| March 6, 2022
I was pleased to hear Jeffrey Katzenberg interviewed by angry, middle-aged onanist Kara Swisher and saying, “I think for anybody to sit here today and think that they have a crystal ball, and they can see what this looks like three years from now or five years from now–I’m certainly not capable of doing it. But I don’t know that anybody is, because you think about the movie theater experience. What is that going to look like? And I have to say, any presumption that you make about that today, you’re likely wrong.”
Things are still heavily weighted by COVID, still in flux, and–although the evidence keeps coming in that theatrical and streaming being commingled as so many seem to desperately want is financial malfeasance–still loaded with production and distribution companies running new strategies on a seemingly haphazard basis, not allowing stability toward any clear future.
My ambition is not to predict the future, but to figure out when it will be safe again to pick up the crystal ball.
For me, this starts with the overall box office, not just the success of one opening weekend or another. In 2019. there were just two three-day weekends on which the overall domestic gross was under $100 million. The overall average of the 52 three-day weekends was just over $150 million.
Will we ever see this again? Maybe. Maybe not. The future of theatrical is on the distributors, not the exhibitors. There are scenarios in which theatrical can grow from its heights moving forward. But there would need to be the will to make that happen… and right now, distributors are playing everything scared.
So what would “a new normal” look like?
Let’s say the Vaccinated era of COVID started with A Quiet Place II on May 27. In the seventeen weekends since, there have only been two $100 million domestic total three-day weekends, with the openings of Black Widow and Shang-Chi. There have only been three more weekends between $80-$100 million. Between $60-$80 million, nine weekends. That leaves three under $60 million.
In this matching 17-week period in 2019, there was just one weekend under $108 million.
Somewhere between those two years of results lies the “new normal,” which can then be built on (or reduced). The average weekend in those 19 weeks in Summer 2019 was $150 million. The average this summer was $75 million.
Let’s cut into a random weekend in the 2 different summers and see why it was a $148m weekend in 2019 and a $78m weekend in 2021.
It may surprise you a little, but the 2021 weekend had more titles doing over $1 million that weekend than in 2019, 11 to 9. But the devil is in the holdover success of those titles.
Both years, there was a new movie starring Dwayne “The Rock” Johnson. In 2019, Hobbs & Shaw opened soft, with $60 million. In 2021, Jungle Cruise opened soft with $35 million. But that $25 million difference only makes up a third of the difference between the overall weekends.
In 2021’s sample weekend, no other movie, even with two solid dramas opening, grossed $7 million. In 2019, there were no new openers, but in weeks 2, 3, 5, and 7, four holdovers grossed more than $7 million, with two of them over $20 million. That’s a $45 million difference on just the #2 and #3 grossers for the weekend.
So we found our $70 million difference just in the Top 3 titles. That was easy! (ha ha)
The total weekend grosses of titles 4 -20 in each of the two years is… almost identical. Within $55,000. I find this remarkable. And though the box office total beyond the Top 20 in more than double in 2019 what it is in 2021 for that weekend, the high is still under $2 million.
So the answer in this case is really at the top of the chart. Top 3. The discussion of what should be expected from the opening of a F&F spin-off starring The Rock vs a Disney Ride spin-off starring The Rock is less interesting and less impactful than the importance of the #2 and #3 films.
In 2019. it was Weekend 3 of The Lion King, with $38.5 million and Weekend 2 of Once Upon A Time in America, with $20 million. This August, it was the 2nd weekend of Old ($6.9m) and the opening of an A24 movie, The Green Knight, the latter of which overperformed expectations with a $6.8m launch.
The health of the theatrical business, even if it is somewhat reduced, is going to be defined by those #2 and #3 slots as much as, if not more, than #1. The best performance by #2 and #3 since AQP2 was $35.6 million by Black Widow Weekend 2 and the premiere of Escape Room. In the same 17 weeks of 2019, 10 of the 17 weekend #2/#3s did better than this year’s high mark.
Why? Two main reasons. First, the distributors are still not programming enough movies close enough to one another for Weekends 2 & 3 of solid openers to deliver strong second and third weekend numbers behind the next strong opener. Second, the distributors are undermining the theatrical on their movies (and all movies, as it is changing the perception of availability in the mind of the consumer) in the hope these films will either boost their streaming subscriptions or in the hopes that Premium VOD revenue, which they earn a significantly higher percentage from, will not only replace 2nd/3rd weekend grosses, but strongly improve on their profitability.
On the issue of density of programming, this was what really created hope for this last summer. But then the distributors scattered to the winds for a second summer. There were five theatrical-only openings over $20 million this entire four-month summer. That is not a full schedule.
Three of the top five openers (aka all the over $35m opens) were theatrical-only. Black Widow was the biggest opener and also added 3 million opening week streams. Three weekends later, Jungle Cruise managed only 1 million. Disney has now shelved Premium day-n-date VOD for the next year or so. Is that a sign of success?
Worth noting, Shang-Chi, with no PVOD, had the sixth best weekend of the summer… on its second weekend. But as noted above, there was nothing else there in the market of any weight, so the overall for the weekend still remained a pathetic $61 million.
To misquote Santa Claus is Coming to Town, put one hit in front of the other… and soon they’ll be walking in the door… orrr… orrr…
But this all leaves the other question… and it is not an illegitimate one. Is there more profit for distributors in a solid, if not overwhelming opening weekend followed by a PVOD windfall?
Here, the crystal ball is being purposefully hidden in a swamp… a swamp of hidden VOD numbers. What we know is that VOD has a long history of being a marginal revenue stream for movies seeking over $50 million in revenue overall. (It has been an industry-saver for indies, but that’s another subject.) And we know that there has been a profound uptick in VOD sales during COVID.
I am of the very strong belief that the VOD-as-major-revenue-stream fantasy that every major studio has harbored for decades now will once again be smashed on the rocks of reality once the pandemic is not our primary lifestyle. Moreover, the Subscription VOD business (Netflix, Disney+, Amazon, etc) works against the future of the Premium VOD model.
To wit, Shang-Chi will be on Disney+ as a part of a paid subscription in November. There will be a VOD window (and DVD release) between now and then. The ven diagram of “anxious to see the film, but not enough to go to a theater” and Disney+ subscriber likely leaves very few people out of the meaty center. In other words, if you waited until October and you don’t prioritize the theatrical experience of this film, you will surely wait until November.
The more the industry trains audiences to expect a quick turnaround of new content to a platform that is not free, but without an added charge above a monthly fee, the more people will expect that, even when it isn’t the specific plan for any specific movie.
There are very smart people who will argue otherwise… that Premium VOD is a new window that will replace and supersede theatrical. Given that anything is possible… anything is possible. But in spite of media arguments every single day, mass audience habits don’t change overnight or in a moment of duress. Households have been spending around $100 a month for Home Entertainment for a long time. Do rental views at $20 and $30 a pop fit into this budget on the regular? I would bet against it.
I believe that the theatrical experience, whatever middle-aged people think of it, is the only differentiated single-serving revenue stream that will still be viable as a significant revenue source as we get to the next normal. Not because it’s special or The Church of Cinema, but because unlike watching a rented film on your TV, going to the movies is leaving your house and not “just” watching the TV you watch for over 6 hours a day every single day.
Distributors can absolutely undermine that and break the theatrical business, as they have broken physical media. But I believe the opportunity for at least $15 billion in annual rentals ($30b gross) will be there if it isn’t crushed in haste. Probably more.
So… getting back to the core question in this piece… what will we see when we can seriously argue that “the new normal” is in sight?
Well, it’s coming up fast now. October 1, Carnage. October 8, Bond. October 15, Halloween Kills. There is a shot at a $100m+ weekend on October 8 and an even better shot on October 15, especially if Halloween Kills isn’t the top grosser.
Then we fall back off the cliff with HBO Max undercutting the opening of Dune on October 22. No big opening likely on the 29th. Or November 5. There really isn’t a major launch until Ghostbusters: Afterlife on November 19 and unless Disney starts pushing Encanto like it’s a major release (no new marketing since the release of Black Widow in July), November has basically been abandoned. So the odds are against anything looking “normal” in November.
December is the first month that really looks like the old normal… still a little shy, but pretty loaded. West Side Story, Spider-Man: No Way Home, Nightmare Alley, The King’s Man, and Sing 2 will get proper theatrical releases within 13 days and The Matrix Resurrections, bent by HBO Max same-day release, should still have an audience clamoring for a big screen experience in that same period.
I don’t expect the 2019 haul of a $250m weekend and a $200m weekend in December, but there is a legitimate chance of getting as many as 3 $100m weekends in a row, which would be a new high since the pandemic started.
For those of you keeping score, we have only had 2 $100m weekends in 2021 so far. So, if we can score 1 or 2 in October, and 2 or 3 in December, that would be a significant accomplishment under these circumstances. It still isn’t “a new normal,” but it is a few glimpses of one.
As long as we have these dry periods of distribution, where there is only 1 or 2 major releases in a month, the opportunity to find “normal” will not exist. As I have said ad nauseum, this is a choice.
And let me be the bearer of shitty news… after December, with the exception of a possibility of single mega-openings (The Batman, Dr Strange 2, Thor 4), there is not a legitimate block of releases that can possibly deliver multiple $100m weekends in a row until June of next year. July is set up for this kind of success – or normalcy – as well.
But distributors are asking a whole lot of the exhibition community, not filling theaters with product that have a serious chance at making the kind of money that was not exceptional in the pre-pandemic past, but the norm.
Decades of emphasis on opening weekend has created a false sense that movie theaters live on an a la carte basis. Distributors have made this happen, not only shortening the window for year after year, but also in obsessing on opening weekend and rarely even spending real money on weekend 3 or 3 unless they have a really big hit.
Distributors have become – even more so as they move further away from the business of making their money on specific pieces of content – lazy and risk averse. You can’t fail if you don’t try. You also can’t win nearly as much. But if your bosses don’t see that as the standard you must achieve to be successful, why risk it? Why risk anything?
And I can’t argue with that… it’s not my money.
But if the “new normal” is where we are now – $60m to $75m a weekend on average – or bit better, say $85m a weekend on average, I would expect about 20% of screens (8000 or so) to shutter before the end of 2022. If that “new normal” continued, I would expect us to be around 25,000 screens domestically by the end of 2023. And come 2024, we would likely settle down into a permanent reduction (that’s how brick and mortar works) down to something between 8,000 and 15,000 screens.
Normal is having movies in theaters. Normal is successful openers playing to over $2 million a weekend for at least 4 or 5 weekends with drops in the 30s and 40s, unless its a mega-opening, dropping in the 60s in Weekend 2 before settling into drops in the 30s and 40s. This is how an ecosystem works. Big openings and big holds still dominate, but 25% of revenues are still “everything else” and that 25% may not be as sexy, but it is needed to have a profit margin… unless you eliminate a lot of screens.
So when will we get there again? No one can know. But based on the current schedule, we shouldn’t expect more than peeks at a new normal until next summer.
That’s a long time from now.
| March 6, 2022
| January 26, 2022
| January 24, 2022
"Netflix, the great disrupter whose algorithms and direct-to-consumer platform have forced powerful media incumbents to rethink their economic models, now seems to need a big strategy change itself. It got me thinking about the simple idea that my film and TV production company Blumhouse is built on: If you give artists a lot of creative freedom and a little money upfront but a big stake in the movie’s or TV show’s commercial success, more often than not the result will be both commercial (the filmmakers are incentivized to make films that will resonate with audiences) and artistically interesting (creative freedom!). This approach has yielded movies as varied as Get Out (made for $4.5 million, with worldwide box office receipts of more than $250 million), Whiplash (made for $3.3 million, winner of three Academy Awards), The Invisible Man (made for $7 million, earned more than $140 million) and Paranormal Activity (made for $15,000, grossed more than $190 million).From the beginning, the most important strategy I used to persuade artists to work with me was to make radically transparent deals: We usually paid the artists (“participants” in Hollywood lingo) the absolute minimum allowable by union contracts upfront, with the promise of healthy bonuses based on actual box office results—instead of the opaque 'percentage points' that artists are usually offered. Anyone can see box office results immediately, so creators don’t quarrel with the payouts. In fact, when it comes time for an artist to collect a bonus based on box office receipts, I email a video clip of myself dropping the check off at FedEx to the recipient."
Jason Blum Sees Room For "Scrappier" Netflix
| April 30, 2022
"As a critic Gavin was entertaining, wry, questioning, sensitive, perceptive"
Critic-Filmmaker Gavin Millar Was 84; Films Include Cream In My Coffee, Dreamchild
April 29, 2022
| April 29, 2022
"Responding to its dramatic slowdown, Netflix said it would test ways to encourage people to pay for sharing passwords; put out better shows, films and games; and explore a lower-cost, ad-supported version of Netflix — an option the company had long resisted. But the bleak subscriber numbers and the company’s response have stirred a mix of angst and uncertainty among many rank-and-file workers. Some are worried that the streaming heavyweight may have hired too fast and grown complacent as subscriber growth skyrocketed in the early days of the pandemic. Others are skeptical about strategic shifts and concerned that Netflix’s distinct culture is fundamentally changing, according to former employees who spoke with The Times and comments posted on a private Netflix group on Blind, an anonymous forum for people with company-verified email addresses."
| April 29, 2022
| December 13, 2019
| December 4, 2019
| December 4, 2019