generally(that is relative to restaurants, casinos and other places such as churches) 2. The airflow from customers moves in one direction in theaters unlike several other businesses. 3. People are not constantly moving in theaters the way they are in stores or restaurants. 4. Theaters are operating at limited capacity and have actually far more room for social distancing than other businesses.

    If you have data I’m willing to look at it but all these points coupled with the available data indicating that theaters are operating safely leads me to think theaters are generally safe.

  21. Stella's Boy says:

    Theaters are safe because no one is in them. If people were in them they would cease to be safe. People do make noise and move around in movie theaters but that isn’t a concern if no one is in them. I can’t tell if you’re being willfully obtuse about this. You admit other indoor spaces aren’t safe but think theaters are but if there hasn’t been an outbreak it’s only because theaters are empty.

  22. David Poland says:

    Amblinman – What are you specifically saying? I didn’t say shut it down in March, so I am rooting for the disease?

    It’s not a guessing game. The story changes. It will keep changing. The major experiments have happened and now, we have the results of those experiments. This is how sane people make decisions.

    Do you think that Dr Fauci is anti-mask because in February they were taking a position of no masks because frontline workers needed them? That position changed six months ago.

    And the Trump reference… fuck you. I consider that the worst of insults. Don’t curse at me.

  23. David Poland says:

    Sam E… Black Widow is not advertising either.

    Empty theaters are surely safe. 10 million tickets sold across the globe proves nothing.

    People aren’t ready. And if, indeed, movie theaters started operating at even just the full 25% on weekends, there would be cases, don’t you think?

  24. David Poland says:

    “The idea though that sitting in an auditorium with fifteen people that is built for 300 is somehow unconscionable behavior well let’s just say it speaks volumes but likely not what is intended.”

    I agree. I’ve been one of those 15. Felt safe. But theaters cannot stay in buisness with 15 of 300.

  25. Dr Wally Rises says:

    Aaannd see you in December 2021 says West Side Story. Who’s next for the year-long bump?

  26. movieman says:

    That extra year will allow Fox to digitally erase Ansel Elgort and replace him with Ben Platt.
    You know it’s coming, right, lol?

  27. amblinman says:

    September 23, 2020 at 9:12 am
    “The idea though that sitting in an auditorium with fifteen people that is built for 300 is somehow unconscionable behavior well let’s just say it speaks volumes but likely not what is intended.”

    I agree. I’ve been one of those 15. Felt safe. But theaters cannot stay in buisness with 15 of 300.“

    So, but: the thing with the comment is the thinking behind it doesn’t stop at “I want to do this thing.” It then proceeds to “we should all be doing this thing” because they don’t want the theater they love to die, so they begin heckling those that don’t need a slightly elevated odds of dying from a preventable disease just to see Tenet.

    Dave: You weren’t wrong 7 months ago cause things changed. You were wrong because you refused to see that *your* modeling of “how things work” meant shit in the covid era. You didn’t even want to have the convo, just arrogant “Lemme tell you people how this here business of show works…” You had a column not terribly long ago gaming out how in person festivals could work.

    You have been wishcasting.

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