It’s been a pretty good summer at the movie theater: Inside Out 2 and Deadpool & Wolverine have been smash hits, generating a combined $2.5 billion in global box office for distributor Walt Disney Corp. Despicable Me 4 has pulled in a most un-despicable $754 million, while Bad Boys: Ride or Die were good enough for $398 million, and Twisters spun up $274 million. Not a bad blockbuster summer indeed.
That’s great news in particular for Bob Iger’s Mouse House, which fended off a rugged proxy battle in the spring and perhaps is seeing a turnaround in its fortunes after three difficult years (though share prices, down nearly 10 percent since April 2, don’t reflect it).
Inside Out 2’s $1.6 billion in global box office set an all-time mark for an animated film. And Deadpool & Wolverine has wisecracked and whacked its way to $824 million in its first 10 days of release. For an R-rated Marvel film, that, too, set records.
And there’s plenty for other studios to smile about too. It’s about time, after a pandemic that killed off several small theater chains, put others in bankruptcy, and has left theaters struggling ever since to get people to come back regularly.
So, is the box office all better, back to something like the pre-pandemic “normal,” which from 2015 to 2019 annually topped $11 billion in domestic grosses? Or are theaters and studios still in “Survive Until 2025” mode, the sardonic motto bouncing around a struggling Hollywood for months?
Certainly, after a first half of the year with too few highlights (Dune Part Two, Kung Fu Panda 4, Godzilla x Kong: The New Empire), the mere existence of more than two big hits during haymaker season is reason for joy, certainly compared to last year’s Barbenheimer and Not Much Else Summer.
But close observers may notice one thing all those 2024 titles have in common (besides a hefty box office take): they’re sequels, prequels or other extensions of previous prominent films. There’s not an original project in the lot.
Maybe that’s the collateral cost of doing business with nine-figure projects that require equally gargantuan marketing budgets. But as Hollywood continues to strip-mine its historic hits, it’s worth wondering whether that will be enough to secure its uncertain future.
Analysts at research firm MoffettNathanson released a note about Cinemark on Friday that gave the nation’s third-largest cinema chain high marks for navigating the last few years of difficult road. The analysts said they expect that sterling stewardship to continue. But more broadly, the analysts remain skeptical that audiences are ready to return to prolific pre-pandemic levels even by next year.
“Audiences still want to see films in theaters, but theaters and films more generally face more competition than ever for audience attention, and viewers today are also far more comfortable now waiting to watch a movie at home,” wrote the MoffettNathanson analysts led by Robert Fishman.
That includes the many, many fans of the $181 billion video-game industry, and the tens of millions of viewers of vast on-demand libraries of films, TV series, and more on streaming services both subscription and free. Social media, such as YouTube and TikTok, vacuum up plenty of free time too, for both creators and consumers.
Increasingly, to wedge potential audiences out of their other interests, a film needs to be a sure-fire hit, from a known property. That’s one lesson for studios, but ensures that severe sequelitis will continue to infect the corpus theatricum.
Even a super-sized sequel isn’t a guarantee of success, as demonstrated by expensive whiffs this year such as Furiosa: A Mad Max Saga ($172 million globally) and The Fall Guy ($178 million globally, though technically, based on an old TV show).
Worse for the exhibitors, underperforming films from some studios are heading to streaming as quickly as 17 days after their debut, something that needs to change, the entertainment-technology consultant and writer Matthew Ball suggested in a lengthy essay released in late June, What a Century (Plus a Pandemic) Does to Moviegoing and Why It Matters.
“While rapid (premium video-on-demand) windows have helped some money-losing films recover their investments, this model probably just trains audiences to skip uncertain releases because they might be available at home in three weeks anyway,” Ball wrote.
Ball, who told me in a recent interview that he’s writing a sequel (of course), tracks the first evidence of declining film viewership to the early 2000s, long before video games, streaming services, YouTube and TikTok existed.
People are going to fewer movies, and have been for a very long while, he said. The declines have been covered by increasing ticket prices that covered the declining number of tickets sold. And increasingly, most attendance is focused on just a few mega-hits, which individually can soak up 5 to 10 percent of the entire year’s audience total. Winners take most.
“In 2024, the domestic box office will be in its 22nd year of sustained decline,” Ball wrote. “And due to the pandemic, audiences are behaving as though they’re between 32 to 37 years into this decline. Fewer than two thirds of Americans still go to the movies, and on average, they will purchase just about 3 tickets annually (hence the average American buying about 2).”
The good results for this summer’s hits encouraged MoffettNathanson analysts to raise their estimate for 2024 total domestic box office by another $200 million, to $8.3 billion. That’s still down about 27 percent from those halcyon late ‘Teens years. At least the MoffettNathanson crew bumped up Cinemark’s projected 2024 revenues, and its target price (by $2, to $21 a share), but even there, the analysts left their Cinemark stock rating at “Neutral,” their equivalent of Hold.
And though 2025’s releaser schedule features a lot more high-profile films that might break through, “We maintain our 2025 box office estimate of $9.5 billion, even though we acknowledge that continued strong momentum from recent hits could lead to some more upside.”
In other words, maybe the recent big hits will entice some audiences back into the habit of going to movies despite all the many other options for their leisure time. But the competition is stiffer than ever, and a sudden reversal of a two-decade-old trend is not highly likely.
Realistically, while Ball has a few suggestions to improve the movie-going experience (far fewer trailers, which get released online anyway; more “relaxed decorum” screenings like those with last year’s hit Taylor Swift Eras tour movie), the business is probably fundamentally different, and probably permanently.
In that regard, movie-going is going through a problematic paradigm shift not much different from that other Hollywood staple: the cable bundle. The bundle is also eroding, at an accelerating rate, even as repeated price hikes try to extract more dollars from remaining customers. Charging fewer people more and more typically is not a formula for real growth, for either cable television or theater-going.
The next question is what the struggling Hollywood studios will do about it, if anything, as they downsize, and once again ponder mergers, partnerships and other measures. Maybe they should just go catch a show.
