Movie industry’s troubles far from wrapping up
Production delays, lack of insurance could lengthen recovery for battered industry
James Bond won’t be saving the movie business this year, and the industry may be facing longer-term problems that even the super spy can’t fix.
News of movie-release delays might now seem commonplace, but Friday’s announcement that “No Time to Die” is being moved from next month to April 2021 was particularly painful. It was the last major big-budget release that could have propped up business for movie exhibitors this year. Theater chains now have to re-evaluate their plans. UKbased Cineworld said Monday it will be suspending operations at its more than 500 U.S. theaters.
A full month into the fall season, 44% of U.S. theaters haven’t reopened from pandemic closures, according to Comscore. The ones that have opened aren’t drawing much of a crowd—a signal that many moviegoers are hesitant to return. According to Box Office Mojo, the weekend’s total domestic box office totaled $8.3 million (U.S.). That is down nearly 12% from last week and is more than 93% below what October 2019’s weekends averaged. News that the pandemic even has reached the White House likely didn’t help matters.
Alack of compelling content is another drag. The second-highest grossing film this last weekend was a reissue from Disney from the early ‘90s called “Hocus
Pocus” that the late Gene Siskel referred to as dreadful.
But even the well-reviewed “Tenet” from AT&T’s Warner Bros. has struggled with indoor entertainment options considered risky. Box-office sales for the film fell 21% over the last week and it has generated only about $45 million over five weeks domestically. “Dunkirk”—the last film from “Tenet” director Christopher Nolan—grossed nearly $169 million domestically in its first five weeks in the summer of 2017, according to Box Office Mojo.
Anemic returns for the expected blockbuster are discouraging to studios once accustomed to greenlighting production budgets of $200 million or more for a major tentpole release. Before the latest Bond movie shift, eight studio films had been delayed since the release of “Tenet,” according to tracking by Wedbush analysts. Those include major releases such as “Black Widow” and “Eternals”—Disney’s next additions to the Marvel canon.
Most of the delays from this year have been moved to 2021, reflecting a bet that life will turn back to something like normal by next summer.
But the effects of the pandemic might actually ripple well beyond that. In a report Thursday, Credit Suisse analysts said production halts due to Covid-19 have put a handful of significant 2021 films in danger of missing their release dates due to the long postproduction times required for major special-effectsladen titles. This could include the next “Jurassic World” sequel from Comcast’s Universal Studios, which resumed production in July and is targeting a June 2021 release. Credit Suisse estimates that shooting on the film would have needed to wrap by the end of August to make that date.
Insurance issues are adding to the backlog and could even affect films slated for 2022. Credit Suisse notes that many new projects haven’t been able to line up production insurance since major providers aren’t willing to cover Covid-related shutdowns. Insurance is typically required for films using outside financing. Once more insurance options become available, the broker estimates that Covid-related insurance and additional safety protocols will add an incremental $26 million to a $100 million film budget.
Higher costs could limit further the number of movies that studios bet on, particularly since the action-adventure genre that dominates the box office is also the most expensive to insure. That in turn could pile more long-term pressure on chains such as Cinemark, AMC and Cineworld—even if they tighten their belts now to survive the rest of this year. Like other in-person entertainment options, complete recovery of the movie exhibition business is unlikely until a vaccine is available. But the side effects of the pandemic may linger even longer than that for Hollywood.