Cresting the Covid Hill – As Many Films are Moving Earlier in the Year for the First Time in This Pandemic – The Most Important Story of the Week – 5 Mar 21

When the biggest story of the week is essentially the same story as the previous week–Paramount+ launched to customers this week after they announced specifics at the previous week’s investor’s day–then you know it is a quiet week for news. Despite this, dare I say this week had some stories that could be described as “fun”? Not hugely important, but fun. 

But one story was important. This week may mark the week when the bleeding was stanched for theaters: as many films moved earlier in the release calendar as moved backwards. Since we haven’t written about movies in a pinch, with all the latest shuffling, it is the “story of the week”. 

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Most Important Story of the Week & Covid-19 Tracker – Fast 9 Moves From May to June

If I have a crutch, it is quoting my second favorite author too often. Several times in the life of this website, I’ve slipped in a Tale of Two Cities reference to explain a current strategy or trend. You know the quote–”the best of times and the worst of times”–but it’s such a terrific opening to a book, it’s worth quoting the first paragraph in full:

It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us, we were all going direct to Heaven, we were all going direct the other way—in short, the period was so far like the present period, that some of its noisiest authorities insisted on its being received, for good or for evil, in the superlative degree of comparison only.”

Dickens, writing in Victorian England about England and France of seventy years before, is basically saying that all time periods have this universal feeling that things are the worst and best at the same time. And guess what?

That quote perfectly describes how we feel right now!

Many Americans will tell you that because of the pandemic, lockdowns, racial injustice, economic inequality, culture wars, and countless other issues, we are living in the worst of times. Both sides of the aisle will say this. The numerically inclined among us, though, would point out that, despite the pandemic, more folks around the world live longer, safer, richer and better lives than ever before. Even the pandemic, for all its tragedy, could be hopeful: a deadly new virus was cured in less than a year with a revolutionary vaccine process, which force a medical breakthrough that could lead to curing future diseases, like malaria.

(Also, how apt is the phrase, the “epoch of believe and the epoch of incredulity”, for our current media consumption/landscape?)

Enough English literature tangents. Theaters went through their own version of the “best of times/the worst of times” this week. After describing the latest movement in theatrical dates, I’ll update the latest Covid-19 vaccination rates data to update my “reopening hypothesis”. 

Part 1: For the first time, films are moving earlier in the calendar.

Here is that quick summary of the news:

– Sony’s Peter Rabbit sequel moved up to May 14th.
A Quiet Place 2 moved up to Memorial Day weekend, a date it now shares with Disney’s Cruella

These offset the big headline, which is that Fast 9 moved back to June, and that pushed the next Minions film even further backwards in the timeline.

Overall, if you’re a theater or theater chain, you have to feel more and more confident that distribution will be almost entirely back by May. President Biden recently announced enough vaccine doses for every American adult by the end of May and that likely means theaters will show films to almost fully-vaccinated audiences. 

Of course, folks read a column like this for hot takes predicting the future. Reading the trade leaves, my gut is that more shuffling is due to come, but don’t ask me when or how. Black Widow could still move, although more likely they’ll add Premiere Access to the distribution if they don’t think there are enough open theaters at full capacity. Some smaller films could still move up, but most films will likely stay where they are. In all, I don’t feel confident predicting specific moves because there are too many variables.

But I am confident that the vaccine roll out will change things.

Part 2: The vaccine roll out continues to reinforce my “reopening hypothesis”

In case you haven’t read my very, very long article forecasting reopening of society, here’s my core thesis on reopening in America:

If current lockdowns can drive down cases…
Which will drive down hospitalizations/deaths…
While the United States is vaccinating the highest-risk groups…
And if the pace of vaccination is increasing…
Since vaccines prevent deaths and hospitalization…

Then once we get the current hospitalization rate down, it will stay down until the next flu season (next November or December). If hospitalizations are down, deaths will stay down as well.

This will allow states to reopen, including theaters.

Let’s go part by part, rating each part of the thesis with a “more confident”, “less confident” or “neutral” status.

Current lockdowns are driving down cases → Neutral

This was trending towards strengthening until a few states ended mask and indoor mandates this week. Through February and into March, cases have continued to drop in Los Angeles and America broadly. Most experts believe we should avoid indoor activities with unvaccinated people, especially at full capacity, for a few more weeks to fully drive the number of cases downward. (This does not apply to outdoor activity.) But ending mandates could reverse the progress so far. Thus, it’s tough to predict that cases will continue declining as fast as they have. (We are also seeing a decline in testing, which we need to stay flat to catch as many cases of community spread as possible.)

Hospitalizations and deaths are declining → Strengthened.

Deaths have always lagged cases and hospitalizations. Both of which are still higher than our previous lows, but declining week-over-week. Crucially, where the initial and summer waves were concentrated by regions, the winter wave was a national event, so each region is arguably doing better than the previous waves. Also, while some visualizations showed spikes in death’s last week, this was actually bittersweet news. Deaths have declined so much that big states can review and update their mortality figures, like Texas, Virginia, Los Angeles, for example. In other words, the peak in fatalities in December and January was even higher than we realized at the time, but that means the current death toll is lower than the figures indicate.

Vaccinating the highest risk groups → Strengthened

The CDC tracks vaccinations by age, and the most vulnerable groups are the most vaccinated. There are hurdles, especially in underserved communities, but we are vaccinating older populations who are most at risk:

Screen Shot 2021-03-05 at 12.36.18 PM

Continue to increase vaccine distributions → Strengthened.

A week ago, a winter storm essentially slowed down all US vaccinations. That would have kept this rating at neutral last week.

But we’ve rebounded. We’ve almost returned to the linear growth we were at before the winter freeze. With Johnson & Johnson being approved and essentially a double dose of vaccines coming last week, America could, tentatively, pass the 3 million vaccinations per day threshold next week or the week after, having passed the 2 million threshold this week. 

Screen Shot 2021-03-05 at 12.38.01 PM

Vaccinations prevent deaths and hospitalizations –> Strengthened. 

All the data–which is becoming voluminous–indicates that vaccinations prevent deaths in high risk age groups, vaccine efficacy begins within 2 weeks of the first dose, and that vaccines prevent transmission. I can’t undersell just how well the vaccines work and how being vaccinated will allow people to return to normal life. This isn’t a selective reading of the data: there are mountains of evidence now that the vaccines are incredibly effective.

Add It Up: We’re on track to “return to normal” in the springtime

There are too many variables to put a specific month or week date on it, but the trendlines are growing. As I mentioned before, the main driver or reopenings will likely be the decline in the death rate.  If deaths go down, and stay down, even if cases rise later, society won’t return to lockdowns. 

Consider it like this: even if cases peaked at the same height as they did in the winter, the peak in deaths will likely be 44% lower, because 55% of the population who are age 65 and older are now vaccinated. 

Screen Shot 2021-03-05 at 1.27.01 PM

If we continue to vaccinate the 65+ group–and those aged 50-65–then the peak in deaths will be even lower. This is where we are as of this moment…in two weeks the deaths prevented will be even higher.

The other reopening criteria concerns the state and local guidelines. The news this week was that New York had lowered its case level to a point where theaters could reopen. San Francisco as well. This leaves Los Angeles as the holdout. According to California’s metrics, Los Angeles was at a “7.2 adjusted case load” and it needs to be below 7 for two weeks to reopen theaters at 25% capacity. If cases continue on their current trends in Los Angeles–a huge if–they’ll join SF and NY soon. 

Other Theatrical Stories – Tenet Finally Premieres in New York

Frankly, I wasn’t looking forward to my first film in theaters being Godzilla vs King Kong. But Tenet? Oh yeah, I’m down for that! Theaters in Los Angeles, San Francisco, New York and other big cities may have a surprising amount of inventory, which wouldn’t have been the case back in the fall, and this could help both theaters and studios confidently reopen.

Other Theatrical Stories – Alamo Drafthouse Bankruptcy

To finish on another depressing note, a theater chain has been claimed by the pandemic. Alamo Drafthouse declared bankruptcy, while expressing optimism for the rebound in customer demand. This filing may be more of a legal maneuver, as the chain says they will be able to continue operations, just with new financing/ownership. Still, they did have to declare bankruptcy.

Other Contenders for Most Important Story

Kevin Mayer Joins DAZN Sports Streamer

It didn’t take long for Kevin Mayer to end up at another streamer. After leaving Disney for Tiktok, then leaving in a political brouhaha, Mayer has ended up as chairman of DAZN, the sports streamer trying to vie with ESPN and FuboTV for future sports streaming glory. This is a fine move, but I would note that Mayer is known for deal-making–that was his key role at Disney–and this likely increases the odds that DAZN is involved in future deals, either acquiring or being acquired. (Given its size, I’d guess the latter.)

BBC/ITV/Channel Four May Team Up..and That’s Smart

A few weeks back, I stumbled on this fun look at European TV revenue from one of my favorite analyst groups, Ampere Analysis:

tvgroup-e1610617522572

The size of Netflix’s revenue growth is impressive, though in context it’s smaller than I would have guessed. (And I’d guess many others think it’s higher, given huge headlines like the one above.) But those revenue numbers can explain this fun story that British broadcasters are merging their free to view applications. Something along the lines of the enemy of my enemy is my friend, but it could be a compelling offering for customers. 

Ion TV/Scripps is a Masterclass in Strategy

I respect great strategy, and Scripps (with some private equity help) show us how it’s done. (Not that there is a lot to love with PE, but they can make sharp business moves.) In this case, Scripps sold it’s channels to Discovery at nearly the height of their value. Now, Scripps is going to launch new cable channels through Ion TV because American rules state that cable providers must carry broadcast channels, with certain restrictions. Toss in the ability to sell linear channels to the FASTs in their boom, and this just smart strategy. 

Twitter’s Publishing Moves

I write long threads on Twitter, and now Twitter is constantly letting me know that they have a newsletter product. That and everyone is worked up that folks may start charging for access to tweets. Frankly, everyone is charging for content nowadays so this isn’t surprising. But will it work? I’m less sure. For as influential as Twitter is, most Americans don’t consume their news through it and those who do usually soon feel like it’s bad for them. (I certainly do.) But given that their advertising revenue just isn’t cutting it, this move makes sense.

Apple TV Comes to Google Chromecast

Another round in the “distribution” wars, this time with Apple TV coming to Google’s Chromecast, which is a phrase that would have made no sense ten years ago. It makes crucial sense for Apple. Most folks have Apple devices of some sort, but they don’t necessarily watch TV through Apple. So getting more distribution for their app make will help justify the content investments.

  1. […] the past, I’ve used Uno games, climbing a hill, and going into bankruptcy as analogies for theaters and Covid-19. But this might be the most […]

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