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There are a lot of things during the COVID-19 crisis we can’t do that much about. The $12.5 billion theatrical GBO that has been lost globally so far for example! But with many countries around the world opening up again, possibilities for distributors to shape the market around them increase. Wherever cinemas are legally allowed to open again, it would be an expected imperative to limit further loss wherever possible. However, through our FORECAST service we can see there may be unexploited box office opportunities distributors are missing out on.
Based on FORECAST, our theatrical market simulation service, the German theatrical market currently appears to be missing out on €8 million box office over the first three weeks of July. A result that, allocated to a single release, would have put a movie in the Top 35 of a (normal) year-end ranking. It is also equivalent to 4% of the €230 million box office currently lost in the German market as a result of the pandemic.
Back in business
After being forced to close all traditional cinemas on March 17, the first regions in Germany started to allow theatres to re-open already since the middle of May. An early stage compared to most of the world. Week after week more regions followed. For the play-week starting on July 2 all German regions will be legally allowed to re-open cinemas (1 final of the 16 regions is still to officially announce a date yet). At that point the new security / hygiene restrictions and processes will have been established, tested and learned for weeks (maybe even eased). A critical mass of cinemas will have followed the chance to offer people the unique theatrical experience; an out of home experience that a critical mass of the audience is willing to come back for.
This summer far less people will travel internationally given travel restriction and the global coronavirus uncertainties. As a result of that more people are likely to do staycation or travel within the country. German school holidays will already be happening across more than half of the country from July 6.
After lacking options for months, going to the movie theatre will be a gasp of fresh air again.
Gower Street currently calculates the market capacity for the first week of July at about €3 million; the second is at €4 million; and the third €7 million. These numbers consider many factors, such as: capacity restrictions following social distancing measures; economic pressures; audience willingness to return; staggered re-openings across regions/states and differing re-opening plans per exhibitor (for more detail see our To Recovery And Beyond article for Germany).
To put these numbers into perspective: The highest performing week of the last five years in Germany has been the play-week from December 17 when STAR WARS: THE FORCE AWAKENS opened, reaching a GBO of €50 million. It’s fair to state that this is the ballpark of full capacity performance in Germany. The first three weeks of July could get to a level from 6% to 14% of that. Not overly high. However, the current release schedule for that timeframe is not offering a sufficient slate of releases to fully realize this potential. With the scenario feature in Gower Street’s FORECAST platform we are able to simulate dating examples of multiple additional mid-size titles (€2m to €5m lifetime GBO potential) into that frame, without a significant impact on the already dated titles in that period. As of now it seems money is being left on the table in Germany in July.
Of course global releases need a significant amount of territories to be in such a state of readiness to kickstart the machinery and open in theatres. As re-opening develops asynchronously and partially unpredictably in different parts of the world, the delayed global releases will feel especially late for the multiple markets that have reached this stage earlier. This is the time for the more flexible local or international titles that are not bonded to a narrow global release window to jump in and exploit an unprecedented lack of competition in the market in years.
We reported the positive impact of local new releases in South Korea and Hong Kong. With July around the corner, that release window is closing fast given that proper campaigns need time. However there are more gaps in the rest of the year, especially given the recent release date changes, that should not be missed. Gower Street’s FORECAST platform allows the users to simulate complex dating moves to assess this constantly changing market place and flag risk and opportunity on a daily base with minimum effort. Enough money has been lost this year, there shouldn’t be more if avoidable.
“Autumn in Italy” Risk
An additional, serious threat could arise due to the uncertainty of global cinemas re-opening that makes this even more urgent. At the beginning of the process there might not be enough movies releasing, as described, then a blockbuster succeeds and too many movies follow in a short time. A scenario like that can be seen every autumn in Italy and should be avoided wherever possible. Traditionally the summer is largely abandoned in Italy. As a result all the films that open in other markets during summer tend to crowd into the September / October window. Typically, these films underperform comparatively as the films cannibalize each other. Everyone loses. It is conceivable there could even be a gap in product to follow, due to production stops.
Thus, it’s more important than ever that attractive product needs to be available more evenly split out and less clustered than usual; that movies dated within the same window need to be complimentary and don’t cannibalize each other. This would boost the level of the market’s performance. Exhibitors and distributors benefit equally. The future of the theatrical experience benefits.
You can request a demonstration of our FORECAST service here.