Like all other industries, the theatrical industry is in uncharted territory right now. Major global crisis, overloaded emergency services, quarantines: this feels like a Hollywood movie. Can we have a happy ending? A story does not write itself. It is up to our industry to work together and come up with one. Here are our thoughts.
First of all, where are we now? The closure of cinemas, at a global scale is something we have never experienced before. The graph (below) gives us a good idea of the scale of the problem, on the international side of the market. Data from our partners at Comscore Movies. Our sample includes cinemas that typically gross 67% of the international box office and shows the count of cinemas with grosses reported to Comscore Movies, by day, in 2020.
This graph will not come as a surprise to industry executives or anyone who has been following the news the past few weeks. And it will get worse before it gets better.
The big question right now is “What happens the day after?”, when we get the all clear and the governments allow the industry to return to normal operation.
As an industry, we have the following 5 key questions to answer:
- Are our cinema-goers willing to go to the cinema?
- Are our cinema-goers financially able to pay for a cinema visit?
- How long will it take exhibitors and their suppliers to get the cinemas ready?
- When will the marketing campaigns for new releases actually start?
- And last but not least: which major release will go first?
The answer to the first question pretty much depends on the resolution of the COVID-19 pandemic. We can use China and, at a later stage, Italy as examples that allow us to fully understand how the population is going to return to social gatherings.
The second question largely depends on the duration of the crisis and the government support measures, but the short answer is that many will be in financial hardship and while they would really appreciate the escapism our industry offers, they may not be able to afford it.
The third question is more challenging, as it depends on a number of different companies operating in harmony to create the cinema experience we all take for granted. We have to stoically accept that some companies could go out of business and some may operate at reduced capacity for a few weeks. Some cinema chains may merge and this may take time too.
Marketing campaigns take time to execute. Depending on the film, these may take 4-8 weeks or even longer. We expect distributors to be ready to start their campaigns, as soon as the situation clears and release dates are re-set.
Also, from a global perspective, COVID-19 has spread at different rates and governments are using different strategies. This means that the “All Clear” message will come at different times in different countries. Global blockbusters may have to wait until 80%, in terms of box office, of the major theatrical markets open for business and some smaller titles have tested the waters.
Realistically, we expect most $1B+ blockbusters to come at least 6 weeks after the last major territory has opened for business.
Now, this creates a big issue. With the above challenges in mind, how are we going to re-ignite the global theatrical market?
There are going to be many initiatives that will focus on re-igniting the markets, but we believe an answer is a cinema practice that has been going on for the past 35 years in France and it is operated by the FNCF (Fédération Nationale des Cinémas Français). Every year, there is a week, called Fête du cinéma, where, for a number of days, cinema-goers can go to the cinema for a very reduced price. This practice drives millions of viewers back to the cinema because of the reduced prices, gets eyeballs on trailers of upcoming titles and gets everyone excited about the cinema experience. Other countries have similar schemes in place. More information on Fête du cinéma here.
To make this effective, this initiative should be global and, from a practical perspective, it needs to last for 4 weeks. A 4-week period will give the distributors time to launch their marketing campaigns for the first proper releases and it will keep cinemas full in the mean time. We can use titles from the first quarter of 2020, with a focus on the titles that did not get a proper release just before the cinema closures and we can even include new titles that were launched on VOD during this period.
Organising such a global initiative would require coordination between exhibition and distribution. Studios and local distributors, major chains and independents, industry and government bodies should work together to make such an initiative a success.
We are working on a number of analyses at the moment and we will be releasing interesting pieces of our work soon.
Stay safe and let’s all work together to bring our industry back.
