×
Back to IndieWire

Denial, Blame, and Hubris: How Movie Theaters Are Making Their COVID Situation Worse

COVID is a terrible reality for theaters, but denying reality came first. The question now is whether it's too late to start facing it.

Photo by: STRF/STAR MAX/IPx 2020 10/4/20 AMC and Cinemark are under pressure after rival movie theater Cineworld announced the closure of its more than 500 U.S. Regal theaters as studios continue to delay major releases such as the new James Bond movie, "No Time To Die".

Cineworld/Regal Theaters

STRF/STAR MAX/IPx

Theaters deserve credit: They took elevated steps to keep their audiences safe. Theaters deserve sympathy: They are at the mercy of those who supply movies. Theaters are also in actual dire straits, as Regal Cinemas shuts down, AMC is a junk bond with just six months of cash, and exhibitor lobbyist NATO pleads with the government for financial bailout. At this rate, by the time “Dune” plays next October, the theatrical landscape may look like the barren plains of Arrakis.

COVID-19 is a destructive force, but that’s not the whole story. During the pandemic, and long before, theaters continued to insist on maintaining a tunnel vision that blamed outside forces for their misfortunes.

October 5 provided the most recent example, when Cineworld/Regal chairman Mooky Greindinger announced that his company would shut down U.K. and U.S. theaters and blamed distributors for not releasing films. He also blamed the delay of “No Time to Die” from November to April, and New York Governor Andrew Cuomo for not opening New York theaters.

Knee-jerk reactions aside, this makes no sense. New York represents perhaps 5 percent of the total box office; Bond films approach 80 percent of their grosses overseas. Moving to April speaks to the concern for worldwide conditions, not the status of New York theaters.

Furthermore, Greindinger closed his theaters even as distributor 101 Studios was spending heavily on “The War on Grandpa” in the U.S. and “Saint Maud” was preparing for release in the U.K. Cineworld cut the legs out from under them without warning, giving studios even more reason not to rely on theatrical partners. That announcement also came with no notice to Cineworld/Regal employees, some of whom attacked the company in the press.

Exhibition faces challenges that are inherent to its industry. Studios share the advantage of being large-scale, multinational operations based in the U.S. that share overlapping interests. By contrast, only Cinemark is U.S. controlled. AMC’s largest stake is held by Chinese conglomerate Wanda, and U.K-based Cineworld owns Regal; its CEO comes out of Israeli exhibition. As AMC recently demonstrated with its Universal deal — which was offered to all chains but accepted by only one, blindsiding its rivals — each has a unique culture and strategies. That leaves theaters with no ability to favor or shun studios: They need them all.

The business effects of COVID forced theater stocks to new lows, but market forces made them weak. AMC’s five-year high, achieved in December 2016, was just over $35; at the start of 2020, it was $7.71. On the London exchange, Cineworld never rose above $3.52 in February 2019, six months after its initial offering; it began the year at $2.88. Cinemark peaked at $44.44 in March 2017, and opened the year at $33.55.

Studios have their own problems and questionable decisions, and the circumstances presented by COVID are beyond anyone’s control. However, over the last six months some of the damage to theaters is self inflicted. With so many factors in play, including an unknown virus and bewildering governance, it’s impossible to know if things might have been different. In assessing theaters’ future, however, it’s clear that they came into the pandemic with a set of truths that they believed to be self evident.

Truism 1: Moviegoing is integral to the social fabric.

Back in February, when China was shutting down much of its society, what felt really shocking (and grabbed an outsized amount of attention) was its decision to close theaters. For the U.S., that seemed unthinkable. NATO spent early months promoting surveys on how much people loved moviegoing, how anxious they were to return, how the current window system was the sole option. They provided testimonials from directors about how much they cared about theaters.

Looking back, it’s clear that exhibitors had an overestimated sense of self, something they might have learned from their own surveys: The average American went to theaters three times a year.

That misplaced sense of proportion is not an accident; it’s built into the industry’s own data. It hyped 2018 as the biggest-grossing year ever, and the 2019 title “Avengers: Endgame” as the biggest-grossing film of all time — but both were calculated as though ticket prices never changed. That movie was huge, but failing to consider revenues on a calculated cost basis is a very effective way to pull the wool over your own eyes.

Movie attendance has been in decline for decades. In 2019, around 1.24 billion tickets were sold. In 2009, it was 1.41 billion. In 1999, 1.458 billion. These numbers become even more significant when considered against a population that has steadily increased.

Truism 2: Studios need theaters as much as theaters need studios.

We go to theaters to see movies, but alternative venues have been on the rise for nearly 70 years. There are blockbusters (“Avengers: Endgame”: 80 million tickets sold) that might have found a larger audience in theaters than in homes, but many more releases survive on post-theatrical showings.

To date, theaters remain the initial home for most feature films because the model is effective for marketing and overall revenue. The rise of streaming, combined with the increasing presence of foreign markets (where streaming is still making inroads and theaters play a more central role) means domestic exhibition does not dominate. Studios have other alternatives, far more viable than theaters want to admit.

Truism 3: Holding firm on windows matters most.

Windows do matter, and exhibitors treated the current norm (around 75 days for premium venues, 90 days for standard) as inviolate. That was upended when the AMC-Universal deal gave the studio the option to offer any title to PVOD after the third weekend, with AMC getting a share of the revenue. Last week, Universal offered its next two films — “Freaky” and “Croods: A New Age” — to all theaters with three- and four-week windows, respectively; non-AMC theaters can take it or leave it, but they won’t get a cut.

The die is cast. Disney might say “Soul” stays, but with a four-week window. Warners could do the same with “Wonder Woman 1984” on December 18. At this point, all theaters can do is say no, but with the dearth of new films that would be the equivalent of hari-kari.

Exhibitors far overplayed their hand. Better that they should have worked on an industry-wide formula more favorable to them. What if they came to the table and sought 45 or 60 days, or a formula based on box-office performance? We don’t know, and neither do they, since studios understood that there was nothing to discuss.

"Tenet"

“Tenet”

Warner Bros.

Truism 4: “Tenet” can save cinema.

“Tenet” was a brave go-for-broke strategy, but positioning one film as savior overestimated the appeal of Nolan’s complicated and cerebral thriller — and left no one in place to soften its fall. As a result, release dates continued to shift, and shift, and shift again. For domestic theaters, it would have been better to delay it — but worldwide, the case is stronger that Warners did the right thing.

Today, NATO published an appeal asking the public to help its campaign send a half-million letters to Congress in support of aid to movie theaters. (NATO said that more than 100,000 moviegoers have sent over 300,000 letters so far.) As always, Americans have a voice — but compared to the many other issues currently facing lawmakers, including a terminally stalled bill that impacts all COVID-related support, this approach seems like an impractical longshot at best. COVID is a terrible, even impossible, reality for theaters, but denying reality came first. The question now is whether it’s too late to start facing it.

Sign Up: Stay on top of the latest breaking film and TV news! Sign up for our Email Newsletters here.

This Article is related to: Film and tagged , , ,


Get The Latest IndieWire Alerts And Newsletters Delivered Directly To Your Inbox