Analyst: Concerns About Moviegoers Not Returning to the Theater Are Overblown

As the theatrical movie business slowly emerges from the pandemic, concerns about any permanent damage the COVID-19 virus have wrought on the moviegoing public are overblown, according to Wedbush Securities media analyst Michael Pachter.

Michael Pachter

Writing in an April 5 note, Pachter said the North American first-quarter (ended March 31) box office ended up 465% at $1.34 billion in revenue, compared with $288.1 million in the previous-year period when most exhibitors either remained closed or operated at reduced capacity. The current year Q1 was still down 44% relative to Q1 2019 at $2.39 billion, due to the relatively slight release slate.

“We are notably more positive as the volume of the release slate normalizes and the quality of releases improves notably,” Pachter wrote. “Barring any significant resurgence of COVID, we expect attendance to begin normalizing in the coming weeks and months.”

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That said, Pachter does not expect the domestic box office to return to its former glory in 2022.

“We are conservatively estimating 2022 domestic box office up 46% over 2021 (down 43% over 2019), and 2023 box office up 32% over 2022 (down 24% over 2019),” Pachter wrote.

The analyst, citing an internal survey of more than 1,000 moviegoers, found that the share of people not planning to return to the theater this year is smaller than feared, and is still driven in part by ongoing pandemic-related fears.

Of the survey respondents who had gone to the movies at least one to two times per year before the pandemic, fewer than 20% said they do not plan to attend the movie theater in 2022.

“Overall, we view this result as relatively benign given ongoing concerns related to the pandemic (the top reason cited for not attending movie theatres in 2021, and still a significant concern among respondents), a shift in behavior over a two-year period of watching content at home, the plethora of quality content now available on a variety of streaming services, and inflationary pressure,” Pachter wrote.

The analyst contends studios have myriad opportunities to close the gap on overall box office revenue by continuing to market blockbusters more heavily with Imax and other premium large format screens, as well as with alternative content, such as live concerts, comedy shows, and sporting events.

“Based on our survey results, we think that interest in alternative content digitally broadcast to movie screens is substantial and can drive incremental attendance,” Pachter wrote.

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