Imax Corp. Posts Record-Breaking Weekend Box Office — in China

While U.S. movie exhibitors continue to languish from government-mandated closures and wary moviegoers due to the pandemic, Imax just recorded its best-ever weekend box office in China — where the coronavirus outbreak began.

The 3D exhibitor soared to its best-ever opening weekend for the Chinese New Year holiday, grossing $25 million through Feb. 14 as the country kicked off its pinnacle box office period. Despite a continued capacity limitation of at least 75% across China, Imax grew opening weekend box office 45% over its record-breaking 2019, when Chinese cinemas were last open for the holiday.

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Shot entirely with Imax cameras, the comedy franchise film Detective Chinatown 3 led the way with $23.5 million — Imax’s biggest three-day opening weekend ever for a Chinese film. Imax captured 6% of the film’s weekend box office, despite accounting for only 1% of overall screens. Friday, Feb. 12 marked the first time Imax generated more than 1 million admissions in a single day in any global market — China or otherwise.

In a strategic effort to embrace local-language filmmaking, grow its network, and strengthen its brand in China, Imax continues to make a significant comeback at the Chinese box office. The exhibitor has grossed $126 million since theaters first reopened in China last July — with box office up 28% in December and 140% in January — despite continued capacity limitations across the country and a lack of new Hollywood movies in the market.

The tally represents 44% of the comparable U.S. weekend box office total of $286.7 million from July 2020 through January 2021.

“Given our recent success at the Chinese box office, we suspected our fans would turn out for Chinese New Year in a big way, but these early returns have blown away even our most optimistic projections,” CEO Rich Gelfond said in a statement. “With record-breaking box office, strong market share, and multiple releases filmed in Imax, this is an important milestone on our road to recovery at the global box office and our long, successful history in China.”

For the first time, the Chinese New Year slate featured an additional two Imax releases, including A Writer’s Odyssey, which includes more than an hour of exclusive and expanded aspect ratio content. New Gods: Nezha Reborn” marked the debut of a new animated franchise. All three films scored high with audiences, with Maoyan scores exceeding 8.8.

“Imax is on the leading edge of the strong box office recovery in China, with audiences emerging from the pandemic and seeking out the most immersive theatrical experience in the world,” said Edwin Tan, CEO of Imax China.

AMC Theatres Says It Will Be Out of Cash After January

AMC Entertainment, parent to the world’s largest theatrical chain, AMC Theatres, said it has received $100 million in stopgap funding to remain afloat financially. The deal with Mudrick Capital Management, disclosed in a Dec. 11 regulatory filing, pays the investment firm 15% in annual interest in exchange for 13.7 million AMC shares.

With coronavirus infections and deaths spiking across the country, movie theaters remain either shuttered (Regal Cinemas) or operating under limited capacity such as AMC and Cinemark. AMC said theatrical attendance has declined 92% since the previous-year period.

The chain said that in the absence of additional liquidity, it anticipates that its cash resources will be depleted in January 2021. To remain viable through next year, AMC estimates its needs approximately $750 million of additional liquidity to fund cash requirements, which include $400 million in deferred rent obligations. The chain is burning through $125 million monthly to maintain operations.

In addition to the pandemic, AMC blamed its fiscal situation and future on delayed studio releases and Warner Bros.’ decision to release all movies concurrently in theaters and on the HBO Max streaming service.

“[The] delays of major movie releases, or the direct or simultaneous release of movie titles to the home video or streaming markets in lieu of theater exhibition, have led to theater closures, prevented the opening of theaters in major markets and have had, and are expected to continue to have in the future, a material adverse impact on theater attendance levels and our business,” AMC said in the filing. “These challenges have been exacerbated by the announcement by Warner Bros. that its entire studio film slate for 2021 will move to simultaneous release, which may result in other studios adopting a similar strategy.”

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As of Nov. 30, AMC was operating at 404 of its 594 U.S. theaters, with limited seating capacities and during limited opening hours. The company’s shuttered domestic screens include theaters in some of its major markets, such as New York City and in California. AMC is operating at 108 of its 359 leased and partnership international theaters, with limited seating capacities and during limited opening hours. Through Nov. 30, AMC said it has seen an 86% decline in international moviegoers compared to last year.

“Our current cash burn rates are not sustainable,” AMC said. We currently estimate that if our attendance levels do not significantly improve during … 2021, then we believe the liquidity shortfall would be greater than the estimated $750 million minimum shortfall, which if not addressed would prevent us from continuing as a going concern.”

Survey: One-Third of Consumers Signed Up for a New TV Service Since Summer

From July to November, one-third of consumers in Hub’s “Predicting the Pandemic” research survey had signed up for a new TV service, up six points from the summer.

The second, just-released wave of the study shows how the pandemic has accelerated the already well-established shift to online consumption of entertainment content.

During that same period, one in four canceled a TV service, up five points. All told, 40% had made at least some change to their TV subscriptions by November, nine points higher than in the summer.

The top four streaming services saw the strongest net increases among those who either added or dropped. Netflix and Disney+ were the most likely to see a net gain in November with half of those who made changes to their TV services adding Netflix and one-third adding Disney+. Meanwhile, only single-digit percentages dropped each of these services.

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On the other hand, consumers were much more likely to drop a live TV service than to add one. Half of those who made TV service changes dropped a live TV streaming service (such as YouTube TV, Hulu + Live TV or Sling TV). One-third dropped a traditional cable, satellite or telco TV subscription. Fewer than one in five added either type of service.

Use of free, ad-supported TV platforms (AVODs) continued to accelerate, including the newly launched, free version of Peacock. AVOD use continued the upward trend seen in the summer with the percent using each major service up since July (and use in July was higher than February, before the start of the crisis). Peacock, released to the general public in mid-July, has quickly become the third-most watched AVOD service, behind the Roku Channel and Tubi.

With many films skipping theatrical release due to COVID, consumer purchase of first-run movies from streaming platforms has jumped significantly. One-fourth of all TV consumers in November said they’d purchased a first-run movie from a streamer, up from fewer than one in five over the summer.

Among those who currently owned a Smart TV, 26% said they purchased their Smart TV during the pandemic — up a full 12 points from July.

“If there were any doubts that some of the changes we’re seeing in leisure habits are here to stay, those doubts were erased when Warner Bros. announced that its entire slate of 2021 films would be released on HBO Max at the same time as theaters,” said Peter Fondulas, principal at Hub and co-author of the study, in a statement. “And with providers like Comcast deciding to impose data caps across its entire footprint as of Jan. 1, it’s clear that many companies agree that streaming content is now the new normal.”

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The hub study surveyed 3,000 U.S. consumers, age 14-74, who watched at least 1 hour of TV per week. The data were collected in October and November 2020.

Thanksgiving Weekend Box Office Eyes Pandemic Plummet

With just one major new release, Universal/DreamWorks Animation’s The Croods: A New Age, hitting theaters over the five-day Thanksgiving weekend, observers contend the traditional box office bonanza is set to disappoint this year due to the ongoing coronavirus pandemic.

Last year, movies such as Disney’s Frozen II and Lionsgate’s Knives Out helped the Thanksgiving box office generate a healthy $263 million in ticket sales, still down almost 17% from 2018’s record North American haul of $315 million. This year, The Croods: A New Age is projected to generate no more than $15 million. The film tallied $1.8 million on opening day Nov. 25, according to Box Office Mojo.

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“The pandemic has negatively impacted every traditionally important box office holiday from Memorial weekend to Fourth of July, and even sidelined the almighty summer movie season, so it’s no surprise that Thanksgiving would be impacted as well,” Comscore analyst Paul Dergarabedian said in a statement. “Usually, it’s a time frame when family and friends get together and historically it’s been a big weekend. This year it’s literally going to be a turkey.”

Indeed, the Thanksgiving weekend has typically generated around $250 million in annual revenue over the past decade, with just 2011 and 2014 falling slightly below the average. In 2020, the last major box office period, Labor Day weekend, saw revenue plummet 76.5% to $28.4 million despite the opening of Christopher Nolan’s espionage thriller Tenet.

With multiple virus vaccines reportedly readying for distribution, the Hollywood box office, and large group gatherings, could return to some sense of normalcy in 2021. A new reality that includes premium VOD. Universal is set to release The Croods: A New Age into homes as early as Dec. 11 should it fail to generate $50 million at the box office as part of a shortened theatrical window agreement the studio has with exhibitors AMC Theatres and Cinemark.

“I do think in the future, Thanksgiving will indeed return to prominence as one of the most important holidays, both symbolically and financially for movie theaters,” Dergarabedian said.

NRF: 2020 Winter Holiday Sales to Grow 5%

The National Retail Federation Nov. 23 forecast that holiday sales during November and December will increase from 3.6% to 5.2% over the same period last year, generating $755.3 billion to $766.7 billion in revenue. The data, which excludes automobile dealers, gasoline stations and restaurants, compares with a 4% increase to $729.1 billion in 2019, and an average holiday sales increase of 3.5% over the past five years.

“We know this holiday season will be unlike any other, and retailers have planned ahead by investing billions of dollars to ensure the health and safety of their employees and customers,” Matthew Shay, CEO of the retail trade group, said in a statement. “Consumers have shown they are excited about the holidays and are willing to spend on gifts that lift the spirits of family and friends after such a challenging year.”

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NRF expects that online and other non-store sales, which are included in the total, will increase between 20% and 30% to between $202.5 billion and $218.4 billion, up from $168.7 billion last year.

“Given the pandemic, there is uncertainty about consumers’ willingness to spend, but with the economy improving most have the ability to spend,” said NRF Chief Economist Jack Kleinhenz.

Kleinhenz said households have strong balance sheets supported by a strong stock market, rising home values and record savings boosted by government stimulus payments issued earlier this year. Jobs and wages are growing, energy costs are low and reduced spending on personal services, travel and entertainment because of the virus has freed up money for retail spending.

As a result of store shutdowns and stay-at-home orders last spring, not all retailers and categories have rebounded as quickly, including small and mid-sized retailers. However, in the aggregate retail sales have been growing month-over-month and year-over-year since June. As calculated by NRF, sales were up 10.6% in October versus October 2019, likely driven in part by early holiday shopping. For the first 10 months of this year, retail sales were up 6.4% versus the first 10 months of 2019.

With e-commerce sales up 36.7% year-over-year during the third quarter, many households are expected to depend on digital shopping to make many of their holiday purchases, just as they have for much of their everyday spending this year. The online spending includes websites operated by bricks-and-mortar retailers, which have become major players in the online market as retail channels have merged.

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The NRF forecast is based on an economic model that takes into consideration a variety of indicators, including employment, wages, consumer confidence, disposable income, consumer credit, previous retail sales and weather. NRF defines the holiday season as Nov. 1 through Dec. 31.

The forecast comes as NRF’s latest research shows 42% of consumers started their holiday shopping earlier than usual this year. NRF’s “New Holiday Traditions” campaign has urged consumers to shop safe and shop early amidst the pandemic, and 59% had begun by early November, up from 49% at that point a decade ago.

 

AMC Theatres ‘Fully Onboard’ With ‘Wonder Woman 1984’ Concurrent Theatrical, HBO Max Release Strategy

Following WarnerMedia’s announcement that it will simultaneously release the highly anticipated DC Comics superhero sequel Wonder Woman 1984 in theaters and on HBO Max on Christmas Day, scuttlebutt suggested major exhibitors would balk screening the Gal Gadot-starrer without an exclusive theatrical window.

However, AMC Entertainment, parent to the world’s largest theatrical chain, AMC Theatres, is breaking from convention and supporting Warner Bros.’ decision to bypass any theatrical window, in addition to transactional VOD revenue — an interesting move considering the chain (along with Cinemark) has a PVOD revenue-sharing agreement in place with Universal Pictures in exchange for narrowing theatrical windows down to 17 days for some titles.

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Wonder Woman 1984

In a statement from AMC CEO Adam Aron, the executive said AMC would “eagerly” showcase Wonder Woman 1984 on its 11,000 screens worldwide regardless of the absence of any theatrical exclusivity.

Aron said AMC had been in “active and deep dialogue” with Warner to determine the best release strategy for director Patty Jenkins’ follow-up to her 2017 box office hit Wonder Woman, which generated $822 million worldwide, in the middle of a pandemic.

“Given that atypical circumstances call for atypical economic relationships between studios and theatres, and atypical windows and releasing strategies, AMC is fully onboard for Warner Brothers’ announcement today,” Aron said, adding that the chain continues to believe that the traditional theatrical window benefits consumers, filmmakers, studios and exhibitors.

“Even so, we also have clearly demonstrated this year that we are flexible and remain open to evolving long-standing business models, provided that we do so in ways that improve the industry ecosystem for all players,” Aron wrote. He said the chain has “instituted novel (release) approaches” with other movie studios during the pandemic.

AMC posted a $905 million loss in its most-recent fiscal period, with revenue down 91% due to a dearth of studio new releases, shuttered screens in Los Angeles and New York, and limited seating at screens that are operating.

With WarnerMedia making Wonder Woman 1984 available on HBO Max, it is effectively undercutting the main reason consumers go to the cineplex. Max costs $15 monthly — about the same price as a movie ticket and concession. More importantly, Max offers new subs a free seven-day trial, which means a consumer could register an account, stream the movie and then cancel.

“As we navigate these unprecedented times, we’ve had to be innovative in keeping our businesses moving forward while continuing to super-serve our fans,” said Ann Sarnoff, CEO of WarnerMedia Studios and Networks Group. “We realize that a lot of consumers can’t go back to the movies due to the pandemic, so we also want to give them the option.”

As a result, Wonder Woman 1984, with a reported $200 million production budget, could essentially become an expensive holiday freebie to existing Max subscribers and a lure to potential subscribers. Or moviegoers could frequent the cineplex without a vaccine in the middle of the flu season during a health crisis.

“Hit me up on Xmas day and show me where there will be open theaters,” said Michael Pachter, analyst with Wedbush Securities in Los Angeles. “We should be up to 300,000 infections a day by then.”

Regardless, Aron is looking on the bright side.

“We hope movie lovers enjoy Wonder Woman 1984 during the holidays this year at AMC,” he wrote.

 

Cinema Stocks Skyrocket; SVOD Fall on Vaccine News

There could be light at the end of the tunnel for beleaguered movie theaters following positive news regarding coronavirus vaccine trials from Pfizer and BioNTech.

Citing the “first interim efficacy analysis” on its “Phase 2/3” clinical trial, Pfizer and BioNTech found 90% effectiveness seven days after the second dose of vaccine “BNT162b2” in preventing infection in test subjects who had never tested positive for coronavirus. The companies said they plan to review the results with regulatory authorities worldwide, including the World Health Organization.

“I would say it’s a historical moment,” Kathrin Jansen, head of vaccine research and development at Pfizer, told the Washington Post. “Something like this has never happened before. Hearing that at the interim analysis we are over 90 percent effective — it was almost stunning to hear.”

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“The results are really quite good, I mean extraordinary,” added Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, who thinks a second vaccine could be produced by biotech firm Moderna, based on similar technology in use.

Dr. Anthony Fauci

The news caused a spark of excitement on Wall Street, with investors rewarding movie theaters and biotech/pharmaceutical companies. Theaters, including most of Hollywood, have been operating under strict pandemic guidelines, resulting in fewer productions and pushing back major tentpole movie releases until 2021.

That, in turn, has resulted in fewer new-release home entertainment titles distributed via packaged media and digital channels.

AMC Entertainment, the world’s largest exhibitor, saw its stock skyrocket nearly 73% in early morning trading after months of shuttered screens and dwindling finances.

The No. 2 and No. 3 theatrical chains — Regal Cinemas and Cinemark — saw their parent stock increase 39% and 42%, respectively. Imax is up more than 27%; Marcus (+17%); Reading International (+13.9%); National CineMedia (+21%) and Theater Landlord EPR Properties (+27).

Meanwhile, shares of Netflix, Roku and other stay-at-home sources of entertainment fell in early trading. Netflix was down 7%, while Roku plummeted 12%. Video conferencing favorite Zoom saw share prices fall 19%, while fitness brand Peloton’s stock was down 24%.

Cinemark Reports 95% Quarterly Revenue Drop as Pandemic Continues to Ravage Movie Theaters

Cinemark Theatres Nov. 5 reported a third-quarter (ended Sept. 30) loss of $148 million, compared with income of $31.9 million during the previous-year period. The nation’s third-largest exhibitor saw revenue plummet more than 95% to $35.4 million, from $821.8 million a year ago, due to shutdowns and limited seating brought on by the ongoing coronavirus pandemic.

Through nine months of the fiscal year, Cinemark revenue is down 76.5% to $588 million, from $2.5 billion a year ago. Net loss tops $378 million, compared with a profit of $167 million.

Through the quarter, the company had 252 domestic and 15 international theaters open to limited hours, showing library content and some new releases.

“As the COVID-19 pandemic continues to have an unprecedented impact on the theatrical exhibition industry, our top near-term priorities remain stringently managing liquidity, driving productivity and reigniting moviegoing,” CEO Mark Zoradi said in a statement. “With nearly 90% of our domestic theaters now operating, we have been encouraged by our results to-date, wherein we have been burning less cash open than when we were shut down.”

Zoradi said the chain has been able to burn less cash through “innovative new ways” of operating theaters and maximizing revenue, such as the “Private Watch Party” concept launched in July.

“We look forward to a more normalized pipeline of new film content,” he said.

Cinemark operates 345 theaters nationwide, in addition to 86 theaters in Brazil, 36 in Chile, and 22 in Argentina. The company’s aggregate screen count was 5,974 and it had commitments to open two new theaters and 16 screens during the remainder of 2020, and 20 new theaters and 205 screens in 2021.

Comcast Eyes More Than $700 Million in Severance, COVID-19 Costs Through Year’s End

The current fourth quarter will not be a good one for some Comcast/NBCUniversal employees as the cable and media giant grabbles with internal restructuring and fiscal realities mandated by of the impact of the coronavirus pandemic on business operations.

Speaking Oct. 29 on a fiscal call, CFO Mike Cavanagh said the company had endured $239 million in year-to-date costs related to layoffs and the pandemic across cable, amusement and NBCUniversal operations. That figure is expected to more than double through the end of the year to more than $700 million. Media reports suggest more than 300 employees at NBCUniversal could lose their jobs in television, studio and streaming by the end of the year.

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NBCUniversal CEO Jeff Shell said the staff cuts and costs would impact the company well into 2021, underscoring the company’s “obligation” to adjust costs as revenue declines. The company recently consolidated all English-language TV networks under Frances Berwick for business operations and Susan Rovner for programming, including streaming.

“I really don’t think the definition of success is any different than it’s ever been,” Shell said. “Our job is to be profitable, generate cash flow and generate long-term value for the company, and that’s how we’re thinking about everything. And it is obviously a very changing world so you have to be nimble in doing that — but the measure of that are the same as they’ve always been.”

Shell said the [restructuring] going forward enables the company to find “great content” in a pandemic-impacted production world and use the streaming, broadband and cable platforms to maximize the value of it.

“It sets us up to grow as the world changes,” he said.

Pandemic Undermines eOne, Hasbro Q3 Fiscal Results

With much of Hollywood and movie theaters shuttered over the summer, film and TV studio Entertainment One (eOne) and parent Hasbro Oct. 26 reported depressed revenue and operating income for the third quarter (ended Sept. 27).

eOne, which Hasbro acquired for $4 billion in August 2019, saw an operating loss of $25.9 million, compared with operating income of $15.8 million during the previous-year period. Revenue dropped 32% to $193.4 million, from $283.3 million a year earlier. For the nine months of the fiscal year, the operating loss was $64.9 million, compared with $91.3 in operating income in 2019.

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For Hasbro, whose entertainment brands include Transformers, G.I. Joe and Power Rangers, among others, saw entertainment, licensing and digital segment revenue decline, which included the Bumblebee film revenue (with Paramount Pictures), partially offset by growth in digital gaming.

Operating profit increased due to a favorable mix of growth in licensed digital gaming, lower advertising costs, and lower development expenses due to the closure of Backflip Studios in late 2019.

“Live-action entertainment production is returning, and we are set to improve deliveries in the fourth quarter with some moving into 2021,” Brian Goldner, CEO of Hasbro, said in a statement. “Demand for stories and content as well as viewership remain high. The teams have a robust development slate of over 150 active television and film projects, including more than 30 Hasbro properties.”