IMAX and other top movie theater chains will release their second-quarter earnings reports next week, and they’re expected to take a victory lap over the best business they’ve seen since the pandemic shutdown. But that windfall is set to end abruptly – more or less immediately, in fact – with no tentpole films on the release schedule for the next three months.
While it’s possible that some late summer and early fall titles will turn a profit for their studios, they are unlikely to deliver the repeated $100 million-plus openings and $300 million-plus domestic runs that theaters have enjoyed this summer. In fact, theaters may not see such a blockbuster hit until November when “Black Panther: Wakanda Forever” arrives.
There will even be weekends with no major studio releases at all, as Warner moved the Stephen King adaptation “Salem’s Lot” from Sept. 9 to next spring.
“There aren’t any films coming up after ‘Nope’ with any sort of built-in audience,” said Boxoffice editor Daniel Loria. “That means that any sort of turnout at the end of summer is going to have to come from strong marketing from studios and especially from word-of-mouth to build an audience.”
Some mid-budget offerings like Sony’s “Bullet Train” with Brad Pitt and “The Woman King” starring Viola Davis may surprise and turn a decent profit, but movie theaters will go months without a big opening weekend.
This is a downturn that the film industry has seen coming for some time now, from theater owners to studios. It’s in large part because film production worldwide is still struggling through a COVID-19 backlog. Studio insiders told TheWrap that many productions have siloed off different film crews into “pods” in keeping with COVID-19 safety protocols in order to prevent shoots from shutting down entirely should a positive case be reported. But even when one section of a production crew is forced to pause, it can slow down the timetable for a film, forcing further release delays.
But before the box office dries up, what you’ll be hearing about over the next few weeks of earnings reports will be all about the Q2 bonanza. It began with the resurgence of family moviegoing thanks to Paramount’s “Sonic the Hedgehog 2” ($190 million domestic) and DreamWorks’ “The Bad Guys” ($95.8 million domestic). That continued into a summer where the record-breaking Memorial Day weekend performance of Paramount’s “Top Gun: Maverick” ($600 million domestic) pushed several weekend totals back to pre-pandemic levels. Other blockbusters like “Jurassic World: Dominion” ($350 million dom.) and “Doctor Strange in the Multiverse of Madness ($410 million dom.) also were key contributors.
In all, Box Office Mojo reports that domestic grosses reached $2.32 billion between April 1 and June 30. While that’s still below pre-pandemic levels — Q2 2017 reached $2.7 billion while 2018 and 2019 soared above $3.25 billion thanks to “Avengers” films — it’s by far the strongest quarter the box office has seen since the pandemic began.
Through the quarter, exhibition stocks have held steady in the $14-16/share range, with share prices at Tuesday close standing at $16.02 for IMAX, $15.60 for Cinemark and $15.65 for AMC. While Wedbush Securities analyst Alicia Reese favored IMAX and Cinemark over AMC in her stock recommendations, she believes that all three companies along with other exhibitors have plenty of reason for long-term optimism.
“Moviegoers have shown that they are willing to return to theatres for quality content, and we think the possibility exists for box office to revert back to pre-pandemic levels,” Reese wrote.
But Reese also observed that the next big hurdle in the road back to normal for the box office isn’t in moviegoer interest but in the number of films studios will have to show on the big screen, and we know that isn’t looking good beyond July.
That downturn will be lessened by the strong July theaters are already enjoying, with Marvel’s “Thor: Love and Thunder” opening to $143 million while Universal/Illumination’s “Minions: The Rise of Gru” has $210 million. As those movies continue to leg out, Jordan Peele’s “Nope” is expected to have a domestic run of $120-$180 million depending on its word-of-mouth, while Warner Bros.’ “DC League of Super Pets” and Sony’s “Bullet Train” should also add around $100 million each.
And with COVID cases on the rise again in California and much of the rest of the country thanks to the more infections from the BA.5 subvariant, there’s a good chance that partial pauses and subsequent delays could plague film productions for months going forward and affect how many films make it to theaters both in the short term and possibly into 2023.
For now, Wedbush is projecting a Q3 domestic box office total of around $1.9 billion, down from Q2 but up from the $1.3 billion seen in Q1 thanks in large part to July blockbusters.
“We expect IMAX and the theaters to step up efforts at alternative content in August and September, when the release slate is lighter,” said Reese, referring to event cinema offerings like live concerts and esports events. “We don’t expect them to have a full slate of alternative content yet, but they should be on their way.”
Wedbush’s overall projection for the year sits at just under $7.8 billion, roughly 31% down from the $11.3 billion grossed in 2019. Other analytic firms, including Comscore, have projected similar annual totals in the $7 billion range.
Reese believes that it’s possible 2023 numbers get all the way back to pre-pandemic levels, but is keeping projections conservative at $8.5 billion as the number of films that studios will release next year is still unclear, and it remains to be seen what role theatrical windows and streamers will play.