Movie theaters after COVID
Part 2: A summer of experimentation
In the second of three parts, Center director Jeffrey Cole explores what happened when the movie studios used a natural experiment for their releases
By Jeffrey Cole
September 29, 2021 — By the middle of June 2021, half the nation had been vaccinated and felt COVID might be entering a more manageable phase. The country began opening up, especially after the CDC allowed vaccinated people to shed their masks in most indoor spaces (although not airplanes).
After 15 months of staying home, we could escape from Zoom and our own four walls. Within a week or so, 15,000 people poured into Madison Square Garden to see the Foo Fighters. Bruce Springsteen was back on Broadway. Sports arenas and theme parks re-opened. There was euphoria as we began to resume our old lives.
And movie theaters were back in business.
In April, when many were still nervous about infections, Godzilla vs. King Kong showed that some movie fans were ready to return to the big screen. Even though the Warner Bros. film was available at no extra charge at home on HBO Max, many wanted to see it on the biggest screen. Opening weekend, it grossed $32 million, respectable for anything but a Marvel film pre-COVID. Eventually it earned $100 million from theaters. It is not possible to know how well it might have done had it only been available in the theater. Evidence from later film releases—coupled with the fact that Godzilla was one of the first films people felt comfortable seeing outside their homes—suggests it might have pulled in another $60 million had it not been on HBO Max.
Many of us felt so captive at home that we would have paid $15 to watch a test pattern in a movie theater. The Center asked movie fans whether they went to Godzilla because they wanted to see that film or because they wanted out of the house and that was the best choice available. Ninety percent said the latter.
The promising signs from Godzilla solidified when Paramount pushed A Quiet Place 2 into theaters (with no streaming option) on May 28. The sequel to the 2018 hit had the misfortune to have been scheduled for an initial release on March 20, 2020. Its marketing budget had already been spent when COVID closed movie theaters.
Over the four-day Memorial Day Weekend, A Quiet Place 2 got movie fans to spend $58.5 million to see it in a theater. It went on to gross $160 million. The numbers suggest that had it been released to both theaters and streaming simultaneously, it might have grossed $60 million less, in line with Godzilla.
Signs of resurrection in the movie theater business became more and more encouraging when Universal released Fast and Furious 9 (F9) on June 25. It brought in $70 million in its opening weekend. That made it the highest grossing film opening since Star Wars: the Rise of Skywalker in 2019, and even more successful than its predecessor, Fast and Furious: Hobbs and Shaw, released before COVID. Was it a better film than Hobbs, or did fans just want to celebrate with a familiar title in the theater? Whatever the explanation, theaters were starting to see numbers they had not seen since before March 2020 and had feared they might never see again.
A Quiet Place 2 and F9 were only available in theaters. More evidence had to be gathered on how streaming affects box office when a film is released to both simultaneously.
With its next two films, Disney supplied key pieces to this puzzle.
Black Widow, the 24th film in the Marvel Cinematic Universe (MCU), was originally set to be released on May 1, 2020. Disney felt it had a huge hit on its hands and chose to push the date back rather than making it available on Disney+ for a fee (Mulan) or with no charge (Hamilton, Soul).
May 1 shifted to November 6, and then to May 7 the following year. (Surely the pandemic would be over by then!) Ultimately, it came out on July 9. Despite the strong box office from theater-only releases of A Quiet Place 2 and F9, Disney decided to go for Day and Date, making it available on the same day in the theater and on Disney+ for an additional charge of $30.
This was an important test, sure to provide insight into how distribution patterns might change.
Unlike Godzilla, Black Widow came out at a moment when movie goers were comfortable leaving home. It featured Scarlett Johansson, one of the most bankable stars in Hollywood (more on that later) in a role with which fans were quite familiar. And it was a Marvel Film!
Black Widow got off to a good start (a great start for anything but a Marvel Film). It brought in $80 million from theaters. Disregarding its normal policy not to release streaming revenue for a PVOD (Premiere Video on Demand) film, Disney could not help crowing that it earned an additional $60 million on Disney+. Movies were back! Theaters plus streaming were the way to go.
Or so it seemed!
Signs of resurrection in the movie theater business became more and more encouraging when Universal released Fast and Furious 9 (F9) on June 25. It brought in $70 million in its opening weekend. That made it the highest grossing film opening since Star Wars: the Rise of Skywalker in 2019, and even more successful than its predecessor, Fast and Furious: Hobbs and Shaw, released before COVID. Was it a better film than Hobbs, or did fans just want to celebrate with a familiar title in the theater? Whatever the explanation, theaters were starting to see numbers they had not seen since before March 2020 and had feared they might never see again.
The next week, Black Widow saw its box office revenue drop 67%, the highest ever for a Marvel movie. Although some fans found Black Widow a disappointment, evidence clearly points to the availability of a streaming option significantly disrupting the movie’s box office trajectory. Also worrisome, Black Widow quickly became the most pirated film of the COVID era. Of course, films only available in the theater can be pirated, but streaming makes piracy easier and more wide spread.
Disney’s problems didn’t end there.
On July 29, Scarlett Johansson sued Disney, making the obvious case that releasing the film on streaming at the same time it premiered in theaters diminished the movie’s box office revenue. She argued that this move on the studio’s part violated her agreement that the film would get the widest possible theatrical release, an agreement in which she got a percentage of the revenue.
Although Disney claimed it released on streaming in addition to theaters because theaters had not fully recovered from COVID, there were significant advantages to release on Disney+. It did not have to share streaming revenues with either theater owners or Scarlett Johansson, as it did with both in a theatrical run. As a bonus, it also built-up buzz around Disney+ and attracted new subscribers.
At this point, Disney made an uncharacteristically foolish move: it went after Johansson for filing the suit. The studio made sure everyone knew she earned $20 million for making the film and then attacked her for insensitivity claiming, “the lawsuit is especially sad and distressing in its callous disregard for the horrific and prolonged global effects of the Covid-19 pandemic.”
The studio attacked one of its biggest stars. What were they thinking? What kind of message was it sending to Hollywood A-listers it needed to attract to its future films? Was Disney hoping to embarrass Johansson so that Emily Blunt and Dwayne Johnson (Jungle Cruise) or Emma Stone (Cruella), whose films were released the same way as Black Widow, would refrain from filing their own lawsuits?
It was a dumb move for a studio known to be talent friendly. Most of Hollywood and the guilds lined up behind Johansson. It raised the question of who was calling the shots at Disney, especially when Kevin Feige, the head of Marvel Studios, made it clear he had nothing to do with the tone-deaf response.
The devastating drop in Black Widow‘s second week box office strengthened the case for the resurgence and importance of movie theaters.
Disney’s next movie would add even more support to the idea that theaters cannot not be replaced.
Next — Part III: Movie theaters are not going anywhere
____________
Jeffrey Cole is the founder and director of The Center for the Digital Future at USC Annenberg.
See all columns from the center.
September 29, 2021