The Impact of COVID-19 on the Box Office

The Impact of COVID-19 on the Box Office

Novel coronavirus has disrupted almost every aspect of our lives, and those disruptions are expected to carry into the short-term future. This is especially true of the entertainment industry, where long-standing production and release schedules have been thrown into total upheaval. Theaters large and small remain closed. When they reopen, there will be few—if any—new films to drive customers to ticket booths thanks to the rise of the premium video-on-demand (PVOD) segment and the friction it’s caused between theater owners and film studios. The cinema experience as we knew it may never return.

The first sign of the growing divides between movie theaters and film studios centered around the success of Trolls: World Tour and a handful of other major releases that bypassed the movie theaters and went straight to digital for $19.99—hence the “premium” video-on-demand moniker. The success of films in that segment prompted Universal Studios to announce plans to continue releasing new movies directly to digital even after theaters reopen, which led AMC Theaters to announce that they won’t screen Universal films after reopening. The spat revolves around the traditional 90-day window of exclusivity that has, until now, limited first-run releases to movie theaters. Without that window, many theaters stand to lose revenue that they depend on to survive.

One potential upside to the divide, though, is the boost to the home theater business. Rather than being a scaled-down movie house for beloved classics and family favorites, home theaters may become the first-run destination for major tentpole movies. From a financial standpoint, this makes sense for consumers and film studios alike—studios make significantly more profit by selling their releases directly, and even at $19.99 it’s a cheaper option for fans (especially those that tend to see films multiple times in first-run). In that sense, we may just trade the commercial cinemas of the recent past for smaller, homier experiences.