Theaters Are (Still) Dying, But Theme Parks Aren’t

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Every so often, I start hoarding news stories like that damn squirrel in Dug Days. (How’s that for an obscure reference for non-Disney+ parents?) I collect story after story on the same topic, but then don’t pull the trigger and write the damn article. Why not? 

Because…I don’t want to.

Take the “future of film” which really means “the future of theatrical distribution” (or “streaming versus theatrical”). Few topics are as important, but as murky, as what lies ahead for feature film distribution. Partially, it’s because—if Covid-19 taught us anything—predicting the future is hard! As I wrote in my “What I Got Right/Wrong” article a few weeks back, I was pretty bullish on theaters heading into 2022, and yeah, I was too optimistic, so I don’t want to be wrong again. 

Worse, if I come to the conclusion that theatrical distribution may heavily retract, then I don’t want to be right either. Personally, I’m biased towards loving going to theaters. (Unlike, seemingly, many entertainment reporters, critics and columnists these days.) It isn’t a fun topic.

But we write these long articles not because they are easy, but because they are hard. And may make us look foolish. So let’s finally dive in…

Most Important Story of the Week – The Future of Film Heading into 2023

The key question heading into 2023—and since it’s February, we really have almost the entire theatrical calendar ahead of us—is whether we should be more optimistic, less optimistic, or about the same regarding the future of theatrical distribution. Are the folks predicting the “death” of theaters more right, after an uneven 2022 and disastrous 2021, than the optimists? Or has the situation genuinely improved?

Overall, it’s probably the same. Reading the major news story trends, there are definitely some bright spots—a surprising number actually—but some fairly big, worrying signs. Let’s review.

Good News: China “Ends” Their Marvel Ban

Well, here’s some good, if not ethically dubious, news. After a near theatrical blackout in 2022, China is letting Black Panther: Wakanda Forever, Ant-Man and the Wasp: Quantumania and Shazam! Fury of the Gods into their theaters. This comes after Avatar: The Way of Water had a successful run from December—despite Covid-19 lockdowns—and made $250 million at the box office. Meanwhile, China’s annual Lunar Near Year holiday—their “summer” season, for lack of a better comparison—has been doing fantastic, again despite lockdowns. 

Because it’s my nature, I do see two downsides. One I won’t discuss (politics) and one I will (business.) Basically, even if China relented in these cases, if I were a studio head, I wouldn’t bank on Chinese theatrical revenue going forward for my blockbusters. I’d leave that line item in my greenlight models as a “nice to have”, not required to break even or achieve profitability.

Good News: Sundance Had Some Big Sales

Let’s keep the positivity rolling with a second good news story.

In this case, Sundance had a number of films sell for eight or seven figures, including Theater Camp, Fair Play, Flora and Son and Talk To Me. These films sold to multiple different types of buyers, including the streamers and theatrical distributors. 

That said, biggest worry I saw was that, despite the headline sales, the total volume of sales at Sundance (meaning unsold films) may have been high.

Good News: The Trend Seems to Be Reversing on Skipping Theatrical Windows

A third story with good news in a row! Do you feel the creeping optimism?

January also featured a few news stories about films going from streaming-to-theatrical, not the other way. This includes one Hulu-intended, 20th Century film (The Boogeyman) and an Amazon/MGM title getting a theatrical date instead of a Prime-Video-only run. (The film is Air from Ben Affleck, and even though I don’t think it was ever intended for streaming only, it’s still notable that it’s going to theaters.) Heck, even Apple TV+ gave Spirited a quiet theatrical run last December!

Related, the studios look like they are returning to theaters. As The Bulwark pointed out last fall, the problem wasn’t customers seeing films, but studios providing inventory. Fortunately, the inventory, in the near term, seems stronger than last year; as The Quorum pointed out, we have a packed March coming up. That’s a great sign and much better than 2022. (The mixed sign? As The-Numbers points out, September and October still look light.)

Mixed News: The Numbers 2023 Forecast: $7.5 to 8.8 billion in domestic box office.

When I first started writing, I had this item pegged as a “Good news story” too. Can you imagine, four good news stories about theaters? Alas, digging in, I’m a little more pessimistic.

See, a lot of commentary on theaters relies on anecdotes or one-off stories. I prefer data-driven models. Most times, I’ll take a models’ forecast over folks’ opinions, since they have data to support them. The-Numbers has my favorite, publicly-available model to forecast theatrical revenue in America. The-Numbers headline—honestly, I waited until they released their model to write this column—is that they forecast a jump from $7.5 billion in domestic theatrical revenue to $8.8 billion. 

That’s good! Now, it’s far off the peak in either attendance or total revenue from past years…

…but it’s also not as low as “death” would imply. That said, their “annual market” forecast still has projections at $7.5 billion U.S. box office revenue, which would be flat growth and likely mean that theatrical revenue won’t ever eclipse $10 billion again. 

(Personally, I think it’s unlikely we’ll see $12 billion in theatrical revenue in inflation adjusted terms—though never say never—but getting back to $10 billion would be a great number.)

Now, due to over-leveraged and over-consolidated theater chains, some may not be able to survive a 20% contraction. But that means that while theater chains may disappear, theatrical distribution still has a market.

On to the bad news…

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The Entertainment Strategy Guy

The Entertainment Strategy Guy

Former strategy and business development guy at a major streaming company. But I like writing more than sending email, so I launched this website to share what I know.


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