Analyst: Q2 Box Office Down 100%

When sales decline 100%, it can’t get much worse for a business. But that’s the reality facing movie exhibitors. Through May 21 of the second quarter, the box office is trending down 100% year-over-year as the industry remains shut down due to the coronavirus.

Wedbush Securities media analyst Michael Pachter expects “very minimal” box office revenue in the current quarter, with most domestic theaters likely remaining closed through June 30.

The first-quarter domestic box office ended down 25.4% $1.79 billion as most theaters didn’t shutter until March. The North American box office in 2020 is trending down 58.1% compared with 2019.

“We do not expect attendance levels to begin to normalize until the end of the year at the earliest,” Pachter wrote in a May 26 note.

The analyst says theaters and studios have some incentive to release new content before a return to normalcy, as a theater would be able to show a single film on all of its screens thereby allowing for social distancing while still providing the studio with the opportunity to drive box office revenue.

Director Christopher Nolan’s Tenet (Warner Bros.) is poised to be the first in line to take that risk, although Pachter doubts the international espionage thriller will be able to hold its current release date target of July 17.

“Our estimates are clearly subject to change given the fluidity of the release slate and the mood on social distancing as stay-at-home orders begin lifting across the country,” the analyst wrote.

He thinks it unlikely consumers will return to cinemas with any semblance of normalvy before a vaccine is widely distributed. Additionally, the dearth of newly produced content may negatively impact theatrical attendance in 2021, while streaming services will be competing at the highest levels for content to bolster their offerings in an extremely competitive environment.

There are now 68 films that have been moved or pulled from the release slate, worth an estimated $7.5 billion. Of these films, seven moved to a streaming platform, worth an estimated $358 million in box office dollars. Fifteen have yet to be rescheduled or slated for streaming, worth an additional $652 million in potential box office dollars.

“All 15 are likely to be moved to streaming platforms, in our view,” Pachter wrote. “When taken together, we expect the negative impact to 2020 domestic box office to be $3.1 billion, only partially offset by a positive impact to 2021 domestic box office of $1.5 billion.”

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