Summer Box Office Review: Despite Post-Pandemic Progress, Theaters Are Still in Trouble

With two weekends left in the summer box office season, the numbers are clear: Gross receipts are down about 23% from 2019 levels — which means that there was significant recovery from the pandemic, but still not enough to stave off crisis for many movie theater chains.

The final summer 2022 domestic total is set to finish at approximately $3.37 billion, down from the $4.34 billion seen in 2019, according to estimates by Comscore. (The summer season is defined as lasting from the first Friday in May through Labor Day, which means the record-setting $473.8 million opening week of “Avengers: Endgame” isn’t included in that 2019 total.)

The good news is that several of the top summer blockbusters performed closer to pre-pandemic baselines than analysts like The-Numbers.com founder Bruce Nash expected. Based on comparisons to 2017-2019 films, tentpoles like Disney/Marvel’s “Doctor Strange in the Multiverse of Madness” ($411.3 million domestic/$953.9 million WW), Universal’s “Jurassic World: Dominion” ($373.8 million domestic/$984 million WW) and Disney’s “Thor: Love & Thunder” ($332 million domestic/$732 million WW) grossed roughly 80%-90% of what he estimated they would have made in a pre-pandemic market.

“That honestly is better than I would have expected,” Nash told TheWrap. “We had been expecting most of these films to be 30% below the pre-pandemic model but they outperformed that expectation. There is still very much an appetite to see these big films in a theater.”

Of course, that appraisal doesn’t include the summer’s biggest hit, “Top Gun: Maverick,” Paramount’s biggest domestic grosser in its history. Performing with the legs of its 1986 predecessor after setting a Memorial Day opening record, “Maverick” has joined “Spider-Man: No Way Home” in the post-shutdown $1 billion club and will become only the sixth film to gross over $700 million in North America before inflation adjustment.

If ever there was a film that demonstrated the enduring appeal of moviegoing, it’s “Top Gun: Maverick,” and its success has been and will continue to be used by industry executives as a reason for optimism in the months and years to come.

Unlike summers past, when a small handful of independent films like “The Big Sick” and “RBG” found some surprise success at art-houses, A24’s spring hit “Everything Everywhere All at Once” was the only indie title to get any major traction, taking in $98 million worldwide, while others like Focus’ “Mrs. Harris Goes to Paris” and A24’s “Marcel the Shell With Shoes On” failed to pass the $10 million mark.

Also Read:
AMC Theatres Stock Dives 40% Amid Launch of New APE Trading Units

Despite the mostly bright signs, the summer hasn’t dug exhibitors out of the deep hole that the year-long pandemic closure threw them into. While second quarter revenue dramatically increased compared to last year, the three big national chains — AMC, Cinemark and Regal — didn’t report a profit. The only quarter that has seen positive cash flow for any major exhibitor since the pandemic began is Q4 2021 — a success made possible thanks mostly to Sony’s “Spider-Man: No Way Home.”

And while there’s been a resurgent period that lasted between Warner Bros.’ “The Batman” in early spring and “Thor: Love and Thunder” in July, it has been sandwiched between two deep dry periods at the start of 2022 and one that theaters are struggling through right now. Overall weekend totals didn’t exceed $100 million at any point during January and February, and have dipped below that mark since the last weekend of July. It may not be until the release of Universal/Blumhouse’s “Halloween Ends” in mid-October that weekend totals rise above $100 million again.

This is in large part because the backlogs in the film production process have decreased the number of titles studios have ready to screen in theaters. Comscore currently estimates that the number of movies that will hit theaters in wide release this year is 90, just two more than the wide release total in 2021 when the box office was relying on films delayed by COVID to get audiences back in theaters.

Until studios can get their release rate back to 2019 levels, there will always be a ceiling on how much the box office can recover even with megahits like “Top Gun” posting astronomical numbers and mid-budget titles like “The Black Phone,” “Nope” and “Elvis” providing a secondary level of support. It also means that the down periods run longer and deeper than they did before the pandemic, with theaters no longer having the financial cushion to withstand those droughts after the pandemic took it away.

Also Read:
Regal Cinemas Parent Confirms Bankruptcy Is a ‘Strategic Option’

“It has been clear for everyone in exhibition that the recovery process would take several years, but not every theater has the luxury of being able to wait that long,” Comscore analyst Paul Dergarabedian said. “Whether it is independent theaters still trying to make rent or larger chains dealing with debt, many cinemas are getting hurt more by these periods where studios just don’t have enough four-quadrant films finished to provide more steady revenue.”

That race against time was made clear with news on Monday that Cineworld, parent company of Regal Cinemas, is considering filing for bankruptcy. The London-based multinational company has built up $4.8 billion in debt, with most of it coming from its $3.6 billion purchase of Regal in 2017. Despite the early summer success, Cineworld said that the admissions rates at its locations are below projections and will likely continue until Disney’s “Black Panther: Wakanda Forever” is released in November.

To be sure, a bankruptcy filing wouldn’t mean that Regal’s cinemas suddenly go dark. Cineworld said it expects to keep its 751 multiplexes operating whether it files for bankruptcy or takes another route to shore up its finances. Premium chain Alamo Drafthouse was able to stay afloat in a similar fashion after it filed for bankruptcy in 2020 and sold its assets to senior lenders, allowing for all but five of its locations to reopen in 2021.

Also Read:
How ‘Everything Everywhere All at Once’ Hit the Indie Box Office Jackpot

And in a sign of optimism for theaters, the subscription service for movie theaters Moviepass announced on Monday that it would be back on Labor Day with three price tiers.

But the struggles of one of the largest forces in exhibition shows how far the industry still has to go to fully recover. Heading into the summer, there was a question of whether audiences would be willing to turn out for films that weren’t the biggest blockbusters. This summer brought some encouragement on that front, as films like Warner Bros.’ “Elvis” found success by catering to a specific section of moviegoers. But the return of robust prestige and indie markets will also need to come, with the fate of the winter awards season still to be determined by films like Steven Spielberg’s “The Fabelmans” and Damien Chazelle’s period drama “Babylon.”

Before COVID-19 locked the doors of cinemas around the world, they were enjoying the bounty of a 52-week release calendar where some sort of film, even if it wasn’t a Tom Cruise thrill ride, was turning a profit at any time of the year. Getting back there isn’t something that can be solved in a single summer.

Also Read:
Summer Has Been a Box Office Feast for Movie Exhibitors – But a Famine Is Coming