In response to the COVID-19 pandemic and its catastrophic effect on cinemas worldwide (less than 1% of global cinemas are currently open), Gower Street developed its 5-stage Blueprint To Recovery. This proposed key markers for how the movie industry might measure the progress of a return to normal levels of business once re-opening could occur.
The outlined stages provoked a lot of discussion within the industry, with distributors, exhibitors and service providers all asking for more information about the specific levels for each market. Last week Gower Street answered those questions by introducing key marker boxes to each market-view page of our international Road To Recovery report and state-by-state in our newly-launched domestic Road To Recovery report (see reports section).
Now that the markers have been identified we wanted to share the maths behind them. The aim of this article is to go into more depth about how the 5-stages are calculated, in a straight-forward way, that provides a better understanding of how we intend to track the ascent back to normality within the global theatrical industry.
For the purpose of this article, we will focus on just one territory (UK & Ireland) to explain each stage in the same manner. However, the same methodology is applied to all territories within our Road To Recovery report.
Stage 1 – Open Day
Open day, when a significant majority of the most prolific cinemas are open again and the market can start to see a reasonable return to capacity. We define this as the cinemas that generate 80% of market share.
2019 yearly cume * 0.8 = 80% market share
Once we have the market share figure, we can order the theaters by 2019 gross and add them up until we get to the 80% market share. For UK/Ireland this gives us a number around the £1.1 billion mark. In the table below, we have illustrated the process using false numbers.
By doing this we can find the fewest number of cinemas that would need to be open to generate 80% of the box office on a standard year and we can infer that this number would be required to achieve a standard ‘Open Day’.
Stage 2 – Base Day
At stage 2, base day, we want to track the lowest grossing day over the past two years, but crucially it needs to pass stage 1, in this case 349 cinemas open. These criteria are essential as, without removing invalid days, anomalies such as religious holidays would skew the numbers. In the example of UK & Ireland, Christmas Day is the lowest day over the last two years but as there were only 45 cinemas open it is not an accurate representation of the market.
Stage 3 – Base Week
Turning our attention now to tracking weeks rather than days, we are measuring the levels at which we start to see a return to the norm and a base with which the cinema industry can build upon. To find our lowest week in the last two years, we firstly must check that every day within that week meets the stage 1 criteria, it’s a crucial part of the Blueprint To Recovery and we need to ensure we are comparing all weeks evenly. Once we know that every day in a seven-day week surpasses the threshold number of cinemas to establish base week we can simply find the lowest total week within the last 2 years. By plotting the weeks of the year against their total box office we can clearly see a dip in which the weekly total box office reaches its lowest point. It is here where we have a base week to build from.
Stage 4 – Material Week
The material week is the point at which we reach a weekly total equal to that of the median of the last two years. When calculating the median, we can no longer plot the data chronologically, instead the clearest way to visualize the data is to order it by the size of the values. The median value, in short, is the ‘middle’ of a sorted list of numbers. We tend to favour the median over the mean as in film there are often ‘anomalies’; there are weeks that massively surpass expectations. In the past two years we’ve had record-breaking days, weeks, months. By using the median rather than the mean we can avoid skewing expectations and keep within what is likely rather than what is possible.
In our case, if we have 104 weeks in our 2-year time-frame (minus the two weeks that had invalid days within them, see step 2) to find the middle value we simply add 1 and divide by 2.
(102+1)/2 = 51.5
As there are an even number of values, we are looking for the number that lies between the 51st and 52nd highest value.
When plotting the weekly totals in a density plot, we can see how the weekly totals are distributed. There is a high level of concentration around £22 million and there is a longer tail towards the end of the range. To find the median of a density plot, we simply have to plot a line right in the middle of the curve, we can see from just eyeballing the diagram that the area under the curve to the left and right of stage 4 is the same, hence we have our ‘middle’ value.
Stage 5 – Recovery Week
The recovery week is the stage at which we start to see a return to the pre-COVID-19 habits of cinemagoers. We define it as the point at which the weekly box office is performing on par with a week in the top quartile of weekly business over the past two years. The top quartile is any week that is in the top 75% of the data.
To illustrate this, we can turn once again to our density plot diagram. When locating the median, we can simply find the middle value of the diagram, whereas with the top quartile we want to find the point at which we reach 75% of the area.
If we look to the orange boxplot below the density curve. That orange box illustrates the inter-quartile range of the data, beginning with quartile 1 (25%) and ending with quartile 3 (75%) with the median (50%) in between. We can see that at stage 5 a week with grosses of >£29.43 million would surpass 75% of weeks in the last two years. This would be a clear sign that the industry has recovered and health fears over cinema visits are no longer prevalent.
In summary, the 5-Stage Blueprint To Recovery will look different for each territory. Each has its own milestones, but the calculations all go through the same process with the same testing to ensure we are setting realistic expectations and helping to keep the film industry informed about where each territory is on it’s journey back to full strength.
If you’d like any more information on the 5 stages you can read our article on the Domestic 5-stages blueprint or download our Road To Recovery reports to see the milestones for each international territory, US state, and Canadian province.