Return of the Theatrical Window? July Domestic Box Office Down 62% From 2019

NEWS ANALYSIS — The domestic box office has returned from the ashes of the lost 2020 COVID-19 year when exhibitors were shuttered due to government mandates. With July ticket sales reaching $485 million, the tally would appear to turn the page from the near non-existent $8 million in revenue generated in July 2020.

But does it really? The current July revenue pales in comparison to 2019, when exhibitors sold $1.27 billion worth of tickets in just the 31 days of July. To be sure, 2019 was a record year at the box office. Disney alone generated more than $11 billion in worldwide ticket sales, much of that from Marvel superhero releases.

Disney’s Jungle Cruise

By comparison, the 2021 North American box office is trending down 10.4% year-to-date, to $1.53 billion, as vaccinated moviegoers cautiously return to the cineplex, underscoring the long path toward normalization among exhibitors.

“We expect shares of theater-related stocks to remain volatile in the coming weeks with the resurgence of COVID cases (i.e. Delta variant) around the country, which potentially threatens the upcoming release slate,” Michael Pachter, media analyst with Wedbush Securities in Los Angeles, wrote in a note.

But the rise in Delta infections nationwide is just one of the issues impacting movie theaters. Expedited access to major studio movie releases in the home continues to undermine ticket sales. Observers contend the freefalling second weekend box office for Black Widow was largely due to Disney’s decision to simultaneously release the Scarlett Johansson starrer, from Marvel, as a $29.99 add-on to Disney+. Sources say Marvel is becoming increasingly frustrated with the same-day availability of its films in theaters and on the streaming service.

While Disney reported the title earned $60 million in PVOD cash opening weekend, the theatrical trade group NATO characterized the revenue as fool’s gold.

“Early analysis pointed at the Premier Access revenue and compared it to the domestic theatrical as a success, especially because Disney keeps every dollar of home release,” NATO said in a statement. “It does not.”

Pachter said he was not surprised by the revenue drop-off as fans of most major titles are likely to see their first viewing in theaters, with subsequent viewings on-demand dependent upon whether that includes repeat viewings.

“We think that the only way for any studio to maximize a blockbuster’s profitability is by preserving the exclusive theatrical window, and not cannibalizing the PVOD or rental windows that follow by releasing the title day-and-date,” he wrote.

The analyst contends that for smaller releases, studios would benefit from combining marketing for both theatrical and streaming windows.

“We believe Disney will return to exclusive theatrical windows for its blockbuster content by the winter holidays and throughout 2022, while sending some of its smaller and family titles direct to Disney+ to shore up subscriber numbers,” Pachter wrote.

Disney releases action adventure Jungle Cruise with Dwayne Johnson and Emily Blunt in theaters and on Premier Access July 30.

“It’s about having a granular understanding of what the consumption patterns are, and then speaking to the consumers in a way that’s going to be relevant to the content that they want specifically for themselves,” Disney CEO Bob Chapek told a virtual investor group last month. “And by doing so, we’ll drive engagement and consumption.”

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