Will the Global Box Office Follow Hollywood’s Slowdown?

After an unexpectedly robust summer at the international box office, there is a near-term question mark about what will happen next: Will recovery stall due to a paucity of Hollywood tentpole movies? Or will international theatrical decouple and find new drivers to maintain the momentum?

The good news is that most of the international market’s top territories are now fully open and operating without significant restrictions on seating capacity. These include the U.K. and Ireland, Japan, France, Germany, Spain, South Korea, Australia, New Zealand, Mexico and Brazil. The smaller number of territories still laboring under restrictions nevertheless include some valuable ones: China, Turkey, Argentina, Hong Kong and Russia.

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Hollywood movies that have driven the recent international recovery include “Jurassic World Dominion” ($611 million internationally); “Minions: The Rise of Gru” ($486 million); “Thor: Love and Thunder” ($405 million); and “Elvis” ($126 million).

“Top Gun: Maverick,” with $1.4 billion worldwide to date, including $720 million internationally, has overperformed against expectations almost everywhere. It is now Paramount’s highest-grossing film of all time, having overtaken “Titanic.”

“Many theatrical markets have shown that when the product is there, the audiences will show up. But we may now be coming to a fork in the road as the new product from Hollywood has run out,” says Robert Mitchell, director of theatrical insights at Gower Street Analytics, a research and consultancy firm based in London.

Warner Bros.’ “Black Adam” does not bow until Oct. 21. “Black Panther: Wakanda Forever” is pegged for a Nov. 11 stateside release. And “Avatar: The Way of Water” opens on Dec. 16.

“This could be an opportunity for local films to plug the gap,” says Mitchell. Or it could be the start of a new box office slowdown.

Signs of local success — and by extension box office recovery — look positive in several territories, including Japan and South Korea. China has recovered from a COVID-related downturn earlier this year with local hits including “Lighting Up the Stars,” “Detectives vs Sleuths” and “Moon Man.”

In other markets, the pandemic era has increased or reinforced Hollywood’s dominance. That’s even true in France, the birthplace of cinema, which can boast diversity and auteur traditions.

This year’s French box office is dominated by U.S. blockbusters, with “Top Gun: Maverick” (launched in Cannes, no less!) in first place, followed by “Doctor Strange in the Multiverse of Madness.” There is only one local film in the top 10: “Serial (Bad) Weddings,” the third opus of the comedy franchise. “The concentration of ticket sales around U.S. blockbusters has been particularly strong in 2022, but it’s been an ongoing trend. In France, it dates back to 2016,” says Eric Marti at Comscore France.

Richard Patry, the head of France’s National Exhibitor Assn., argues that more people working from home is detrimental to luring them back to theaters. He says that when cinemas were closed, media outlets also reduced the editorial space given to film news and interviews. That coverage has not returned.

The increased dependence on Hollywood product puts exhibitors in a vulnerable position, especially in France, whose strict windowing rules led Disney to forgo a theatrical release of “Strange World.” Those same rules have caused Netflix to premiere its star-studded films at the Venice Film Festival, rather than Cannes.

“We need to work with platforms because things are changing, and these windowing rules will evolve. But platforms also need to work with us because cinemas are the best place to experience films,” says Jocelyn Bouyssy, managing director of CGR Cinemas, France’s second-largest exhibition chain.

In Korea, where locally made films have dominated for most of the past decade, there are also questions about which movies need to be seen in cinemas, given the strong streaming market there. Cannes competition film “Decision to Leave” has taken in $14.3 million in the territory, relatively low for “Oldboy” director Park Chan-wook, while “Broker” has managed $9.62 million.

“I think it will take two to three years to fully recover from the pandemic,” says leading Korean producer-director JK Youn, who also worries that distributors will be cycling through a huge backlog of delayed titles until the end of the year, slowly replenishing their coffers and only later greenlighting new pictures. Meanwhile, filmmaking talent is being lured to the wealth and immediacy of streaming. Youn himself has taken a job as head of a new TV production hub, CJ ENM Studios.

With the exception of Hong Kong, where the UA Cinemas chain collapsed, most markets have so far held on to most of their cinemas, according to Gower Street data. But the impending bankruptcy of Cineworld, a U.K.-based chain that owns Regal in the U.S., demonstrates the fragility of the exhibition sector.

“There are currently 43,000 screens in Europe and around the world. The total number of screens, in fact, increased by 5%,” says Laura Houlgatte, CEO of UNIC, a trade body representing exhibitors in Europe. She says that some chains stayed afloat through the pandemic thanks to “generous subsidies and rescue packages” from local governments.

The greater challenge comes now that COVID-related subsidy schemes have ceased and landlords have ended rental holidays, but cinema revenues haven’t caught up to pre-COVID times.

“We haven’t had bankruptcies in France, but some companies have been weakened by the crisis and are now struggling with large amounts of debt,” says Magali Valente, head of cinema at the CNC, pointing to exhibitors and distributors that are starting to repay state loans. Valente says the CNC is exploring new subsidy schemes targeting distributors.

Bouyssy, who is in the process of putting CGR Cinemas up for sale, says upgrading venues and installing premium formats may be the way forward. Box office data from Imax venues shows that they have strongly outperformed regular screens during this year’s revival.

Says Houlgatte: “Audiences are craving premium experiences, so distributors and exhibitors must look at different ways to build events around releases. It can be done by bringing filmmakers to interact with audiences, serving tea during screenings, as in the U.K., or serving drinks ahead of a screening.”

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