How to Fix Movie Theaters’ Supply Problem

Maybe Tom Cruise couldn’t save the films single-handedly after all.

Despite a summer marked by the soaring theatrical performance of Cruise’s long-delayed sequel Top Gun: Maverick, the world’s second-largest exhibitor and owner of Regal Cinemas, Cineworld Group, is reportedly preparing to file for bankruptcy.

How did this happen after a summer that also produced hits like “Jurassic World Dominion”, “Doctor Strange 2” and “Minions: The Rise of Gru” in addition to “Maverick”? In fact, banner performances of titles like Maverick have helped mask the looming crisis for the theater business.

In recent weeks, cinema owners have expressed concern about the lack of new releases in the coming months. But they should give even more thought to what will happen next year.

Plenty of potential blockbusters are in the pipeline for 2023, from Marvel’s third Guardians of the Galaxy film, to the long-awaited Indiana Jones 5, to Cruise’s next feat of death-defying stunt work, Mission: Impossible – Dead Reckoning Part. One.” However, the total number of films released will remain below pre-pandemic levels, which is a worrying sign for the health of the industry.

Currently, 40 theatrical releases are planned in North America in the first six months of 2023. That’s down 37 percent from the same period in 2019 — the most recent year unaffected by the pandemic — when 63 broad releases hit U.S. theaters, according to Comscore. (In this context, “wide release” refers to films that have been played in at least 1,000 domestic theaters.)

Of course, more films could be added to the schedule in the coming months, but it’s unlikely that many major releases not currently on the schedule will ultimately be released in the first half of 2023. That means next year will look awfully much like this year: In the first six months of 2022, only 41 widely distributed films were produced.

This is bad news for cinema owners who are increasingly facing periods of feasting or starvation due to the number of tentpole films released monthly. This fall is a particularly blockbuster dead zone, with the next big tent poles, Warner Bros.’ Supervillain storyline Black Adam and Marvel’s Black Panther: Wakanda Forever, due out in late October and early November, respectively.

In the meantime, of course, there will be films, some of which have a good chance of catching on through strong word of mouth. But a closer look at the year’s box office numbers reveals more cause for concern: a case of movie income inequality, if you will.

The top 10 most successful films accounted for 64 percent of the domestic box office this summer; “Maverick” alone accounted for more than a fifth. Tentpoles, of course, reinforced their overwhelming dominance at the box office even before the pandemic.

But the gap between top earners and the rest of the table has widened significantly in the COVID era. In the summer of 2019 (from the first Friday in May through Labor Day weekend), the top 10 films accounted for just 53 percent of the total box office; By the end of the year, they made up less than 40 percent.

With fewer films overall and less money pouring into the box office, each individual film carries more weight — a weight that some films are simply ill-equipped to carry. A research note from Cowen last month bemoaned “the almost complete non-performance of attempted alternative programs like ‘Firestarter’ and ‘Men'” and concluded: “It’s not clear that adding more films to the release line would make the overall box terrible.” would complement office.”

However, this analysis ignores the fact that mid-budget hits still exist. This year’s “Elvis”, “The Lost City” and “Nope” each cost between $65 and $85 million and have all grossed more than $100 million domestically. Even Blumhouse’s latest low-budget horror play The Black Phone grossed nearly $90 million.

Not for nothing did “Firestarter” earn a 10 percent “Fresh” rating on Rotten Tomatoes while those four films landed in the high 70’s to low 80’s. Audiences will turn up for counter-programming if the films are good or have a notable star (like Sandra Bullock in Lost City or Elvis with Tom Hanks).

In fact, pumping more movies into theaters could do very well for the box office – assuming they’re the right movies. And there are movies that drop streaming, those would be just the right movies.

One that’s been touted a lot lately is “Prey,” the latest addition to the “Predator” franchise, which scored Hulu’s biggest premiere movie or TV show of all time. Horror, especially IP-based horror, has performed strongly even in the current box office climate; Check out the new January entry “Scream” which grossed over $81 million.

Disney’s calculus in sending “Prey” directly to Hulu was reportedly to prevent the film from also streaming on HBO Max under the terms of an old Fox release deal. This amounts to cutting off a potentially lucrative revenue stream out of defiance. How much financial value will Prey really generate just on Hulu?

Not to mention Netflix, which could open up a new revenue stream with its own plays. Star-driven movies like The Gray Man, the upcoming Knives Out sequel Glass Onion, and even Adam Sandler’s well-reviewed Hustle, which released in June, would have theatrical potential, if Netflix could bother, seriously big get out -screen shares. (A24’s “Uncut Gems” proved that audiences still turn up for Sandler when the material is good.)

And they should be worried. As legacy revenue streams like home video and TV syndication dry up, and Wall Street becomes increasingly wary of streaming, studios should reconsider their movie release strategies. At this point, forcing theaters to keep fighting for survival is not doing anyone any favors.