October 8, 2021

Theater Chains Clap Back

The one social media platform that was working in Hollywood earlier this week was Twitter. Those that follow Adam Aron (CEO of AMC) were served with a large dose of “choke on that!

Despite the Delta Variant, last weekend’s moviegoing receipts were up, impressively so, with the rise in theatrical revenue teasing the industry that moviegoing is back to normal

Or, rather, is this but the “newest normal?”

No Time to Cry
Daniel Craig, in one of his last performances on set as James Bond, gave a tearful thank you to the crew of his five bond films. As arguably Britain’s most bankable property (presumably to be snatched up by Bond villain doppelganger, Jeff Bezos), Craig barely held back the tears as he remarked on the greatest honor of his life, playing 007.

Bond’s latest incarnation had been sitting on the shelf for almost two years, its original release plan being November 2019 (pre-pandemic, if we can remember such a time). Delayed a few more times over the last 18 months, Bond finally opened this weekend overseas to a huge $119M debut without China (opening day in the Middle Kingdom is October 29). As Variety reported back in January 2021, a film on the scale of Bond needs substantial ticket sales to pay back its huge price tag, rumored at $200M, requiring—in many people’s opinion—a theatrical-only release. Opening this week in the U.S., No Time To Die is expected to become the biggest box-office hit of the pandemic era.

Inject the Venom
Battling on the domestic shores for weekend headline supremacy were Venom: Let There Be Carnage and Shang-Chi and the Legend of the Ten Rings, with the former taking the crown. Venom easily won the weekend with an opening of $90M, ending Shang Chi’s four-week run at the top of the box-office.

Venom is now king of the post-pandemic era, beating out hybrid-release Black Widow’s $80M, as well as other films. Venom also holds the current title as second-biggest October weekend release ever, behind Joker, which ultimately made over $1B in global box office.

Is this a splash or a wave? Key to determining this will be second-weekend declines; during the pandemic these have been routinely over 65% to 70%, whereas pre-pandemic fall off was typically 20 points lower.

“Calm Down, Mate! I’m Not Dead”
On the strength of Shang-Chi’s Labor Day box-office results ($94.5M, the best Labor Day weekend ever), Disney recently announced that all six of its 2021 slate would return to a theater-first release with a minimum theatrical window of 45 days except for Encanto, which has a 30-day window.

AMC and Cinemark, the two largest theater chains, claim to be profitable if they reach 80-90% of pre-pandemic levels. Thus, Shang-Chi’s performance counts as a big win for moviegoing – and as proof that yet another minor Marvel character (of relatively hidden interest) can command a major audience. Another checkmark for the future of moviegoing.

Shang-Chi now tops $208M in domestic box office and almost $390M total without counting China—a bone-fide tentpole return. This obviously shows strength in moviegoing, and all studios will take notice.

More Suits
Venom, released by streaming-less Sony, benefited by a reduction in COVID, colder weather (less time outdoors), and a Chairman who at least publicly supports theatrical windows. Tom Rothman argues that “theatrical films will have exclusive windows in theaters…but be flexible.” SPE CEO, Tony Vinciquerra, stays on message, claiming now “there is a higher bar…to get films into theaters.” However, flexibility seems to be key as the studios scramble to make as much as they can in order to arm themselves against an uncertain future.

With all the excitement around the recent, unexpected success at the theater, Ted Sarandos (also at Code) gave a firm “no” to the idea that Netflix would buy a movie theater chain. Sarandos further stated that “moviegoing will be less frequent and more expensive” going forward, at least every weekend except Labor Day.

Sharing the same stage as Sarandos, the next day Kilar was asked about the content “arms race” among the top steamers, to which Kilar replied that WarnerMedia will spend “north of $18B,” similar to what Netflix expects to spend. How the studios/streamers fund this arms race is likely to remain very different for the moment, which leads us to…

Back to Disney
A few estimates of content spend put the Mouse House on top (between $18B and $25B). Without relatively cheap capital from Wall Street (Netflix), nor ancillary businesses to subsidize entertainment (Amazon/Apple), Disney must find its own sources of income to pay for its spend. Making the decision to bring back the theatrical window for the remainder of its 2021 slate seems like a good decision at present. Delta is on the decline and theatrical attendance is strong. Subscriber counts have slowed for both Disney+ and Netflix, and the old ways of making money seem attractive once again.

Can the genie be put back in the bottle?

I’m interested in your thoughts. Please email me.

Douglas Montgomery is a 15+ year veteran of the Entertainment Business. His time with Warner Bros. was spent analyzing, and living the incredible changes from the VHS era, to DVD and finally Streaming.

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