A view outside of cinemas 1, 2, and 3 during the coronavirus pandemic on May 18, 2020 in New York City. COVID-19 has spread to most countries in the world, killing over 320,000 people with over 4.8 million infections reported. (Photo by Noam Galai / Getty Images)
While some industries have heralded the third quarter as the beginning of a recovery from the financial devastation caused by the coronavirus pandemic, the outlook for US cinema operators is still poor.
In the past few days, all of the major cinema chains released quarterly results showing rising losses as nearly 100% of sales were wiped out as auditoriums stood empty for months. With Covid-19 cases still rising in the US, states are unlikely to encourage citizens to watch a movie night. Meanwhile, the studios are making the difficult decision to release movies direct to video-on-demand in the US after repeatedly postponing release dates.
"If the US government had taken this seriously at the start of the shutdown and worked out a comprehensive plan of action, we would all be sitting in our favorite theaters watching Hollywood blockbusters in their normal living quarters," said Jeff Bock, senior analyst at Exhibitor Relations, said .
"Due to the lack of leadership, theaters across America are on the verge of bankruptcy with no real cinematic savior in sight," he said.
As of Friday, U.S. Covid-19 cases topped 4.88 million with at least 160,111 deaths. The US accounts for a quarter of all coronavirus cases worldwide and more than a fifth of deaths. Over the past week, the country has reported an average of more than 50,000 new cases a day, according to a CNBC analysis of data compiled by Johns Hopkins University.
Instead of pushing for the economy to reopen, states are tightening restrictions.
When the US was first locked in March and closed non-essential stores, the expectation was that the country could go back to normal appearances after a few months. In countries like France, Great Britain, South Korea and Germany this has become a reality.
A willing audience
Nearly half of the world's cinemas have now reopened in some form, according to Gower Street Analytics, a UK-based company that has a partnership with Comscore. It is said that nearly 12,400 theaters are open, more than 90% of which are outside of the United States.
The good news for theater operators is that audiences are hungry to see new films.
Adam Aron, CEO of AMC, said on a conference call Thursday on the results that audience numbers in open theaters have been low as older catalog films are shown, but excitement and ticket sales have increased when new films are released.
AMC operates around 8,200 screens in the US and more than 2,900 internationally. Aron said more than a third of its theaters in Europe and the Middle East are already open and the rest should be back up and running within two weeks.
Quite simply, content is what drives filming, and there are some great examples of films in the international marketplace that have found opportunity and favor with the enthusiastic viewers drawn to theaters by these high profile new films
Senior Media Analyst, Comscore
One of the new films that is doing solid business for the cinema chain is a sequel to the popular Spanish-language film "Father There Is Only One (Father No Hay Mas Que Uno)", which debuted in Spain in late July. It opened at $ 2.52 million, or 70% of the total Spanish box office, this weekend. To date, the film has had sales of more than $ 4.4 million and more than 665,000 people have bought tickets to see the film.
"The box office revenue for this year's sequel was significantly higher than that of the original film, which in 2019 was itself the most successful domestic film in Spain," said Aron.
The second "Padre" movie is generating 20% more box office revenue with 20% fewer theatrical locations, said Paul Dergarabedian, senior media analyst at Comscore. The first "Padre" film was the number 1 local track in Spain last year.
"Quite simply, content is what drives filming, and there are some great examples of films in the international marketplace that have found opportunity and favor with the enthusiastic viewers who are drawn to theaters by these high profile new films," said Dergarabedian.
In South Korea, a steady stream of local films has rapidly increased box office sales. "Peninsula" grossed $ 26 million in three weeks. Steel Rain 2 opened last week and had ticket sales of $ 9 million. This weekend will bring "Deliver Us From Evil" which is expected to take first place.
According to Comscore, South Korea had the second highest checkout move last week, just behind China.
Go global first
With so many international theaters open and such good local titles, it's no surprise that American studios are releasing their films outside of the US.
As of Thursday, the horror flick "Antebellum" was the latest film to change its release strategy. It left its August release date and set a digital rental date for September, skipping cinemas in the US. However, the film will be released in some international cinemas.
This trend could continue until the US can safely reopen its theaters. The October release of "Wonder Woman 1984" as well as the November releases of "Black Widow" and "Soul" are all in question. These blockbuster features would traditionally generate massive revenues for theaters and studios, but with no guarantees that people in the US could safely make their way to see them, they could easily be on a premium, on-demand basis or basis for an international publication.
Before the pandemic, Hollywood was already thinking global, targeting international markets like China with high-octane blockbusters in hopes of bigger box office profits. US blockbusters often generate more than 60% of ticket sales outside the country.
China operates more than 10,800 theaters, currently 64% of these locations are open. Overall, Chinese theaters make up almost 40% of the total number of theaters in the world.
Last year, box office sales in the country totaled $ 9.2 billion. This was the second highest box office sales just behind North America, grossing $ 11.4 billion. Before the pandemic, China was expected to eclipse the US and become the world leader in cinema within a few years.
China's ability to reopen its theaters and be at the top of the box office makes the region incredibly alluring to studios. Especially when analysts are not optimistic that America can successfully reopen theaters before the end of the year.
"Given the government's inability to contain the pandemic and the determined idiocy of much of the public, it seems to me that both interest and ability to return to the theaters will wane by 2021 if and if there is an effective one Vaccine available, "said Doug Stone, President of Box Office Analyst.