Skip to main content
Open this photo in gallery:

Moviegoers sit in a theatre at a Cineplex theatre in Toronto, on Oct. 6, 2020.Chris Young/The Canadian Press

The lobby of the Winston Churchill Cineplex in Oakville, Ont., was unintentionally on-theme for the opening day of the new film The Empty Man: It was, save for a handful of masked employees, empty.

While movie theatres in Ontario’s COVID-19 hot spots were shuttered, this multiplex just west of Toronto was still open for business. Yet the weekend’s one and only new release – a barely promoted horror flick that had been sitting on Disney’s shelf for a few years – attracted just three audience members for its first screening.

The following weekend, 3½ kilometres away at the 5 Drive-In, the Heffron family waited to watch a sold-out showing of the 1966 special It’s the Great Pumpkin, Charlie Brown. They’d been here before, but “never this late in the season,” said Amanda Heffron as she draped blankets over her daughters. A propane heater sat in front of the family’s lawn chairs and the open back door of their minivan. As the fall chill sets in, drive-in theatres usually quiet down. But not this year.

“I feel like Cinderella. I’m going to wake up one day and my car’s going to turn back into a pumpkin,” says Brian Allan, the owner of Premier Drive-In Theatres, which has five locations in Ontario including the 5 Drive-In. “I am very grateful for how things have been going so far.”

The small number of drive-ins that still exist are not the panacea that the film industry desperately needs. And while many viewers have turned to streaming and video-on-demand, or SVOD, home entertainment is not the cure to Hollywood’s pandemic woes either.

Open this photo in gallery:

People attend a screening at the 5 Drive-In in Oakville, Ont., in July, 2019.Peter nowak

Having been conditioned by streamers to expect a monthly all-you-can-binge buffet for the price of a single movie ticket, consumers now expecting a seamless shift of blockbusters from the big screen to their homes are about to get a rude awakening. Those Marvel epics, Star Wars sequels, and James Bond capers cost a tremendous amount of money to create. Streaming alone does not make up the revenue that the theatrical box-office used to account for.

All of this has left Hollywood scrambling. Studios are rethinking the economics of how they make and release films. Streamers are facing an increasingly competitive market. Viewers will have to change their expectations. And movie theatres, which were already facing audience declines, will have to wait out a financially disastrous pandemic, and then try to lure audiences back. Fasten your seatbelts; it’s going to be a bumpy year.

A full week before the World Health Organization declared COVID-19 a global pandemic, moviegoing as we know it was already beginning to crumble. On March 4, the producers of the latest James Bond instalment, No Time to Die, announced they were delaying the film’s April release. Soon enough, rival Hollywood studios punted their spring and summer titles – huge money-making franchises including Fast & Furious 9, Black Widow, Wonder Woman 1984, A Quiet Place Part II – to later in the year, or even 2021.

Open this photo in gallery:

On March 4, the producers of the latest James Bond instalment, No Time to Die, announced they were delaying the film’s April release.Nicola Dove

Warner Bros. did its best to prop up the status quo, releasing the sci-fi thriller Tenet in late August, even as key markets such as New York and Los Angeles remained in lockdown and others were hobbled by audience-capacity limits. But Tenet’s relatively paltry domestic box-office take of US$52-million is a troubling sign for Hollywood.

“We’re not going to know whether or not consumers feel safe until someone drops another blockbuster in the marketplace. Consumer confidence is what it’s going to come down to, whether there’s a vaccine or not,” says Jeff Bock, a media analyst at Exhibitor Relations Co. “The best-case scenario is next summer.”

But the studios are not ready to abandon cinemas. They can’t afford to. While some have gone direct to SVOD, most of the big-budget movies are still being held back. Studios are counting on the revenue and word-of-mouth marketing that theatrical releases deliver, to make the financials of moviemaking work.

“A big theatrical run makes these projects more valuable down the road in ancillary markets like home entertainment and broadcast, merchandise and even theme parks,” says Paul Dergarabedian, senior media analyst for Comscore.

Last month, rumours started flying that a financially strapped MGM was shopping No Time to Die – now set to open in April, 2021 – to streamers. But the massive reported asking price of US$800-million, necessary to offset the loss of theatrical revenue and sponsorship campaigns, was deemed too rich for even major players such as Netflix and Apple TV+.

“If I’m going to spend $200-million to produce a piece of content, which is the quality of content that the consumer expects, the only way for me to create monetization of that product effectively is through movie theatres,” says Bill Walker, chief executive officer of Landmark Cinemas, Canada’s second-largest theatre chain.

This explains the existence of the theatrical “window”: the amount of time a movie is shown exclusively in theatres before moving to home entertainment. Talks of shortening the window, which is traditionally 72 days, had become a sticking point between studios and theatre owners long before the pandemic. In a sign of these unusual times, in July, Universal Pictures struck an unprecedented deal with theatre giant AMC to shorten the window to 17 days. Of the few star-driven movies opening in theatres this fall and winter that audiences might have actually heard about – such as the animated Croods sequel or the Tom Hanks drama News of the World – most come from Universal.

Cineplex Inc., Canada’s largest exhibitor with 1,687 screens, has long been opposed to shortening the window, but recognizes the new reality.

“During the pandemic, things are different,” Cineplex CEO Ellis Jacob says. “It’s not to say that we accept what they’re doing as being the best for the long term. But in the short term, sometimes you have to make some changes that work in favour of both sides. Everybody is basically trying to bring the movie business back.”

Yet Universal’s arrangement has emboldened other studios.

“When you consider 95 to 97 per cent of box office is done within the first 42 days, it seems folly to think that you should have to wait another four to six weeks, and sometimes longer, to go to the next window,” says Chris Aronson, president of domestic theatrical distribution for Paramount Pictures. Although he adds that Universal’s 17-day window is too short, “exhibitors know darn well the more money we as a content distributor make, the more movies we’re going to make, which is better for the theatrical ecosystem.”

That may be true in the long term, but right now, those theatres are suffering.

AMC, the biggest theatre operator in the world, has warned investors that it is running out of cash. Cineworld last month closed all its locations in Britain and the United States because it no longer made financial sense without new blockbusters to screen. Cineworld was on the brink of buying Toronto-based Cineplex, but the deal disintegrated during the pandemic, sparking a legal battle. With government subsidies and a recent round of financing, Mr. Jacob says the company can weather the storm as long as it can work with suppliers and landlords. But that’s not true for everyone.

“There’s a high percentage of theatres that will shutter permanently. It’s a serious situation for this sector,” says Nuria Bronfman, executive director of the Movie Theatre Association of Canada, who stresses there have been no reports of COVID-19 transmission in any theatres. “We’re getting squeezed at both ends: tight regulations, and we don’t have a product to sell.”

The few new titles that studios are sending to theatres represent low-risk bets: movies such as The War with Grandpa, The Honest Thief, and, yes, The Empty Man. A handful of Canadian productions, such as Possessor, The Nest, and The Kid Detective, received more screens than they otherwise would have had for their releases. Theatres have also dug into the archives to fill in the gaps, replaying classics such as Hocus Pocus and The Lost Boys.

“We’ll play anything, frankly, right now,” says Mr. Walker at Landmark.

As much as studios want to hold bigger titles for theatrical release, they have turned to streamers to bring in some immediate revenue. Sony offloaded the Tom Hanks drama Greyhound to Apple TV+. Disney spent US$75-million to acquire the filmed version of Broadway’s Hamilton for a 2021 theatrical release, but instead sent it straight to Disney+ in July. Sacha Baron Cohen’s Borat sequel skipped theatres for Amazon Prime Video. Paramount got a whopping US$125-million from Amazon for the Eddie Murphy sequel Coming 2 America, and sold The Trial of the Chicago 7 to Netflix.

Open this photo in gallery:

A scene from The Trial of the Chicago 7.Niko Tavernise/The Associated Press

“Several months ago, I got on a call with Paramount’s marketing department, and it ended with them saying, ‘Listen, we just don’t know what the exhibition business is going to look like in the fall,’” Chicago 7 director Aaron Sorkin says. “They got back some troubling data indicating that the first people who return to theatres will be the people who think that COVID is a hoax and won’t wear a mask. And I agreed that the Idaho militia wasn’t the audience for this, so we should dip our toe into the water with streaming services.”

Meanwhile, Disney, NBCUniversal, Warner Media and Viacom CBS (owner of Paramount) have all recently restructured their organizations to prioritize their streaming divisions over their theatrical pipelines.

“Many of these streamers are pumping out new films, not to mention new series, every single week. If you’re getting that for a price point of $15 a month, why would you ever go to theatres again?” asks Exhibitor Relations' Mr. Bock. “This is a war for eyeballs.”

Yet the increasingly crowded streaming market – the past 12 months saw the launches of Disney+, Apple TV+, HBO Max, NBC’s Peacock and Quibi, the latter of which is already dead – means companies have to spend heavily on content to lure consumers who have more choices than ever.

Netflix, for instance, has been on a years-long spending binge, racking up more than US$15-billion in long-term debt. After adding millions of subscribers during lockdowns – growth that is now slowing – Netflix just raised the price of its most popular subscription plan. And though it has pledged hundreds of millions of dollars to everyone from Martin Scorsese (The Irishman) to Michael Bay (6 Underground), there hasn’t yet been a Netflix film to either capture the pop culture zeitgeist or be crowned the industry’s ultimate conferrer of respect, the Academy Award for Best Picture.

But it can be hard to judge the success of any big-budget production made for streaming.

“Streamers will report if they’re up or down on subscriptions, but they don’t make revenue or viewership numbers available,” says Comscore’s Mr. Dergarabedian. “They’re only forthcoming if it’s a knock-it-out-of-the-park scenario.”

Take Mulan, for instance. The Disney remake was originally set to open in theatres this past spring, but the studio decided to experiment with a Disney+ release in the middle of the pandemic, in September. The company has not disclosed how many subscribers chose to shell out the $34.99 premium to see the film. But it is telling that Disney’s next Pixar release, Soul, will go to Disney+ without the added price tag.

Open this photo in gallery:

People walk past a poster of the Disney movie Mulan outside a cinema in Beijing, on Sept. 10, 2020.GREG BAKER/AFP/Getty Images

“These companies are caught in a lurch,” Mr. Bock says. “They don’t know what to do, and I don’t blame them. There’s no pathway to success right now.”

For decades, cinemas have been the gatekeepers for filmmakers: bringing movies to audiences, and also conferring legitimacy. “Straight to video” was shorthand for failure. That is changing.

“I love the theatrical experience. … But Netflix was giving us so much more money than a studio, and it was becoming difficult to justify saying no,” says Gina Prince-Bythewood, director of the Charlize Theron action vehicle The Old Guard, which premiered on Netflix in the summer. It also gave the film a wider audience, she added, with subscribers in more than 190 countries.

“I’m sad as a filmmaker that people aren’t in theatres for a lot of stuff,” says David Dobkin, director of the Will Ferrell comedy Eurovision Song Contest, which also premiered on Netflix. “But I’m excited and grateful that there’s another platform succeeding in bringing these stories and fun to people, and it’s working on a massive scale.”

Yet the financial realities are different for the next Star Wars movie or a new Jurassic World.

“Remember, it’s an over-$40-billion business around the world. The studios are not going to say, ‘Okay, I’m just going to go to [video-on-demand rentals] and streaming,’” Cineplex’s Mr. Jacob says. “We are still the engine that drives the train. We create the awareness. That’s so important when it comes to sequels, when it comes to merchandise sales, when it comes to gaming, even rides in theme parks.”

And streaming executives do not necessarily think they will kill the theatre business, either.

“In general, after COVID, people will still go to bars and go to stadiums, go to movie theatres. I think it will surprise everyone how quickly it all comes back,” Netflix CEO Reed Hastings said in an interview with The Globe and Mail in September.

“There is something about the theatrical experience that is different than what we offer,” adds Crave’s Tracey Pearce, president of distribution and pay for Bell Media. “We’re not looking at the death of the theatrical experience.”

Even so, streaming has changed audiences' expectations. Movie theatres have adapted by building more whiz-bang features – seats that move with the action on-screen, 3-D, better-quality sound systems, cushy recliners – to press the point that cinemas beat living rooms, and to justify premium ticket prices. But this may need to change, suggests Paramount’s Mr. Aronson.

“If you’re talking about lowering prices, then more people will come,” he says. “… You’re going to arrest the decline in admissions, and more bodies in the door means more money.”

With high-definition television screens becoming cheaper, the average home entertainment system is also improving, Morningstar analyst Neil Macker says. People sitting at home are still missing out on a big-screen experience, but not as much as they were before.

“If you have a larger family and it’s expensive to go to theatres, maybe you only do it for the most premium things. … Where you don’t want the scale of a Marvel or a Fast and Furious on the big screen, you’re more likely to do it at home,” Mr. Macker says.

Still, Comscore’s Mr. Dergarabedian says he believes there is an “emotional” quality to sitting in a darkened movie theatre. The transactional nature of e-commerce is fine for buying toilet paper, but people still want to go to the movies.

Cineplex’s Mr. Jacob agrees. He says he believes people are turning to streaming out of necessity right now, but they are also suffering from cabin fever. Once theatres are able to open fully again, audiences will come, he says – with an exasperated emphasis many will relate to after months of being cooped up.

“People. Want. To leave. Their homes.”

Open this photo in gallery:

A woman prays at the Erawan Shrine in front of an advertisement poster featuring Daniel Craig in the new James Bond movie No Time to Die, in Bangkok on Sept. 28, 2020.MLADEN ANTONOV/AFP/Getty Images

Plan your screen time with the weekly What to Watch newsletter. Sign up today.

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe