28 JUN 2021

U.S. BOX OFFICE LOSES MILLIONS AMID PERMANENT HYBRID THEATRICAL RELEASE SHIFT

The industry's total gross figures are expected to decline by 20% to $2.3 billion, with only Cinemark showing promising growth with a 2% trade increase. Approximately 70% of total ticket sales will stem from theatrical releases, set to generate $8.2 billion.

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Though box offices have recently seen a spike in revenue this summer, Wall Street exhibition analyst, Robert Fishman, projects that the industry’s gross figures will drop by 20% to $2.3 billion. The report provides revenue estimates throughout the year 2022. 

In Fishman’s report, he states that theatrical release models will remain, and will hinder the recuperation of box offices. The researcher revealed that only Cinemark shares have sparked by 2% in trading $23. “Now that studios essentially have full flexibility on windowing strategies with increasing emphasis on favoring self-owned OTT platforms, the supply of theatrical releases from the major Hollywood studios into theaters should be negatively impacted, which would hurt long term attendance trends,” he wrote.

Fishman expects 70% of total ticket sales to stem from theatrical releases, resulting in a total of $8.2 billion, a significant decrease from the $11.4 generated in 2019. Approximately 20% of releases will be considered non-theatrical, set to air on Disney+ Premier Access or as no-additional-charge titles on HBO Max or Paramount+. A small portion of movie releases will debut solely on streamers, like “Luca” on Disney+.

The expert predicts that 40% of the 2019 slate from Disney, Warner Bros, Universal, Sony and Paramount would have been unlikely to play exclusively in theaters. He also noted an increase in theater attendance interest following the removal of mask mandates across the country. Third-quarter box office sales are estimated to reach $2 billion, about 30% below the comparable period in 2019. The fourth quarter, though, should surpass 2019 and reach just shy of $3 billion in grosses. “The aggressiveness of studios’ respective windowing strategies is still one of the key unknown variables in our short-term and longer-term forecast,” Fishman said.

Universal sealed a deal with a large portion of box offices in the country to obtain rights to air select titles just 17 days after they debut in theaters. Franchise films can make the move after 31 days, while most other studios continue abiding with a 45-day theatrical exclusive window. The overall figure expected to be impacted by the theatrical releases is 5%. “If Disney continues to push Disney+ Premier Access for its family oriented titles, we would anticipate a higher cannibalization rate,” Fishman wrote. "Depending on what Warner Bros, Paramount and Universal decide to do, “we expect a meaningful cannibalization rate on historical box office for these films."

He also noted an additional $600 million in annual domestic box office from 20 Netflix titles next year, a small portion of the streaming giant’s annual feature releases. “We anticipate a more formal agreement between Netflix and exhibitors to help bring additional attention and eventize some of its key releases going forward,” Fishman wrote. 

 

Now that studios essentially have full flexibility on windowing strategies with increasing emphasis on favoring self-owned OTT platforms, the supply of theatrical releases from the major Hollywood studios into theaters should be negatively impacted, which would hurt long term attendance trends.” Robert Fishman Wall Street Analyst