Though theaters saw box office grosses down 35% from pre-pandemic year, audiences showed up for two movies: “Top Gun: Maverick” and “Avatar: The Way of Water” in 2022. Despite theaters’ excitement, Kim Masters and Matt Belloni examine how these two films were exceptions to the industry, which is still trying to recover from the pandemic by adopting strategies that best fit each studio’s business model and needs.
This segment has been edited for length and clarity.
Audiences showed up for “Top Gun” and “Avatar” sequels
Kim Masters: Matt we can now look back at 2022 at the box office for the year and see that the grosses are significantly down 30 something percent, as were the number of releases going into theaters.
We have Jim Cameron to thank partly for the relief in Hollywood. He, Tom Cruise and Jerry Bruckheimer. [Those] two movies were so dominant, “Top Gun: Maverick” and “Avatar: The Way of Water,” that it did show that audiences will show up in droves.
That doesn’t sustain the industry
Masters: Now that doesn't sustain the industry, and as someone said, in a piece I wrote recently, it's not a great thing for the business that “Top Gun: Maverick” was the number one movie at the box office on Memorial Day, and again on Labor Day. That just doesn't speak well to the flow of product or the spreading around of the wealth.
Matt Belloni: No, it doesn't, and you hit the nail on the head there. It's the number of releases that is the real problem here.
The new normal
Belloni: The studios have not settled into what the new normal is going to be post pandemic, and we're seeing weaknesses in some pretty significant genres.
The family movie has not really come back yet. Only “Minions” really performed this year in terms of animated films, and over the holidays, the “Puss in Boots” sequel did not really light the world on fire despite getting great reviews. And that's a real problem going forward.
The adult drama is basically dead. All of these holiday award-style movies, one after another, faltered at the box office. And with rare exceptions, “Elvis” being one of them, there's really not much of a market for these adult-oriented movies. we'll see what happens in 2023.
Legacy studios want theatrical debuts
Masters: Hollywood is hoping that having more movies in theaters in 2023 will prime the pump. This is the hope of the legacy studios, obviously. Netflix doesn't care. But the legacy studios, and even Apple has a couple of movies going into theaters. They care! They're just hoping that people will remember that going to the movies can be fun, and that that is a relatively inexpensive form of entertainment in today's world.
Also, the studios are realizing that by pushing so hard towards streaming – which as we've talked about repeatedly, Wall Street encouraged them and demanded of them – they are screwing themselves because movies in theaters do better on multiple windows, there is a waterfall of money that comes.
And so now, you'll see the legacy studios try to pull it together to say we're going to preserve a window, maybe not necessarily the longer old window. If you look at a studio like Paramount or Sony, they would say give or take 45 days, maybe less in some cases. But if they're going to try, they do have to retrain the audience that they will have to wait two weeks to see a movie and they're not unified on this issue, yet.
No consensus and very different agendas
Masters: They're not allowed to collude, and they haven't come to any kind of informal consensus.
Belloni: There may not be a consensus, and that's what's kind of fascinating about the situation we're in right now. These companies have different agendas. If you look at what Warner Bros. Discovery is doing with the Warner studio, they are saying, “We believe in theatrical and we're gonna give these movies exclusive 45-day windows or sometimes even longer if they have a hit.”
Then you're looking at a studio like Universal, which is owned by NBC Universal and Comcast. They believe very strongly in this PVOD, or premium video on demand window, where they're going to put a lot of movies in theaters, but then it will go almost immediately to this different window where they can extract more revenue via their PVOD relationships.
And Disney is in another separate thing where some of the big 10 tent poles are going to get big theatrical windows. We saw [this] with “Black Panther” 2 where it's not on streaming yet. It's coming to streaming in February. But then a movie like “Strange World,” which flopped at the box office and was animated, that [movie] got a 30-day window and was almost immediately on Disney+. So we're seeing very different strategies.
Masters: At least one of the distribution guys I talked to said, “That creates confusion and confusion is not good. That's a lost sale,” he said.