United States / Coronavirus Insights
We Need a (Super)Hero

What information do you want to see from IBISWorld on COVID-19? We'd love to hear from you

by Christopher Lombardo, Senior Analyst
Oct 21 2020

In late spring and early summer 2020, as shelter-in-place orders eased and nonessential businesses were permitted to begin reopening, the fate of film industries remained tenuous. The summer season, which is generally packed with big-budget franchise hits and international blockbusters, become even more dubious. Early 2020 titles had been postponed until summer months, with the belief that movie theaters would be safe to operate. However, the reality of how eager consumers would be to return to the theaters appeared to be overstated by previous estimates. Summer passed, scant of the international blockbusters many film-related industries have grown to rely on, and while heading into winter, the repercussions have already begun to occur.

Film production

For more than a decade, the Movie and Video Production industry (IBISWorld report 51211a) has experienced growing market share concentration, with the industry’s largest players, including the Walt Disney Company, have consistently accounted for greater shares of revenue. As consumers have increasingly used alternate services to watch films, operators have struggled to entice consumers to rent, purchase or view their films in theaters. However, these large companies have proven that box-office hits, such as the Avengers franchise, have been the greatest drivers of revenue. While operators hedged their bets on consumers’ return to theaters by late summer 2020, one of the only would-be blockbusters to hit theaters, Tenet, served as a testing ground for the power of blockbusters during the COVID-19 (coronavirus) pandemic, and thus, demonstrated that operators’ should have been more cautious. In response to Tenet’s dismal returns, many other blockbuster films that were slated for release in 2020 have been pushed back to 2021. While some operators have released movies exclusively through streaming services, the returns lost from theater closings has hurt operators’ bottom lines. As a result, revenue the Movie and Video Production industry is expected to decline 7.1% in 2020 alone.

Movie theaters

While film producers have been hurting amid the exodus of blockbusters, operators in the Movie Theaters industry (51213) have taken the brunt of the blow. The rise in streaming services and straight-to-streaming feature-length films over the past decade has placed significant pressure on movie theaters. Moreover, as films receive shorter theater-exclusivity periods, the incentive for consumers to visit theaters diminishes. Coupled with home entertainment systems becoming more accessible and affordable, movie theaters have become increasingly reliant on exclusive blockbusters to attract customers. For example, franchises, such as the Avengers and Harry Potter, have continued to attract a large fan base. However, independent films and nonaction pieces have largely become fodder for the small independent movie theaters that have struggled to remain financially viable. Still, as revenue lost from blockbusters’ schedules being pushed backed, even the industry’s largest operators have taken a hit. In early October 2020, Regal Cinemas, a subsidiary of Cineworld Group PLC, the largest operator in the Movie Theaters industry, announced it would temporarily close more than 500 locations across the United States. Concurrently, industry-relevant revenue for AMC Entertainment Holdings Inc., the second-largest industry operator, is expected to decline 65.0% in 2020 alone. In response, the company recently announced plans to offer full-theater use to customers for $99.00, with exclusivity and privacy potentially enticing customers that have been weary of indoor activities amid the coronavirus pandemic.

 

Edited by Alexandria Valenti