Is Covid the Crux of Cinema?
It’s hard to compete with the joy you get when you sit down in the best situated seat in the theatre to watch the latest blockbuster movie. The smell of the buttery popcorn, a soda in the cup holder, and the previews just beginning; there is nothing quite like it. However, this feeling alone has not been able to save the film industry from shifting norms. There are a variety of reasons behind the declining yearly per capita cinema admissions, from decreasing theatrical windows to the growing acceptance of steaming services by major production companies. Warner Bros is one of the first major film production company to announce they will stream all of their 2021 moves at the same time they hit theatres.
Before jumping into the effects the Coronavirus has inflicted on the film industry, let's view the health of the industry as a whole. Although the U.S./Canada box offices have experienced a slight upwards trend in box office revenue, they have been slowly decreasing the per capita admissions.
With this being said there is still a lot of demand for movie theatres and this slight decline hasn't been detrimental to revenue generation. But like many other industries, the film industry and especially cinemas have been hit hard by the pandemic. With box office earnings going from just over $11 billion USD in 2019 to $2 billion USD in 2020. As we (hopefully) approach the back nine of this pandemic and things begin to open up, the question becomes if Cinema's will be able to recover, or has COVID just accelerated the inevitable end of the Box Office golden age.
Covid-19 Impact on the Film Industry
1. Increased Streaming and Decreased Screenings
With nationwide lockdowns, even frequent moviegoers are unable or unwilling to attend the cinema. In contrast the streaming service market has grown by 37% in 2020. The largest growth has been obtained by Disney+ after hitting 73 million subscribers in its first year. With Netflix also increasing the number of paid subscribers by over 16 million since the beginning of the pandemic. Aside from these two streaming giants, a variety of others have increased their subscription base with projected increases continuing into 2021. Going forward, will theatres be able to grab market share back from these streaming services?
2. Delayed Premiere Times
With production costs for major Hollywood movies being in the hundreds of millions, they rely heavily on box office sales to recoup these costs. For example, the movie Avatar was released in 2009 and had a production cost of roughly $387 million and received $2.029 billion at the international box-office. In comparison, the highly anticipated movie Tenet was released in 2020 with a production budget of $205 million but only made $363 million at the box-office. Naturally, this reduction is highly correlated to the reduced ability to attend movies due to COVID-19.
This underperformance of movies has resulted in many major studios to postpone release dates In attempt to maximize box office revenue. Movies like Black Widow, Godzilla vs Kong and F9 all rescheduled or postponed release dates. As the pandemic rages on, will these movies continue to postpone their release dates, or will they decide to focus on streaming channels. If they choose to do so, this may be the next step in movies deciding to release in the box-office and on streaming channels at the same time, further hurting Cinemas in a post-pandemic world.
3. Production Delays
To no surprise the pandemic has also increased the capital required to finance a big blockbuster movie. With production companies needing to supply proper safety equipment, enforce various health and safety protocols, and conduct regular testing; the price of being on set has increased drastically. Precautions put in place because of the coronavirus have caused production crew to push back filming because members of the cast or crew testing positive.
For example, let’s look at the production of Jurassic World: Dominion. The movie has had to stop filming due to a number of members on the film crew testing positive for Coronavirus. Resulting strict quarantines of the cast and crew and a required three Covid tests a week, the budget of the film has already increase by 3 million dollars. Even after the first production shutdown due to positive cases it was again halted in early march 2020 due to the surging cases. This reoccurring trend looks like it will dominate the film industry in the near future, delaying anticipated films.
Without a doubt going to the cinema is an amazing feeling, but with increasing cinema prices, decreasing cinema availability, and an increasing revenue potential from streaming services for blockbuster films; it is not out of the cards to witness a industry shift away from theatres. It remains to be seen how the film industry will react post pandemic. Will new movies go straight to streaming services? Or will Cinema's be able to recapture the market share they lost during the pandemic? In the end, COVID-19 may have accelerated the inevitable crux of Cinemas, and younger generations might end up seeing cinemas the same way current ones see Blockbuster Video.