$US1b question: As it faces less-than-sizzling summer, can Hollywood win back COVID’s chilled couch potatoes?

Thomas Buckley
Bloomberg
Ryan Gosling in The Fall Guy, directed by David Leitch.
Ryan Gosling in The Fall Guy, directed by David Leitch. Credit: Universal Pictures

The Fall Guy had so much going for it — Ryan Gosling and Emily Blunt, two of Hollywood’s hottest stars, no real competition and a multimillion-dollar promotional campaign.

Yet the $US125 million ($189m) production from Comcast’s Universal Pictures brought in just $US28.5m in its domestic box-office debut this weekend — the latest evidence that film fans are refusing to return to their pre-pandemic, moviegoing ways.

Despite a few must-see pictures in recent years, such as 2023’s Barbie and Oppenheimer, or 2022’s Avatar: The Way of Water, ticket sales have stubbornly remained a third below pre-pandemic levels, imperilling the crucial summer box office season that begins the first weekend in May.

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It’s possible no film tops $US1 billion this summer, which would be the first year that’s happened in almost two decades, excluding 2020, when cinemas were closed to comply with pandemic-related restrictions.

“This summer’s box office appears likely to suffer both from a smaller overall film slate and a relative lack of top-tier franchise pictures,” Doug Creutz, an analyst at Cowen, said in a research note. Sales are running down 22 per cent year-over-year, “and we expect summer box office to perform at that level or worse”.

In an earlier time, a film with the cast and calibre of The Fall Guy would almost certainly have done better. The picture earned critical praise, bringing together elements of an action movie and romantic comedy. Gosling, co-star of Barbie, and Blunt, recently in Oppenheimer, made numerous promotional appearances, including one together on NBC’s Saturday Night Live that went viral on TikTok and Instagram.

The biggest challenge for studios and theatres today may be getting film fans off their couches to see original fare from directors who aren’t marquee names. Streaming soared in popularity during the pandemic and taught consumers to expect a steady diet of new movies and TV shows to watch at home — for less than a weekend trip to the cinema.

The standard streaming plan at Netflix, which recently said its worldwide subscriber base hit 270 million, costs $US15.50 a month, about what a single movie ticket costs in many markets.

To distinguish the theatre experience from what consumers see at home, theatre owners are increasingly introducing larger-screen formats such as those sold by Imax, which were a significant driver of ticket sales to Dune: Part Two and Oppenheimer. The latter title has grossed close to $US1b globally.

Movies don’t typically need to reach $US1b in ticket sales to be considered a success. Many earn multiples of their production costs and turn a profit without ever nearing that mark.

But the dearth of big hit pictures is a reminder that the industry remains in a hole. In 2019, studios produced nine films that grossed over $US1b, a record year in which Walt Disney Co. alone supplied seven. In 2018, there were five.

Last year, Hollywood delivered two films that topped $US1b. If the industry fails to produce a billion-dollar film in this year, it will be the first time — excluding pandemic years — since 2008. Of this year’s summer releases, only Inside Out 2 and Deadpool & Wolverine are expected to produce the domestic box office achieved by Oppenheimer in 2023, according to Creutz’s estimates.

One reason is overall output — which has been hurt by sweeping budget cuts in Hollywood and lingering effects of strikes that shut down movie and TV production for months last year. Some films scheduled for release this year will come out in 2025 instead.

Adam Aron, chief executive of AMC Entertainment Holdings, the world’s largest cinema chain, said in April that major studios are producing an average of 64 films a year, compared with about 84 prior to the health crisis.

As a result, box-office sales in the US and Canada are expected to fall to $US8b in 2024, down from $US9b last year.

That’s hurting theatre operators: Shares of AMC are down 46 per cent this year. Marcus, a cinema and hotel group, is down 18 per cent. Metropolitan Theatres, a 100-year-old business, filed for bankruptcy in February.

Still, studios rely on more than just the box office for profit, including sales of consumer products tied to the films and online movie rentals. They also use movies to attract subscribers to streaming services and can license their pictures to competitors.

And some films in 2024 have performed strongly, including Dune: Part Two, which delivered more than $US700m in ticket sales, as well as Godzilla x Kong: The New Empire and Kung Fu Panda 4, which each grossed over $US500m. None of those would have made the top 10 in 2019 in terms of worldwide receipts, however.

Some theatres chains are coping better than others. Last week, Cinemark Holdings reported sharply higher first-quarter profit, along with sales that nearly matched year ago levels. Its shares are up 26 per cent this year.

Sean Gamble, the company’s president and chief financial officer, predicts a solid recovery in 2025, when films including Captain America, Mission: Impossible, Jurassic Park and another Avatar are due for release, as well as a Michael Jackson biopic and a Superman reboot.

“Next year’s lineup is already coming together in a big way with a wide array of spectacle films,” he said on a call with investors.

Bloomberg

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