Does a COVID Vaccine Mean a Return to Theaters?

Photo by Benedikt Geyer via Unsplash

Does a COVID Vaccine Mean a Return to Theaters?

By Cooper Dowd, Staff Writer

The 2020 theatrical box office experienced the worst revenues in decades due to the coronavirus’s restrictions and regulations. However, the announcement of a possible vaccine could mean a quicker return to cinemas.

According to Variety, the 2020 theatrical box office revenue will plummet 65.6% to an estimated $15.5 billion amid the pandemic.

However, hope for the ravaged entertainment industry hit the headlines with the news that Pfizer developed a 90% vaccine in the trial phase. Post announcement, theater stocks swelled with the possibility of a return to normalcy.

“It’s a huge game changer,” Alejandro Ramírez Magaña, CEO of Cinepolis, said. Cinepolis is the primary chain in Latin America and one of the largest in the world.

“It was going to be difficult for movie theaters to recover to pre-pandemic levels without an effective vaccine or treatment. We’re seeing light at the end of the tunnel finally,” Magaña said.

However, due to a social media storm and an undecided election, the vaccine could be delayed resulting in bankruptcy and closures for midsize markets across America.

“It’s life or death for many, many, many theater companies,” John Fithian, chairman of the National Assn. of Theatre Owners, said. “You don’t flip a switch and go from this current bad, pandemic-era business to where we used to be in 2019. It’s going to be a slow ramp-up.

In the U.S., the two largest markets located in Los Angeles and New York also decided to clamp down on restrictions.

Calif Gov. Gavin Newsom moved 28 counties in California to the most restrictive tier (Purple tier), which means 40 of the 58 total counties’ theaters must remain shuttered.

Studios will not release significant movies in such a tough market, especially with an effective vaccine’s uncertain timeline.

“We need WONDER WOMAN 1984 to open to give us another boost,” Eric Kuiper, chief creative officer of Celebration Cinema, said. “When studios put out a major release, they’re doing major marketing. They’re not doing major marketing for these smaller releases. When there’s a major marketing campaign, it sends a message that movie theaters are open.”

However, WONDER WOMAN 1984’s release seems unlikely for Warner Bros. after TENET’s mediocre performance.

“Warner Bros. is not about to throw out another huge blockbuster before any other studio does,” Jeff Bock, an analyst with Exhibitor Relations, said. “They gave that a try once, and it was a disaster. They’re not going to do it again.”

These circumstances force theaters into a corner. Many of the significant theater chains will have to scale back operating hours and get creative.

“We’re making enough money to keep our theaters open and basically pay for operating costs,” Mark Zoradi, CEO of Cinemark, said. “We’re treading water to get to brand-new first-run product.”

AMC is in a similar boat.

“Returning to movie theaters before the pandemic is over requires consumers to be comfortable that moviegoing is a low risk activity with respect to the virus,” Elizabeth Frank, AMC’s chief content officer and executive VP of worldwide moviegoing, said.

However, the size and reach of these two theaters—AMC, with its 620 U.S. theaters, and Cinemark, with its 525 theaters—gives them a distinct advantage versus Independent chains who face total shut down much sooner.

“I do not think we will survive much longer unless we receive federal funds from some sort of bailout,” Christian Meoli, founder and CEO of Arena Cinelounge in Hollywood, said. “I’m trying to make lemons out of lemonade. I’m in survival mode. I’m being flexible and doing everything in my power to stay in business.”

Christian Grass—the CEO of Metrographan, an independent two-screen cinema on New York’s Lower East Side—said that he has gone digital. Metrograph is offering on-demand screenings of movies paired with conversations between cast members, filmmakers, and critics.

“It’s a difficult situation no doubt, but I see our digital strategy as a supplement to what we were doing in the physical space,” Grass said.

Other theaters chose to wait out the shutdown until a solid blockbuster lineup is released.

“We can’t open the cinemas just for one movie, as big as ‘Wonder Woman 1984’ will be,” Cineworld CEO Mooky Greidinger said. “Once there is a clear lineup, we will reopen. … We should do it when we know we are moving on solid ground. We’re bleeding much less when we are closed than when we are open.”

One bright spot for chains is that most of the blockbuster movies have chosen to postpone releases instead of going directly to streaming.

“The encouraging part is studios, by and large, haven’t gone to premium video on demand; they’ve gone to 2021 or 2022,” James C. Goss, vice president and senior research analyst at Barrington Research, said. “There is an importance to getting these movies in the theaters. Even if there was a big streaming platform that could cover production costs, why bother taking that risk if all you’re going to do is recover the cost?”

Exhibitors are waiting on the eventual vaccine, but the possibility of one could mean a return to open theaters.

“The news has been so bad recently that I didn’t really expect something so dramatic to happen,” Rich Gelfond, CEO of Imax, said. “Of course, nothing is certain. But it does seem like things could go back to normal significantly sooner than we thought last week. And that’s unqualified good news.”