You rarely see it in a period of time where new advances in technology are rapidly having an affect on how we live our lives. In the same way that streaming brought about an abrupt end to the video rental market, many entertainment analysts believed that the theatrical experience itself would also see a decline over time, as on demand entertainment would soon become the norm. It sure looked like that was a possibility. With Netflix and Amazon’s rapid rise over the last decade, and the soon to happen launch of streaming services by some of Hollywood’s top studios, the turn of the last decade seemed to mark a turning point for entertainment, where movie theaters no longer stood out as the primary place to premiere a new film. And then of course came the perfect storm that nearly brought the theatrical industry to the brink of extinction. The Covid-19 pandemic of 2020 forced the closures of movie theaters across the world, leading to an unprecedented halt on film exhibition. Movies, including ones that were months away from their planned release, were moved off the calendar with no sign of when they might be able to finally be seen. In the meantime, movie studios with their newly launched streaming platforms were finding it crucial to unload the burden onto these new services to provide entertainment for audiences who were now stuck at home. With theaters unable to operate, and streaming now able to grow without competition, it looked as if this might be the nail in the coffin for a century old industry that had long faced competition only to see themselves evolve into something better and stronger. But, as the shadow of Covid is beginning to finally fade, we are seeing something truly remarkable happening, and that’s a surprisingly resilient theater industry crawling ever so carefully out of it’s hole. And it makes everyone wonder, are movie theaters really destined for irrelevance or are they a much stronger part of the culture than we ever thought.
The story of movie theaters enduring through it’s most trying challenge during this pandemic has taken a surprising turn in the last couple weeks. Disney, with their popular brand Marvel, undertook what they considered an “experiment” to see if one of their movies could perform well enough without the help of a streaming option. With the Delta Covid variant causing problems across the country, this seemed like a tricky gamble. Also, the movie they were testing the waters on was based on a lesser known comic book character named Shang-Chi; not exactly a household name. Sure, he’s part of the extensive Marvel family, but Shang-Chi has no where near the following that an Iron Man or Captain America has. Essentially, he was going to have to perform solely based on the strength of the Marvel brand itself. But, it’s a gamble that remarkably paid off in the end. Shang-Chi and the Legend of the Ten Rings not only broke records for it’s Labor Day weekend premiere, it shattered them. The movie pulled in $95 million over the four day weekend, and it’s three day total was only slightly behind that of Black Widow for the highest opening of the year; a movie that featured a pre-established Marvel icon with a strong following. Surely, the Marvel branding helped to carry Shang-Chi to a strong opening, but at the same time, it also proved something else, especially in the weeks that followed. After it’s strong opening, Shang-Chi continued to hold onto it’s audience, dropping only 50% in it’s second week, and is on track to out gross Black Widow by the end of it’s run. This, more than anything, proves the inefficacy of the hybrid release model, as a pure exclusive theatrical window allows for a stronger audience hold over time. This is also something that Disney observed with it’s 20th Century Studios release, Free Guy starring Ryan Reynolds. Before Shang-Chi, Free Guy had been the box office champ 3 weeks running, and it managed to also cross the $100 million mark which is especially good for a movie made on a more modest budget than what Marvel is putting out. As a result of both Shang-Chi’s and Free Guy’s remarkable success, Disney made the crucial choice of sticking with exclusive theatrical windows for the remainder of the year.
This news was a dream come true for the beleaguered theater industry. The largest studio in Hollywood was abandoning the bet hedging practice of releasing day and date on streaming and in theaters, and was committing to an exclusive, albeit shortened, theatrical first strategy. One can speculate that Disney’s premium Premiere Access was not performing as well as they had hoped, but as outsiders, there’s nothing we can prove with that being the case. Disney’s keeping their internal numbers regarding streaming a very closely guarded secret, and they’ve only released total grosses from their $30 access fee publicly on opening weekends, with the hopes that it might help with the overall positive press with the movie. But, after that, we don’t know exactly what the movie makes. My educated guess is that even though the movie might do well on opening weekend, it’s following weekend grosses probably see a huge drop off. And that’s probably because once someone buys the access to watch a movie like Black Widow, they basically own that movie after that point, so Disney no longer is making any more money on that single customer. Movie theaters on the other hand has something that works well to their advantage and that’s repeat business. Because people are paying for the experience of watching a movie in a theater and not just to own the movie outright, it opens the door for people to return again if they desire to view the movie again. That repeat business helps to keep movies performing strong week after week. What I imagine is that Disney saw that they weren’t making the same kind of long term money on their Premiere Access as they were keeping the movie in the theaters. And a big sign of that is in how Black Widow lost 70% of it’s audience from week one to week two, while Shang-Chi managed to lose only 50%. Yes, they do keep 100% of the profit from streaming, but they lose out on future gains that can accumulate through word of mouth. That’s what they’ve observed over the last week, and it’s why Disney made the monumental choice to move away from that hybrid model.
With Disney committing to theatrical, it suddenly puts pressure on other studios to do the same, and some studios perhaps jumped the gun a little in response to the ongoing uncertainty in the theatrical market. Only a couple weeks prior, Paramount made a bunch of drastic moves. They took their family friendly comedy Clifford the Big Red Dog off it’s September release date and has not found a replacement date yet. And after that, they moved two high profile Tom Cruise vehicles, Top Gun: Maverick and the next Mission: Impossible sequel and moved them months away from their intended dates; a big blow for Top Gun: Maverick as it already saw a year long delay from 2020. Universal likewise changed it’s release strategy for the upcoming Halloween Kills release in October, choosing to put it on both it’s streaming service Peacock and in theaters at the same time. And Warner Brothers, like they have all year, are continuing to release their entire 2021 slate of movies in theaters and on their streaming service HBO Max for no extra charge; a move that has irked many of their stable of filmmakers like Christopher Nolan and Denis Villenueve. The only other major studio to follow Disney’s theatrical only lead has been Sony (the only major studio without a streaming platform). In fact, they doubled down on theatrical after the other studios began to hedge their bets. Both of their big upcoming franchise films, Venom: Let There Be Carnage and Ghostbusters: Afterlife moved up their release instead of delaying them, and most tellingly, they did so after the successful launch of Shang-Chi. Clearly Sony saw the same promising numbers that Disney saw, and they decided that it was better to give theaters the exclusive window for the first month, instead of selling off their titles to Netflix like they have been doing. So at this point, the movie studios are suddenly seeing their worst fears about the theatrical market not coming to fruition, and it’s leading to some second guessing. This in particular is leading to some flare up confrontations between studios and talent, as these drastic, panicky moves have negatively affected already pre-standing contracts. Christopher Nolan in fact has parted ways with Warner Brothers after a 20 year relationship, as he’s now setting up his next film at Universal instead. It’s really interesting to see the dynamic flip so much on the industry in such a short amount of time, with movie theaters now back in a more dynamic power position, while the studios are struggling to figure out their next moves.
That being said, movie theaters themselves are not entirely out of the woods yet. The pandemic is still going on, with some parts of the United States seeing the worst flare up they’ve experienced so far. What’s helping keep the movie theaters from reaching the point of worry now is the fact that the two biggest markets (New York and Los Angeles) are experiencing a relative low rate of spread of the virus compared to other parts of the country, and that’s due to higher vaccination rates in those areas. Certainly, there is still a lot of worry in those large cities, and they are taking drastic measures like mask mandates and proof of vaccine requirements, but overall it’s allowing businesses to function as close to normal as they possibly can. Movie theaters in particular are following the guidelines set, and they have been able to operate throughout the summer without leading to any significant outbreaks. I can say from first hand, even the packed out screenings of big films has all of the audiences members respecting the mandates here in the Los Angeles area where I live, and that has been a big contributor in seeing the confidence build back up for the theatrical industry. If Los Angeles and New York manage to keep another disastrous spike happen again, the threat of another shutdown is almost assuredly behind us. Even still, closures anywhere are still a lingering threat, especially in the parts of the country that are really hurting right now. There’s also concerns about what effect vaccine mandates might have on future theater attendance. In the coming weeks, Los Angeles County will soon be requiring proof of vaccination upon entry into many indoor establishments, including theaters. Some see this as a bad thing because of how it might turn away audiences who refuse to be vaccinated. On the other hand, some argue that requiring proof of vaccination may help bring more people back to the theater who have been hesitant before, because it will make them feel safe knowing that everyone around them has also been vaccinated. So, even though movie theaters have seen promising developments over the last few weeks, the storm hasn’t cleared out of the way just yet.
Even still, with movie theaters doing the kind of business they’ve seen at all this summer is something pretty miraculous. Going into the new year, it seemed like Armageddon was on the horizon for the theatrical industry. Many chains, including the biggest of them all (AMC) was too far into debt to recoup, and in many cases, a few of them closed for good. AMC still operates today solely due to the intervention of meme stocks forced higher through Reddit. But even in the face of that, it took a lot of hope to believe that audiences would come back after having to rely on streaming for their entertainment over the last year. Did streaming claim a foothold too strong for theaters to overcome in order to return to normal? As evidenced by what we’ve seen in the last month, streaming in fact did not kill the theatrical market for good. As some of us already know, and what more are probably realizing more and more each day, there really is no substitute for the theater experience. No matter how big and impressive your home theater set up is, it can not replicate the experience of watching a movie in an actual movie theater. What I’ve really noticed in the difference is the way a movie sounds in a theater. A home theater 7.1 system just does not have the same oomph that a nearly 25 speaker set up in a cinema has. It’s the immersion that makes all the difference. Movie theater sound just puts you in the middle of the movie better than it does at home. And of course, the bigger the screen the better. I’m sure there is not a single home theater that captures the immensity of an IMAX image. Big movies need to be seen in a big way. I for one have always known that and during the past year I went to great lengths to enjoy movies the way they were meant to be enjoyed. I sought out the only operating Drive-In theaters in the Los Angeles area and drove back and forth almost weekly to these venues that were well outside of town. I even drove 120 miles to San Diego just so I could see Christopher Nolan’s Tenet in a theater, because it was the closest one open that was playing it in IMAX. These are the lengths one will go to for that theater experience, and I know my case is on the exceptional side. But, what I am pleased to see is that more and more people who don’t typically go to the theaters are also realizing that special connection too.
What people are beginning to realize now is just how much they took the theater experience for granted. For a lot of people, returning to the movies has in some way become an almost healing experience. The psychological effect of the past year has created an appetite for many people to have something in their lives that helps remind them of life before things began falling apart. In a way, movie theaters are the beneficiaries of that effect. After being holed up in their homes for months and in some cases over a year, people want to be outdoors again, as well as return to activities that require them to leave their homes. With the vaccines and mask mandates helping to slow the spread, and making the weary feel more safe as they exit their homes, we are seeing more vigorous enthusiasm for wanting to get back to the things that we’ve missed out on in the last year. This is why movie theaters might have a bright future, at least for a while. It reminds audiences of better times, when it didn’t seem like the world was falling apart. The act of going out to a movie theater, or any establishment outside the home, has a therapeutic effect now; like it’s a reward for having to endure the hardships that it took to get to this moment. One thing I wonder is how streaming will be viewed in the years to come post-pandemic. I’m sure that it will still be robust, but the rapid growth they saw during the pandemic will likely never be seen again, and in some ways, people might turn away from streaming viewership because it will remind them of the worst days of their life as they endured the uncertainty of the year 2020. It’s probably going to be a small effect, but I think the psychological impact of how we endured through the pandemic year will in some ways be reflected in the way we chose to experience film in the years ahead. One thing that I do believe is driving the renewed love of going back to the theaters is the realization for many people that a shared communal experience with an audience is an indispensable part of watching a movie. The joys of cinema are in being able to laugh, cry, and cheer together with other people, including strangers, because we are a social species, and going out to the movies is one of the best ways we can experience that joy together. This pandemic forced us apart; it’s cinema that is helping us to come back together and in turn, helping us to heal.
A lot of these positive signs are, of course, just an immediate observation. It’s hard to say what lasting effect it will have on the long term future of cinema. We certainly are no where near where we were pre-pandemic, as 2019 was a record breaking year for the box office. We’ll probably never in our lifetimes see something like the fall off that box office took in the year 2020; going from an all time high in the year before to a near flatline thereafter. 2021’s box office is still stunted, but it is heading in the right direction, with Shang-Chi becoming the first movie in over a year in a half being able to perform like a movie without roadblocks, even in the face of a lingering pandemic. One thing that the pandemic gave us in the meantime was perspective. We began to realize just how valuable the theatrical experience was to us in our culture. We don’t just watch the movies, we experience them, and that experience shouldn’t be done alone. I think that after a hundred years of the silver screen, the need to go out to the movies is just embedded in our DNA now. Sure, it’s going to take time for many people to feel safe and confident in a theater again, and streaming will undoubtedly be an ever present force in entertainment from here out. But, movie theaters, through all the hardship, are still open and they are still seeing healthy amounts of business. In time, we may actually see a theatrical market that looks almost normal and back to it’s pre-pandemic levels again. Movie theaters have had to face many calamities over time; the Depression, the War, civil unrest, the aftermath of the 9/11 terror attacks, not to mention the existential threat television, home video and ultimately streaming. And yet, despite all these obstacles thrown their way, they’ve managed to survive and thrive. Covid was it’s greatest challenge yet; a force so destructive it that prevented any business from happening, and nearly forced the complete disintegration of the industry as a whole. So, if it could survive that, it might be able to survive any calamity. Like I said before, people are a social species, and our desire is to share a collective experience as a group. Movie theaters, with their abundance in neighborhoods across the globe and relatively economical entry fee compared to other forms of entertainment, are the best places for communities to gather together and enjoy the bonds of joy that entertainment brings to us. And after an experience like the Covid-19 pandemic, it something that we need more than ever to help heal the wounded world that was broken apart over the last year.