Week two of the cultural phenomenon "Barbenheimer" continued to produce upside as we had previewed in our story last week. Barbie’s and Oppenheimer’s second weekend was down only -43% week-over-week (compared to a typical decline of -50%) and their domestic release-to-date total of $580M is phenomenal. Tom Cruise was able to lift up the nose of Mission: Impossible--Dead Reckoning Part One for a third weekend, with a -45% decline week-over-week.
Alamo Drafthouse is a “gastropub theater” known for its casual attitude. This week, there was a fun story in the WSJ about Barbenheimer leading to “Movie Theater Behavior Has Gone Off the Reels” with theater goers viewing it as a cultural celebration and rock music concert-like event. While Placer can tell you how many people brought their smartphones to the theater, it can’t tell you how many were taking selfies and posting shots of the movie screen on TikTok. But from the article, it was many. Shown below is visitation to Alamo Drafthouse Cinema (visits per location) and as one can see, Barbenheimer and Mission: Impossible has driven visitation to near flat with 2019. We would expect those theaters with premium large format screens (PLFs) to be outperforming 2019.
Cinemark Tinseltown Jacinto City in Houston has five PLF screens. Below we show the Mission: Impossible opening weekend versus the Barbenheimer opening weekend. To our surprise, while Barbeheimer weekend did double the admissions of MI’s weekend, that lift came from “densifying” the market. The drive time between the two weekends are nearly identical. However, the True Trade Area increased by +33%, indicating densifying. There were also almost 60% more visits per square mile (380 visits per square mile versus 240), also indicating densifying. Moreover, when comparing the demographics and psychographics (’Captured Market) of the two periods, we see very similar audience profiles. Said differently, everyone that wanted to see Mission: Impossible, also wanted to see Barbie and Oppenheimer.
IMAX’s CEO Richard Gelfond said of Q2 2023 box office results, “Perhaps the best indicator of the power of IMAX was the significant attention devoted to our play times for Mission: Impossible--Dead Reckoning Part One and Oppenheimer and the competition for our screens in the broader summer marketplace, and IMAX is delivering with both excellent films. Our debut with Oppenheimer gave us our best indexing of any major release ever, global, domestic and international. It is the biggest IMAX debut in our long and wildly successful partnership with Christopher Nolan, and it helped turn the film into an unmistakable cultural event...Mission: Impossible delivered the highest grossing IMAX debut of the franchise.” (Recall from our last story that there was a potential spat brewing that could see more movie screens and theaters upgraded to PLFs.) Shown below are the films that IMAX thinks will be big for the back half of the year.
Source: IMAX Q2 2023 Supplemental Slides
Q2 2023’s box office slate allowed Cinemark to generate more revenue in the U.S. than it did in 2019. While admissions were still 23% below 2019, revenue per admission increased to $18.90 in Q2 2023 from $14.40 in Q2 2019. While costs were also up ($13.40 per admission versus $10.90), the higher unit contribution margin and the international business, combined, produced EBITDA of $180M compared to $132M in Q2 2019. The healthy EBITDA led to the business generating $225M in free cash flow for the period. Shown below are the titles for 2024 that Cinemark views as “compelling.”
Source: Cinemark Q2 2023 Investor Presentation
As we’ve written, 2024 should have been a year of more wide releases setting up the year for a gain on top of 2023’s box office total. However, the strikes have challenged that outlook given the strike’s duration. Cinemark’s CEO affirmed our fear saying that their viewpoint of more volume in 2024 has become “increasingly uncertain.” Two larger films have slipped into 2024 from 2023, and Dune is rumored to be at risk. Any slippage from 2023 boosts 2024, and any slippage from 2024 boosts 2025. Additionally, rushed work (any rework required for 2024 releases once the strikes end) is often not the best work. Moreover, slippage from one year into the next still requires the slipping movie to find an opening weekend not already claimed. As noted above, Mission: Impossible has been impacted by Barbenheimer. The strikes also likely cause Cinemark and others to be more cautious on their plans for screen upgrades to PLF. We will get the upgrade story early next year when Cinemark, AMC, and Cineworld provide their capital expenditure outlooks for 2024.
Lastly, this week Cineworld (parent of Regal Cinemas) exited bankruptcy newly capitalized. We will offer more insights on its financial and strategic positioning in the weeks to come.
