The bad news for the movie industry keeps piling up, enough that B. Riley analyst Eric Wold has further reduced its box office forecast for this year and 2021before suggesting something of a return to old levels in 2022.
But in the meantime, the pandemic pinch that has left movie theaters closed for months and Hollywood studios rescheduling most of their slates to next year or beyond continues to hurt the business.
In the latest news, UK exhibitor chain Vue said it would partially close a quarter of its screens during the week. The chain said in a statement that it would close 21 of its 87 theaters from Tuesday to Thursday, starting next week, “to ensure that our business is financially well positioned to weather the uncertainty ahead.”
This decision is similar to that of British competitor Odeon. Cineworld, which also owns second US channel Regal, has taken an even more drastic step by closing all of its UK and US locations over the next few weeks.
The situation is even bleaker for B&B Theatres, the sixth largest chain in the United States. The company warned that it was a few months from bankruptcy if it does not receive new content or government aid.
America’s No. 1 broadcaster AMC issued a similar warning last summer, then restructured its debt, reached a landmark revenue-sharing deal with NBCUniversal and said it planned to issue 15 million new shares. In response to the Cineworld closures, AMC said last week that it would keep theaters open and work to open more, based in part on potential revenue from this NBCU deal.
But the situation is generally ugly for the industry. The announcement of Cineworld’s closure came shortly after MGM pushed back the latest James Bond film, No time to die, until April next year. Other studios pushed back other blockbusters Black Widow and Dunes see you next year a little after.
As a result, the fourth-quarter movie release schedule is “increasingly barren,” B. Riley analyst Wold wrote. He said the situation had been made worse by continued uncertainty over when movie theaters in New York, Los Angeles and San Francisco would reopen, and under what capacity restrictions. The three metropolitan areas are major film markets in normal times.
“Even though we previously projected a 70% year-over-year decline in domestic box office revenue in 2020, we are still reducing that projected decline to 80%,” Wold wrote in a research note. It also cut its forecast for 2021, predicting it will be down 20% from 2019 levels, before mostly bouncing back to less than 10% from 2019 in 2022.
Given continued industry uncertainties and broad financial challenges, Wold warned that investors “need to be increasingly selective with the exposure space given both the volatility of news flows and the issues of liquidity”.
So it slashed the price targets of several major movie chains — AMC to $4.50, Cinemark to $11, Imax to $18 and Marcus Corp. at $21 – as well as theatrical advertising giant National CineMedia.
The next notable Hollywood releases aren’t expected until Thanksgiving week, after Warner Bros.’ weak debut. Christopher Nolan Blockbuster Principle early September. Warner continues to tout the film as “the greatest movie in the world” a month after its release.
Last weekend, it finally slipped out of the top spot at the domestic box office, grossing just $2.1 million to fall behind the Robert De Niro-directed family comedy. The war with grandfather, which debuted at what would normally be a terrible $3.6 million.
Principle grossed $48.3 million in the United States, well below expectations for a Christopher Nolan film, especially one that cost an estimated $200 million to create and tens of millions more to market. It’s done a little better internationally, but the global gross remains a disastrous $323 million.
Product shortage issues last week led Robert Fishman, Moffett Nathanson analyst suggesting channels consider cutting content deals with streamers to gain access to certain movies. One possibility is to multiply revenue-sharing agreements over premium versions of video on demand, similar to what AMC and NBCUniversal have done.
Fishman predicted this year’s domestic box office would plummet 81%, deflating to just $2.1 billion.
PwC partner CJ Bangah said last week that the sector could even “slightly underperform” the consulting giant’s dismal numbers. media and entertainment annual outlook, which forecasts a 65% decline in global income.
Rich Greenfield of LightShed Partners has repeatedly suggested in recent months that Hollywood studios are missing a chance to build audiences for their own streaming services by not shifting their pipeline of pending blockbusters to online releases. Not to, he suggests, is ceding a huge opportunity to Netflix.