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Box Office Update: Entertainment Partnerships and 2023 Release Schedule Give Exhibitors Reason for Optimism

Oct 28, 2022
Box Office Update: Entertainment Partnerships and 2023 Release Schedule Give Exhibitors Reason for Optimism

  • This week, Financial Times ran an insightful article about the future of the box office and theater industry which explored how theaters with large screens and elevated full-service dining were outperforming. Our piece last week about EV charging and movie theaters tightly envelopes the article’s conclusions. In that analysis, we shared that we expected 4Q22's box office to be 10%+ above last year’s level at $2.25B+, but still below the pre-pandemic (2012 -2019) average of $2.82B. The article quoted one exhibitor insider stating, “It’s about how do we innovate, how do we engage and how do we entertain without standing still.” And another insider saying, “Cinemas’ main competition isn’t Netflix, it’s other out-of-home options, and there’s a lot of stuff you can do nowadays from laser quest to golf to escape rooms. You have to compete with all that on price and experience.” In our view, we see a meaningful opportunity for operators to examine new initiatives like reserved EV charging stations and other synergistic services and partnerships.
  • In 2018 and 2019 there was an average of 166 wide-release films per year in North America; in 2022 there will be just 109 (mid-budget horror, kids, dramas, and comedies are missing). The release number is expected to increase to over 125 in 2023, leaving the box office short of 40 releases compared to pre-pandemic levels. 40 releases times 2.5M in average admissions per release (the pre-pandemic average) results in 100M fewer admissions versus pre-pandemic levels just due to the lower production per release volume. As there are roughly 40K movie screens in the U.S., 100M fewer admissions equates to 208 fewer admissions per screen per month, which is a meaningful decline just due the lower release volume
  • We've also previously shared that 1Q23's box office should be come in around $1.4B-1.5B, up YoY, but well below pre-pandemic levels of roughly $2.6B. 2Q23 is estimated to come in around $2.4B versus the pre-pandemic 2Q average of $3.0B, or 20% behind. This week, we looked at the 3Q23 release schedule which includes: The Marvels, Mission Impossible Dead Reckoning, Indiana Jones, TMNT Mutant Mayhem, and five other big releases. All total, these could drive the box office near $2.5B, which gets close to the 2012-20119 pre-pandemic 3Q box office average of $2.7B. As such, we should be considering a strong next 12 months of box office releases despite the release volume shortfall impacting 2023.

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