Avengers Movie Redefines Movie Theater Economics

It can never be said that Disney didn’t have big goals for the “Avengers,” or that it is even at all surprising that they did. Prior to the release of “Avengers: Endgame,” the house a mouse built was batting 21-0 on astronomically successful superhero movies. And the previous recordholder for domestic box-office openings was the preceding installment in the series, “Avengers: Infinity War,” which opened last year to $257.6 million.

Still, there are high expectations and then there are HIGH expectations – and it is fair to note that Disney’s hopes for this weekend’s release tended more toward the latter.

“We wanted it to feel like an epic, important, seminal, can’t-miss event,” said Asad Ayaz, president of marketing at Walt Disney Studios.

It’s a pretty tall order – and yet somehow, by every reasonable metric, it seems they actually managed to clear it. Almost every multiplex on the planet was gridlocked over the weekend. “Avengers: Endgame” took in a whopping $1.2 billion worldwide, was the No. 1 movie in at least 54 countries and made a record-breaking $350 million in the United States and Canada.

The fact that “Avengers: Endgame” made a lot of money is not all that surprising – analysts were forecasting the movie would make between $260 and $285 million. Some particularly enthusiastic sorts were throwing out estimates of $300 million or more, though the conventional wisdom was that it was basically mathematically impossible for the movie to make more than $300 million, and that figure itself was extremely unlikely.

Oops.

So how did a movie make $50 million more than it was mathematically possible for it to make, effectively creating the retail win of the year for theater operators?

Creative theater managers and a faulty assumption on the part of analysts.

Noting the staggering amount of digital ticket sales in the run up to the release, analysts correctly assumed the movie was going to be very popular. But since other movies came out that same weekend, theaters’ contractual obligations required that those films get screen space and a certain number of showings. On top of that, the movie is three hours long, which limits how many times a day it can be run. The film ran at 4,662 theaters, and it was expected that Endgame would bring in about $60,000 and $65,000 per theater over the weekend. That still would have still made it a recordholder – the previous record of $59,900 per theater was set in 2015 by “Star Wars: The Force Awakens.” That $63,000 range, analysts noted, would just about max out what theater operators could hope to bring in.

Endgame earned an average of $75,075 per theater.

Theater operators, in the words of Paul Dergarabedian, senior analyst at Comscore, “created a situation for the film to earn the maximum dollars, by literally expanding the supply to meet demand” by offering round-the-clock screenings.

Analysts knew that some operators were trying this 24-hour screenings promotion, according to reports in CNBC, but initially thought it would be a handful of theaters and not enough to change the underlying performance data. But as the tsunami of customers showed up, the round-the-clock showings got a lot more common, and in some cases doubled the number of times per day they could screen the film.

Plus, those off-hours 4 a.m. and 7 a.m. showings were unexpectedly popular, which pushed even more theaters to move to round-the-clock screening nationwide.

“At Marcus Theatres, we went all in on this title, adding more show times based on demand prior to Thursday’s opening,” said Greg Marcus, CEO of the Marcus Corporation. “Presales for the opening broke all records for presales we had for any other title.”

So is Endgame a lock to dethrone “Avatar” and its $2.7 billion total global box office take? Analysts say it is possible – but not super likely.

“Pushing past $2 billion is like running the three-minute mile or breaking the sound barrier. Getting in the extra $800 million over the $2 billion it’s guaranteed to make will take a superhero-like effort, considering the competition on the horizon,” Dergarabedian noted.

But whether the customers come to see “Avengers” again – or to see any of the rest of the summer popcorn fare that has now officially started the season – theater operators probably don’t care.

So long as they come, and keep buying the popcorn.