During the pandemic, studios experimented with shrinking the amount of time that their films screened exclusively in cinemas, while spending oceans of money to launch streaming services. But the debt they racked up has sent their share prices plummeting and, now, studios are making more movies for theaters and cutting back on their streaming budgets.
CinemaCon, the annual exhibition industry showcase that is unfolding this week in Las Vegas, couldn’t be happier about the shift in strategy. John Fithian, the head of the National Association of Theatre Owners, the trade group behind the show, touted the new state of play during his speech to the convention, while praising Apple and Amazon for embracing the big screen with movies like “Air” and the upcoming “Killers of the Flower Moon” and “Napoleon.” Both of these companies will reportedly spend more than $1 billion on theatrical films.
“It is now more irrefutable than ever that theatrical is the keystone for the movie industry,” Fithian said. “Releasing major films with massive budgets directly to streaming platforms is not a sustainable business model. The return on investment is non-existent.”
Fithian said that debuting a movie in cinemas makes people more likely to check it out on streaming because it gets more attention for a film. Nine out of ten people are aware when a movie comes out theatrically and 50% of them are more likely to check out that film on streaming. “Movie fans want a theatrical release to help them decide what their best viewing options are,” Fithian argued.
The NATO chief, who is departing his post after two decades, said that the movie business is enjoying a return to pre-pandemic form with ticket sales up more than 30% thanks to hits such as “Avatar: The Way of Water” and “The Super Mario Bros. Movie.” He said much of that resurgence has a simple explanation. “We have more movies to play.”
Fithian, who oversaw NATO as COVID shuttered theaters and pushed for federal funds to support the industry, will be replaced by Michael P. O’Leary, who has served in senior positions at the Entertainment Software Association, 21st Century Fox, the Motion Picture Association. He also worked on Capitol Hill and at the Department of Justice.
Motion Picture Association Chairman Charles Rivkin also touted the box office comeback in his remarks to theater owners, while arguing that his organization, which represents the major movie studios and Netflix, is doing the vital work of encouraging production incentives that keep movies flowing to the big screen. He noted that the MPA has been meeting with countries such as Argentina, Colombia, and New Zealand to push them to make their mixture of tax breaks and rebates more attractive to filmmakers.
“In many ways, we are serving as Hollywood’s ambassadors to the world, engaging at all levels of government to fight for the freedom, and the agency that this great industry needs to do what it does best, and ultimately to bring more people to more theaters around the world,” Rivkin, who in a previous life was ambassador to France, said.
Some of those efforts may be paying off. Rivkin said that the Kingdom of Jordan is investing in new soundstages to lure filmmakers to iconic locations such as Petra and Wadi Rum, which have previously hosted “Dune” and Indiana Jones, while Saudi Arabia has made film production a key part of its economic development plan. Critics have complained that these breaks don’t generate enough economic activity to justify them, serving as corporate giveaways. Rivkin pushed back at that suggestion. “In Australia, every Australian dollar invested in production has generated nearly six Australian dollars in return,” he said. “Every dollar of tax credit allocated in New York State generates more than nine dollars of economic activity in the Empire State. And every British Pound spent attracting investment in the UK film sector returned almost eight pounds in revenue.”