Analyst: Theatrical Return Could ‘Normalize’ in July

With President Biden predicting 1.5 million daily COVID-19 vaccinations nationwide by mid-spring, the return of the domestic box office could be right around the corner. Wedbush Securities media analyst Michael Pachter believes the box office could “normalize” as early as July as vaccinations roll out, and virus infections/deaths decline.

“We maintain that most people will remain reluctant to attend the movies until they receive their vaccine, or in the case that the
transmission rate significantly falls,” Pachter wrote in a Feb. 22 note. “Simply stated, we do not expect attendance levels to begin to normalize until July at the earliest.”

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Pachter contends AMC Theatres and Cinemark have taken the right precautions — installing high-quality air filtration systems, implementing enhanced cleaning and disinfecting protocols, reducing seating capacity, and block seating to preserve social distancing. Regal, which remains shuttered, has taken similar steps.

The analyst bases much of his optimism on the strong return of the Chinese box office — the second-largest in the world — which saw a major boost from a record Lunar New Year weekend with action comedy Detective Chinatown 3 opening to $393 million.

“Chinese box office bodes well for Imax, global theatres post-COVID,” Pachter wrote. “There was clearly pent-up demand in China as audiences returned en masse once theaters re-opened, and in Q4 Imax revenue was down only 4% YoY in the region. Through Feb. 14, Imax is trending up 471% from [the previous-year period].”

That said, Pachter estimates the Q1 U.S. box office is trending
down 93.6% through Feb. 21, with ticket sales down 88.1% year-over-year, and 2021 trending up 122.5% over 2020 (down 59% over 2019). More than 50% of theaters in major markets remain closed.

“We expect 2022 to return to 2019 levels on pent-up demand for long-delayed films,” he wrote.

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