It’s no secret: Movie ticket sales plummeted in 2020 as theaters closed because of the COVID-19 pandemic, causing studios to delay movie releases. In some cases studios turned to on-demand streaming to get their movies out there and to start generating revenue.
In this clip from Motley Fool Live, recorded on July 13, Fool contributor Brian Withers asks fellow contributors Toby Bordelon and Jon Quast whether the pandemic killed the box office forever. While their answers differ slightly, both agreed that movie theaters must deliver a better consumer experience going forward if they’re going to compete with the convenience of your living room.
Brian Withers: In 2019, worldwide box office gross returns were $42 billion, and that was a record up to that date, in 2019. And for 2020, sales dropped 70% down to $12 billion. Here’s the question. Did the pandemic kill the box office? When do you think annual box office returns will get back up to the 2019 numbers? Toby, you are up first.
Toby Bordelon: I don’t think it killed it. We’ve talked about this a little bit with the last question. I mentioned this idea, Disney figuring out which stories play better in which format or what’s types of stories. I think you’re going to see people come back to the box office. We’re seeing that now I think you’re going to see the big tent-pole movies come back. I think you’re going to, people want the experience of going to the theater. But I think the success with Disney+ has proved and other streaming services has proved, you got to get people a reason to go. If you’re a studio, you got to get people a good enough story to get them into the theater. It’s got to be a movie that you got to see just on the big screen. Then on the side of the theater owners, you make the experience worthwhile. Am I going to buy a ticket to go to a movie if you don’t have reserved seats, stadium seating that reclines? I don’t know. My couch is countable.
Withers: You don’t want coach class?
Bordelon: I do. [laughs] I want seats that are more comfortable than I have at home.
Withers: You want first-class.
Bordelon: Exactly. Give it me. Maybe give me a massaging chair even. Let’s open it up here. In the winter give me heated seats. Think through what’s going to be a comfortable experience, something beyond what you can get in your living room. I think we’re going to see some of that. We’re going to see some changes. I don’t know how long it would take to get us back to that $42 billion level. I think sooner than people think. Because if you start doing things like maybe putting in more comfortable seats, which may be means having less seats for theater. You’re going to see these ticket prices go up. People are going to be willing to pay out potentially, so maybe your overall number of people going as lower, but the revenue is going to be higher. We’ll have to see how that plays out. I don’t know. If I had to guess. I don’t think it’s going to be 2021 by any stretch, maybe not even 2022, but 2023 maybe. So we’ll see.
Jon Quast: Toby, I really agree with what you’re saying there. With theaters, they really need to entice people to come in because your living room is a viable competitor now. You can stream that movie at home and so there is competition. They’re going to have to up their game to get people in the door. For me, I would seriously question how well they can do that and how consistently to get those box office numbers above what 2019 did.
Now for me, I’m not sure if the pandemic is the real reason here because I feel like there were some things already in place before the pandemic. Brian, when you posted this question to us, my mind instantly went back to a 2013 interview — I guess it was a panel at the University of Southern California — with George Lucas and Steven Spielberg. Two guys who know a thing or two about movies. They were talking to them about the future of the box office. They really rattled some cages saying, look — The Verge covered this and the promo for the article back in 2013 said, “Movie theaters may be left behind for the living room.” That seems incredibly prescient in hindsight. This is what Spielberg and Lucas were talking about.
One of the things that George Lucas said back in 2013, he said, “Movies are no longer casual outing. You’re going to end up with fewer theaters, bigger theaters with a lot of nice things. Going to the movies is going to cost you 50 bucks, maybe a 100, 150.” This goes back to what you were saying, Toby, like, give me a reason to come in. It’s going to be a big experience rather than a casual every Friday night type of thing. Lucas then also said, “It’s not going to have cable or broadcast, it’s going to be internet television.” He was talking about this way back when, and it’s now playing out before our eyes.
I think that for your movies like a Black Widow or I don’t know, just certain movies are going to be more living-room friendly. You’re not going to want to go to all the effort to do it. Maybe something like an Avatar 2 or the next installment of The Avengers. Maybe you’re going to say, you know what, this is a big blockbuster, I’m going to go out for this. But it’s going to be more and more the exception than the rule.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.
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