This weekend marked the first bit of good news U.S. theater operators have had in nearly six months. Cinemas were actually open in some states, there was a new movie to splash up on the silver screen and there were consumers actually willing to take the plunge and watch it some place other than their living rooms.
The film was “Unhinged,” a hyper-violent black comedy/thriller starring Russell Crowe. It opened on about 1,800 screens and grossed some $4 million in the United States and Canada from Friday (Aug. 21) through Sunday (Aug. 23), according to studio estimates cited by the Los Angeles Times.
It was the first major wide release to hit U.S. theaters since March, when the industry ground to screeching halt under pressure from COVID-19. It’s been rough sledding ever since for the industry as a whole, and for theater operators in particular.
However, studios had one option available to them — release films direct to home streaming. That’s a system theater operators hate, and worked hard — and until recently, very effectively — to protect against. They required Hollywood to agree to a theatrical release window, with studios waiting to release movies to streaming for at least three months.
But in a world where nothing is getting released to theaters because cinemas are closed, studios learned that in some cases, they made more money on streamed releases than theatrical ones. In fact, they began to make noise that they might rethink their release strategies even in the post-pandemic world. NBCUniversal CEO Jeff Shell noted in an interview with The Wall Street Journal that “as soon as theaters reopen, we expect to release movies on both formats.”
Theater operators were initially so angry that AMC, America’s nation's largest chain, struck back aggressively. “It is disappointing to us, but Jeff’s comments as to Universal’s unilateral actions and intentions have left us with no choice. Therefore, effectively immediately, AMC will no longer play any Universal movies in any of our theaters in the United States, Europe or the Middle East,” CEO Adam Aron wrote in an April letter to Universal.
But several months of being totally shut down softened theater owners’ opinions and broadened their minds. By last month, AMC was singing a very different tune, striking an agreement with NCBUniversal regarding streaming.
The two sides agreed to a new arrangement that allows the studio to release films to premium video-streaming services after just 17 days of play in cinemas. In return, AMC negotiated about a 10 percent cut of on-demand revenues, apparently having accepted the idea that collecting something from digital-only consumers is better than nothing.
AMC CEO Aron said his company “enthusiastically embraces this new industry model both because we are participating in the entirety of the economics of the new structure and because premium video on demand creates the added potential for increased movie studio profitability, which should in turn lead to the green-lighting of more theatrical movies. This multi-year agreement preserves exclusivity for theatrical viewing for at least the first three weekends of a film’s release, during which time a considerable majority of a movie’s theatrical box office revenue typically is generated.”
So, in light of the industry’s results for its first week back, are AMC and other theater operators celebrating their new “live and let live” attitude toward streaming — or do they rue the future opportunities that they’ve lost?
It’s hard to say given the $4 million weekend box office for “Unhinged” pales in comparison to the $350 million opening weekend for “Avengers Endgame” in 2019. And the L.A.Times reported that some drive-in theaters showing second run films outperformed “Unhinged” in weekend box office.
PYMNTS surveyed U.S. consumers throughout the pandemic and found that Americans aren’t quite ready to resume normal activities like going to the movies.
Yes, 54.2 percent of those we spoke to said they missed going to leisure events like movies. But consumers also remain nervous about the health consequences of getting back to the physical world. Many consumers we surveyed are uninterested in giving up their digitized lifestyles in favor of getting back to their physical ones.
However, theater owners are nonetheless reacting to the film’s box-office results positively. “We’re breathing a sigh of enormous relief,” Mark Gill, president and chief executive of Solstice Studios, told the Times.
No one was expecting a massive comeback weekend, particularly from a very violent R-rated movie that got middling reviews. And indoor theaters remain closed in the biggest states for moviegoing: California, New York and New Jersey.
But theater owners saw the fact that people were willing to go to the movies at all as a highly positive sign that they expect will build up over time. “This is looking exactly like the rest of the world, where slow and steady wins the race,” Gill told the Times.
So when are they expecting the race to pick up?
Reports indicate that Hollywood will be especially watching the box office for the next two weekends, when Walt Disney Co.’s “The New Mutants” and Christopher Nolan’s “Tenet” hit theaters. Of the two, “Tenet” seen as having blockbuster potential.
But can theaters tap that potential with the same capacity restrictions imposed on retailers and restaurateurs? And with consumers required to watch movies wearing face masks, and it remains to be seen how many will simply decide to wait it out for 17 days and watch first-run films mask-free at home.
Still, results for “Unhinged” show there’s still some interest in actually going out to the movies. But it’s going to take a whole lot more of it for theater operators to really begin to recover.