This week marks the two-year anniversary of China’s closure, just ahead of the Chinese New Year holiday, in 2020. On January 23, 2020, China was the first market forced to close cinemas due to the COVID-19 outbreak.
In March, the spread of the virus hit a new and devastating gear, rushing on to the daily global agenda and into the lives of the whole of humanity. On March 11 the World Health Organization classified it a pandemic. By March 21 less than 20% of the global theaters that had been open at the 2020 peak remained in operation, by April 5 this number had dropped below 1%.
Since COVID-19 began to impact the theatrical industry a combined global box office of approximately $50 billion has been lost! (Compared to an average of pre-pandemic business 2017-2019).
However, after hitting rock bottom in the first half of 2020, the global theatrical box office is recovering at an increasing speed and value. A new impressive high had been reached at the end of 2021, with pre-pandemic box office tiers been achieved.
While contracting a bit at the beginning of 2022, the recovery continues a pattern of business climbing back up. It is not a linear growth but a constant development to a higher level, which goes up and down with increasing bases and peaks.
The progress is highlighted in the graph below. It displays the number of tracked territories reaching individual critical performance levels in each play-week as dots. It covers the full two years from the start of the pandemic influence on the theatrical market, January 17, 2020 until January 13, 2022.
5-Stage Blueprint To Recovery
In the time of crisis, it has never been more important to identify and understand the signs of potential recovery. It is also vital to track sustainability of business in markets that have achieved important recovery benchmarks. With this in mind Gower Street created a considered 5-Stage blueprint to recovery, marking five key and identifiable stages to track the recovery.
In this article we focus on the play-week based Stages 3 to 5 applied on a territory level for analysing the global theatrical recovery. Stage 3 marks the Base Week, where box office is equal to the lowest week’s box office result from the two pre-pandemic year’s (2018-2019). Stage 4 is the Material Week, equivalent to a median business play-week of 2018-2019. The highest Stage 5 target, the Recovery Week, corresponds to a performance in the top quartile of weekly box office in the two pre-pandemic year’s.
This analysis looks at the 30 territories we track in our weekly State of The Market report: Domestic, China, UK/Ireland, France, Germany, Russia, Spain, Italy, Austria, Netherlands, Portugal, South Africa, Turkey, UAE, Japan, South Korea, Hong Kong, Malaysia, Singapore, Taiwan, Australia, New Zealand, Mexico, Brazil, Argentina, Chile, Colombia, Ecuador, Panama, and Peru.
Falling Below The Base Level
In the play-week starting January 17, 2020, China was the first of our tracked markets to fall below the Base Week level, with cinemas starting to close at the end of it.
In the following weeks the impact of the virus on the theatrical market was first visible in other Asian countries. From the January 30 play-week Hong Kong and Singapore also started to miss the basic Stage 3 level targets, joined by Taiwan and South Korea in the February 21 play-week. While not already closing cinemas, the appearance of first COVID-19 cases muted the theatrical performance in these countries.
Other regions were first impacted in the February 28 play-week when the virus pulled down attendance below Stage 3 levels in Ecuador and Italy. Italy had already seen the closure of cinemas in specific regions beginning and social-distancing measures were implemented in parts of the country where cinemas still operated. The situation accelerated from there.
In the first play-week of March, Japan, New Zealand and Panama also ended below the Base Week marker. Another week later, just 2 of the 30 tracked territories were still capable of achieving that essential stage. After this March 13 play-week for 17 weeks – a bit over 4 months – none of the 30 tracked territories was able to reach the lowest week’s box office result from the two pre-pandemic year’s (2018-2019)!
First Signs Of Recovery
Just a handful of markets remained open during March and April. Consequently, the release schedule suffered a myriad of changes and significant delays. With decreasing Covid-19 cases, from May onwards slowly countries in the Asia Pacific region, excluding China, and EMEA began to allow the re-opening of cinemas. In most cases with multiple restrictions.
However, a lack of major global releases from Hollywood caused a ripple effect and proved a stumbling block for re-openings and recovery globally. Thus, it was mainly in the hands of local and non-US title to reach the initial milestones of recovery.
The July 17, 2020 play-week was the first to see a territory cross the Stage 3 level again. In South Korea the release of local action sequel PENINSULA pushed the market above its Base Week target for the first time in 22 weeks. It did the same in Taiwan. Japan had two successful homegrown productions help that week to reach the same goal, after missing it for 19 consecutive weeks, with FROM TODAY, IT’S MY TURN!!: THE MOVIE and CONFIDENCE MAN JP: EPISODE OF THE PRINCESS.
The First Peak
It took another month for the next major step in the global recovery. China lifted the number of territories reaching Stage 3 targets to four in the play-week commencing August 14. By the following week it had already reached the top recovery level, Stage 5! Both weeks’ results were driven by local blockbuster THE EIGHT HUNDRED. China rushed through all recovery stages in a little less than month after allowing cinemas to open from July 20, following a six-month closure.
A week later, starting August 28, TENET finally opened internationally. The release had been postponed several times and became a totem leading the schedule of cinemas re-opening in many countries. The global number of cinemas open by market share rose to 72% that week coming from 48% at the beginning of August. The TENET launch pushed many opening markets up to new levels on Gower Street’s Blueprint to Recovery: France, Italy and Germany, among others, hit Stage 3 and Taiwan crossed Stage 4. As a result, 8 of the 30 tracked territories were above their Base Week targets. The TENET-effect was also felt more broadly than simply in terms of targets hit. Some markets saw an over-spill to other titles; holdovers were rising in business week-on-week despite the competition. This established a base line of at least five territories being above their Stage 3 target every week until the end of October, with one exception of four (Sept. 18).
After this first major uplift, recovery in most international markets (excluding China) and Domestic took a turn. This was caused by the pandemic triangle-of-troubles: lack of product / re-closing of cinemas / rising COVID-19 cases.
At the beginning of October 2020 TENET was fading out with no studio tentpole dated for subsequent weeks. NO TIME TO DIE announced a move from November 2020 to April 2021. That left an already dried out release calendar without a studio live action blockbuster scheduled for more than two months.
This resulted in the Cineworld Group, the world’s second largest cinema chain, re-closing all Cineworld, Picturehouse and Regal sites in the UK and US one week into October. Other exhibitors followed. After months of constantly increasing numbers of global cinemas open by market share, this triggered a reduction from a peak of 79% at the beginning of the month to 74% in the Oct. 9 play-week.
The next hit was caused by the rapid rise of Covid-19 cases in Europe. Italy and France were the first to re-close their cinemas in the final week of October. The UK, Germany, the Netherlands and Austria, among others, followed in November. At the end of that month the market share of theatres open across the EMEA region had fallen to 24%, a dramatic drop from a peak of 89% at the start of October! The global number plunged to 60%.
Due to the triangle-of-troubles the number of territories above their Stage 3 target every week dropped down to a median of just 4 again for the five-month period from November 2020 until the end of March 2021. This would even have dropped to 3 without the uplift of the holiday period.
A Small Break In The Triangle
The four weeks around the turn of year showed some positive signs of recovery having at least 5 territories reaching Stage 3 since the end of October on a weekly basis. The play-week of the December 25 was the first since February 28 to have three territories above their Stage 4 target. Japan and China surged above their Stage 5 markers again, while Singapore reached Stage 4. The play-week after, starting January 1, had 7 markets performing at least on Stage 3 levels, a number last achieved 16 weeks earlier (Sept. 11).
This usually lucrative period boosted multiple markets’ performance supported by various major releases, including long-missed Hollywood releases. WONDER WOMAN 1984 elevated results in Australia, New Zealand, Taiwan and the UAE. SOUL helped Singapore and Taiwan, while CROODS 2 found a successful release in Australia, New Zealand and Russia. Besides these US films, several local titles fuelled growth in Japan, China, and Russia. Hong Kong action title SHOCK WAVE 2 also drew audiences to rush to cinemas in China, Singapore and Taiwan.
The Second Peak
A long hard COVID-19 winter ended with an epic battle in GODZILLA VS KONG! The international launch, in the March 26, 2021 play-week, created the second meaningful peak in the recovery process.
Thirteen of the 30 tracked territories reached at least Stage 3 in the film’s opening week. Most came from the Asia Pacific region. Except for South Korea, 8 of the 9 territories we track in that region, including China, hit the target. However, it was the real global nature of GODZILLA VS KONG’s roaring success in uncertain times that truly confirmed hopes that theatrical recovery was possible.
In Latin America, for the first time in over a year, 3 of the 8 tracked markets reached at least Stage 3. Three weeks prior no market in the region had done so at all since the pandemic started.
In EMEA, the cinemas in most countries were still closed but the UAE and Russia were open and got to Stage 3 and 4, respectively.
The week after, 11 territories still hit their base level, while a new high was achieved with 5 also achieving their median Stage 4 level as a minimum.
The success of GODZILLA VS KONG was framed by a period of decreasing COVID-19 cases and an increased number of cinemas open by market share globally. It reached the highest count since mid-November with 63%. That was especially driven by an improvement of the situation in the Domestic market, which reached 56% that week – a level last hit at the beginning of October, crawling slowly back up from a low of 37% around Christmas. The long-awaited re-opening of cinemas in the industry essential markets of New York City (March 5) and Los Angeles (March 19) was key to that development.
In The Fast Lane On The Road To Recovery
The quantity of mid to big size releases grew in the following months as the number of cinemas re-opening also expanded on both sides of the Atlantic. From mid-May major European markets were allowed to re-open their cinemas after up to seven months of closure. In contrast to a year earlier, the supply of attractive content was significantly increased. A QUIET PLACE, PART II, THE CONJURING: THE DEVIL MADE ME DO IT, CRUELLA and PETER RABBIT 2 released, among others. This illustrated the simple equation for speeding up on the road to recovery – more cinemas open, more attractive movies to show, more box office coming in!
Over the June 11 weekend the global market share of open theatres hit 80% for the first time since the pandemic began. In the June 25, 2021 play-week, a new chapter of one of the biggest modern franchises, F9: THE FAST SAGA, was released in North America and several other top markets. This created a new peak in the recovery process. Nearly two thirds (18) of the tracked markets crossed at least Stage 3 that week. The two following weeks boosted that further up to 19 and 23! The release of BLACK WIDOW for the July 9 play-week supported that new record. The week after, further F9 openings in Europe fuelled a new pandemic best: 6 territories delivering at least median box office level, Stage 4 results.
After this pivotal four weeks, every week since has recorded at least 13 tracked territories above Stage 3 as a minimum. Prior to that point, this was the pandemic ceiling reached only once when GODZILLA VS. KONG opened.
Time To Accelerate
The beginning of the last quarter in 2021 marked a further milestone on the road to recovery. The staggered opening of NO TIME TO DIE and VENOM: LET THERE BE CARNAGE from the play-week of October 1 produced new recovery benchmarks. The first October play-week had 6 territories generating top quartile, Stage 5, weekly box office! That is a mark last hit in the January 24, 2020 play-week, before the pandemic went global!
The play-week of October 15 saw 25 of the 30 tracked markets reach at least the Stage 3 base level – the first time that had happened since the February 21, 2020 play-week!
On a weekly base since then at least half (15) of the tracked territories (30) have delivered more than the lowest week’s box office result from the two pre-pandemic years! In 7 of these 12 weeks that number hit 21 and more, illustrating the breadth of the worldwide recovery!
It was again the continuing supply of attractive movies and a high level of open cinemas that supported the sustainability of the recovery. Among others the releases of DUNE, ETERNALS, and HALLOWEEN KILLS created frequent triggers for audiences to come back to movie theatres around the world; establishing an increasing box office stability on the global marketplace.
Throughout Q4 2021 the number of cinemas open by market share was at a pandemic best, around 90%. Despite drastically rising COVID-19 cases, cinemas stayed open with just a few exceptions and the value never fell below 87% globally.
A Way Home
In mid-December the arrival of SPIDER-MAN: NO WAY HOME demonstrated the regained capability of the recovering global theatrical business.
The December 17 play-week saw 25 of the tracked 30 territories crossing the highest box office level, Stage 5, on the blueprint to recovery. This is far above the previous pandemic high of 6 territories.
Only one of the tracked markets, the Netherlands, couldn’t achieve at least Stage 3 levels that week. This was due to a lockdown from December 20 re-closing cinemas. This breadth of the worldwide recovery continued with 29 territories reaching at least Stage 3 in the following week and 28 in the final week of the year.
The Rise Of Cinema
Globally the second pandemic year ends in a much better state than the first. The world-wide theatrical business has shown an impressive recovery so far, that accelerated over the last couple of months.
The number of territories crossing at least a basic box office level on a weekly base has significantly grown and been sustained in every global region. Several titles demonstrated how the market can stretch even with restrictions. Apart from South Korea, all our tracked territories have now achieved the top tier Stage 5 box office level at least once.
All-time records have been broken on territory, regional and global levels. The trend is pointing clearly upwards, even with the Omicron variant spreading around the world, causing record numbers of new Covid-19 cases. The toolbox to fight the virus has been drastically extended. The re-closure of cinemas has been rare so far and requires higher measures than before. With every visitor to the cinema the likelihood of further visits increases. The confidence in the theatrical experience as one of the safest out-of-home activities in the pandemic is rising. Even now, in the upcoming weeks, when the density of mid to big size releases has fallen a bit, the global business will still sustain on a level not seen for most of the time in the two years since the pandemic began. 2022 should continue the path of recovery, even if smaller steps back won’t be avoidable. Recovery will continue, enabled by strong slate lined-up.