Recovery Year: CinemaCon and CineEurope Highlight Exhibition’s Post-Pandemic Concerns and Anxieties

Photo by David Becker/Getty Images for CinemaCon

There was an anxious anticipation leading up to CinemaCon 2021, held in August at its usual site, Caesars Palace in Las Vegas. For one, Covid-19 cases were surging due to the Delta variant. Other large-scale conventions had rescheduled or canceled their 2021 editions entirely. Secondly, there were still concerns and questions about the potential impact of the Delta variant on the cinema industry. After enduring 18 months of closures, operational restrictions, staffing challenges, and release delays, exhibitors found themselves at a difficult crossroads. CinemaCon 2021 had the potential to represent the start of the moviegoing recovery—no longer the victory lap many industry insiders had hoped for—but the industry still faced serious questions about the months ahead.

In addition to the general sense of unease, CinemaCon 2021 was further impacted by international travel restrictions and the pandemic’s toll on cinema vendors and suppliers. It was clear from the start that CinemaCon 2021 was going to be a smaller affair than in years past. Nevertheless, the National Association of Theatre Owners (NATO) felt it was crucial to mount the event despite these challenges.

“There was never a doubt that we were going to hold it,” said NATO’s John Fithian during a live taping of Cinionic’s podcast, The Insiders, at Cinemacon, after being asked if the association considered bowing to the pressure of canceling the event for a second consecutive year. “We knew there were going to be challenges. We knew that some, for their individual reasons of risk calculation, didn’t want to come. And that’s fine. We knew that many people still wanted to come and wanted to get back to doing business together with their partners.”

This year’s CinemaCon, along with its European counterpart, CineEurope, which went ahead in October, reflected the back-to-business resolve in Fithian’s words. Yet the sector was still reeling from the financial devastation of the pandemic. Global box office revenue dropped by 72 percent in 2020 from 2019’s $42 billion record-setting year. North America suffered an 80 percent decline in annual box office, breaking its yearslong streak of $11 billion per year and relinquishing its status as the world’s highest-earning market to China.

In Europe, where admissions had reached their highest level since 2004—growing by 34 percent since the year 2000—UNIC territories suffered a 68 percent drop in attendance over 2020.

“We had a small epidemic in 2009 with the H1N1 flu in Mexico. The government shut down everything for a week. It took us five weeks to recover and we thought it was devastating,” said Cinépolis CEO Alejandro Ramírez Magaña at a CinemaCon panel. “When this began, that was our only reference point to an epidemic. We thought this could be a one-week shutdown or a 10-week shutdown followed by 12 weeks of recovery. We never in our wildest dreams imagined that a year and a half later we would still have countries that were fully closed.”

The disruption caused by the pandemic has been acutely felt by the multinational circuits, which represent the highest screen counts. Mooky Greidinger, CEO of Cineworld, the world’s second-largest exhibitor and parent company of Regal Cinemas, spoke about those challenges at a CinemaCon panel. “We operate in 10 countries and received different rules from every government,” he said. “One prime minister thinks the best thing is for kids to not be allowed at the movies. Another one thinks we need to keep five seats between transactions. The third one thinks we should not sell popcorn. It’s crazy. And you’re dealing with these changes across territories on a daily basis. Now it’s quieted down a little bit, where we are almost with no restrictions in most countries, but at its peak it was a disaster because there were changes every day.”

Regal remedied those challenges by deciding to close all its locations worldwide in October 2020, citing varied operating restrictions across territories and the volatility of studios’ theatrical release schedule. For Cinépolis, Ramirez Magaña noted his circuit conducted a market-by-market analysis when deciding where to keep theaters closed and when to reopen. “We don’t call it a breakeven analysis, but a loss-even analysis. How do you lose less: open or closed? Because you’re going to lose in both instances, it’s all about how you minimize burning cash,” he said.

The pace of reopening cinemas increased through Q3 2021, following the wider access to vaccines and a peak of the highly contagious Covid-19 Delta variant. Another major factor was the stabilization of the theatrical release schedule, with studios’ increased confidence in releasing major titles—albeit under significantly different business terms. Theatrical exclusivity windows were once again at the forefront of discussions at CinemaCon and CineEurope in 2021. The contentious topic took on an increased importance following the experimentations in studios’ release strategies during the pandemic.

Addressing the topic on Cinionic’s podcast, The Insiders, Fithian distanced himself and NATO from discussions about the duration of windows while expressing his general support for a period of theatrical exclusivity. “People talk about the window as if there’s only one. There are multiple windows, and each studio has a different perspective on what is important in those multiple windows,” he said. “Our members are working through all those issues with the studios now, and we’re encouraged by it. Windows coming out of the pandemic won’t be what they were before the pandemic. They’re not going to be what they were during the pandemic, either. It’s about taking that step coming out of the pandemic in getting to release models that work for everybody in the industry.”

“I think decisions like day-and-date have been made because of Covid, and there have been adjustments to everyone’s benefit. Going forward, I think the long-term solution is a proper exclusive theatrical window,” said Chris Aronson, president of domestic distribution at Paramount Pictures, during a CinemaCon roundtable. “A lot of this experimentation that has been going on with windows was eventually going to happen. It’s been accelerated because of the pandemic. But I think [the notion of] a proper theatrical window holds. It’s what gets people talking about the movies. Finding the proper window—we may still be trying to figure that out.”

For major circuits like Cinemark, the third-largest chain in North America, the length of that window appears to be a 45-day exclusive run for major titles. “Sometimes the windows will be a little shorter than 45 days, if it’s a smaller or modest-size movie. But for the big movies, that’s really what we’re looking for,” said Cinemark CEO Mark Zoradi. “We use the term ‘Dynamic Window’ as another way of saying ‘flexible window.’ Because with the bigger blockbuster movies, content providers want a longer window—it’s going to be to their advantage to get as much of that box office as possible. It starts with theatrical; it helps create the franchise and ‘eventizes’ the movie. You get your highest per-cap anywhere in the [distribution] chain with [exclusive] theatrical distribution.”

LAS VEGAS, NEVADA – AUGUST 23: CinemaCon Managing Director Mitch Neuhauser speaks onstage during CinemaCon 2021 Opening Night Event: The Big Screen is Back and Sony Pictures Entertainment Presentation at The Colosseum at Caesars Palace during CinemaCon, the official convention of the National Association of Theatre Owners, on August 23, 2021 in Las Vegas, Nevada. (Photo by David Becker/Getty Images for CinemaCon)

Fithian says a dynamic exclusivity window can help more independent and midsize movies reach a wider number of screens, particularly with the expiration of the binding virtual print fee model. Under that structure, smaller distributors found themselves priced out of exhibitors’ binding agreements with the studios that helped finance the transition to digital projection. “With VPF deals coming to an end, the barrier to entry for smaller films has gone down tremendously. When you combine more dynamic windowing capabilities with the end of the VPFs, we expect a resurgence of small art films and mid-budget films in cinemas,” he said.

A diverse slate of films will be crucial for cinemas’ recovery from the pandemic. The assumption that one film alone can spur a comeback—as the industry learned with the release of Christopher Nolan’s Tenet during the pandemic—places undue expectations on the film in question and fails to address the frequency of attendance necessary for the theatrical model to work properly. Warner Bros. president of international distribution Andrew Cripps acknowledged as much in an executive roundtable at CineEurope. “Success begets success. It always has in this business,” he said. “Once you get people coming to see movies, they’re exposed to trailers, they’re exposed to marketing materials, and they discover it’s actually a lot of fun going back to the movies.”

Paramount’s Aronson addressed the topic by pointing at the top-performing weekends ever recorded at the domestic box office. “When you look at the highest-grossing weekends in this business, it’s not just one film. When this business is firing on all cylinders, there is something for everyone.”

The shorter windows and studios’ increasing emphasis on blockbuster spectacles have led several exhibitors to seek out content with untraditional partners. “We are not opposed to asking, ‘What does Amazon have coming that would have real theatrical potential, or Apple TV Plus, or Netflix?’ and doing some unique deals with them,” said Zoradi. “Had The Irishman been coming out right now, as opposed to when it did, we would have played it. We would have made a deal with Netflix: a flexible window, probably with some flexible terms. Scorsese and audiences would have been very happy to have had a 24- or 31-day window on that title.”

Access to premium content from streaming platforms emerged as an untapped source of potential for the industry at CineEurope. “Is a cinema only reserved for films? These days, you can see ballets, operas, [concerts], and all sorts of events at a cinema. As a fan of event cinema, there’s a lot left to be done there. TV series today are in many cases stretched out like long movies, and it’s great to see the bridge between TV and film creating an ecosystem where talent can create across both mediums,” said StudioCanal CEO Anna Marsh.

From L to R: Tim Richards (Vue International), Anna Marsh (Studiocanal), Andrew Cripps (Warner Bros.), Julien Marcel (The Boxoffice Company). Image Courtesy Daniel Loria

At the same roundtable, Tim Richards, CEO of Vue International, a multinational chain and one of the U.K.’s top circuits, observed that tapping into streamers’ content library for eventized screenings wouldn’t cannibalize the performance of feature films. “Why wouldn’t you want to put an episode of Game of Thrones once a week, over two months? Why wouldn’t you show Queen’s Gambit and other high-quality series? I think we’re going to do both high-quality movies and content of all forms in the future.”

At present, however, it’s feature films that were originally destined to hit cinemas that are going exclusively to streaming. Streamers like Netflix and Amazon were active buyers of studio titles shelved because of the pandemic, sending movies like Paramount’s Coming 2 America and Sony’s Cinderella straight to people’s living rooms, at times forgoing a theatrical release entirely. Major studios like Disney have moved blue-chip titles like Pixar’s Soul and Luca off the release schedule to instead launch them exclusively on their streaming service, Disney Plus.

While this trend has caused concern among industry observers, Cinemark’s Zoradi, who previously served as an executive at Disney, sees it as business as usual. “During all those years I was at Disney, when we did sequels to The Lion King or sequels to Aladdin, those were direct to video. Those sequels were going straight to the home,” he said. “Now, much of that is going to Disney Plus. That doesn’t mean that all of their titles are only going to be spinoffs, but a significant number of the shows that are on Disney Plus came from theatrical movies. [Theatrical and streaming] are complementary in this way.”

Previously a point of contention between exhibitors and distributors, the debate around theatrical exclusivity is now being played out among filmmakers and Hollywood talent. Black Widow star Scarlett Johansson sued Disney for its decision to make the film available day-and-date on premium video on demand (PVOD) upon its theatrical release. When former WarnerMedia executive Jason Kliar announced Warner Bros. would be making its entire 2021 slate available to theaters and the home on the same day (through its streaming service, HBO Max), high-profile filmmakers Christopher Nolan and Denis Villeneuve were quick to denounce the decision and express their displeasure with the studio’s parent company.

Warner Bros. had earned considerable goodwill from the exhibition community in 2020 for backing Nolan’s wishes to release Tenet as soon as cinemas reopened. Warner Bros. was voted studio of the year and exhibitor relations department of the year, and Tenet was recognized as the most important film of 2020, by a panel of over 50 exhibitors in this publication’s Boxoffice Pro Blue Ribbon poll. That sentiment soured considerably following the studio’s binding decision to roll out its entire slate day-and-date in 2021. While the decision ensured that major titles could keep their existing release dates, something that cannot be overlooked when looking at box office receipts from Q1 2021, the gamble seems to have delivered diminishing returns as the pandemic began to subside in Q3 2021.

The first Warner Bros. tentpole to premiere day-and-date in theaters and on HBO Max was Patty Jenkins’s Wonder Woman 1984. Released on Christmas Day of 2020, in the middle of the highest surge in Covid-19 cases in the United States, the movie provided respite for exhibitors that had soldiered on for months with a dearth of studio releases. “It was the best choice out of a bunch of very bad choices at the time,” said Jenkins at CinemaCon, calling the decision to go day-and-date “a heartbreaking experience.”

“I think it was hugely detrimental to the movie, and I sort of knew it could happen. We asked ourselves, ‘At this point, what are we going to do? Wait for two more years?’” she said. “I was happy to give the film to the public. I don’t think that it plays the same on streaming, ever. I’m OK with films going to streaming eventually, but I definitely think when you make a film … it’s painful to see it not get the big-screen experience. I’m not a fan of day-and-date, and I hope to avoid it forever.”

Similar attitudes regarding theatrical exclusivity could have a major impact on the talent pool studios have at their disposal in the future. Jenkins, who has a series development deal at Netflix, doesn’t see a problem working with different mediums on productions that are optimized for their respective platforms. “Films that streaming services have recently put out, I’m sorry, they look like fake movies to me. I don’t hear about them, I don’t read about them, I don’t see anything about them,” she said. Jenkins rejected the idea of making a movie for a streaming service outright, “I wouldn’t. I just would not right now. Nor would I accept a limited-window run. I love working with Netflix for television, it’s great for me, but I wouldn’t make a movie for any streaming service. It’s very difficult to market a movie if you’re only having a limited run. Perhaps that’s why I don’t think that that model works,” she said.

Fithian argued that audiences value theatrical releases while he was at CinemaCon. “There’s always been a consumer perception of what a movie made for theatrical release is and a movie made for the home. They’re different. That’s true through television, VCR, DVD, and now through streaming,” he said. “If you go down to the street and just ask a movie fan, ‘Name the last 10 great movies you saw that were made by and released on Netflix,’ they can’t come up with 10. Maybe they can come up with two. They know Netflix for the great series and all the streamers for their television product, but people know movies because they play in cinemas … it has a greater impact on the cultural conversation.”

“I make movies for the big-screen experience; that’s the sandbox I’m in right now. If you want to watch it for the third time later on, streaming it on your phone, fine, but I’m not making it for that experience,” said Jenkins at a separate CinemaCon roundtable. “I believe in the theatrical experience, and I don’t understand why we’re talking about throwing it away for 700 different streaming services that there’s no room for in the marketplace. For studios to throw [theatrical] in the garbage so they can roll the dice, it’s crazy to me,” she continued. “All I can say is that one studio should plant the flag and make a huge move to the theatrical experience, and the filmmakers will go there as a result.”

From a studio perspective, shorter windows can also have an impact on the bottom line. “In the past, a lot of piracy started in the theater, people camcording. They got crappy copies and we did our best—night vision goggles, guards, everything we could—to try and limit that. When movies come out in a day-and-date situation, or in too short of a window, to the home environment, you’re putting a pristine copy over a digital mechanism that can [be pirated] like that,” said Zoradi, snapping his fingers for effect.

Piracy was a major concern for Universal’s international release of F9 over the summer; the studio understood that a shorter window in the United States could eat into profits overseas. “We took a release strategy that was tailored to each market, depending on Covid recovery, that was really important in terms of maximizing box office grosses internationally,” said Universal president of international distribution Veronika Kwan Vandenberg at CinemaCon when explaining the studio’s early launch of F9 outside North America. “Based on that, it was really important to protect the movie against piracy as best we could. We put additional measures into place in each of those markets, to make sure we were maximizing the film theatrically and protecting it as much as we could. At the end of the day, we were really pleased to see that the piracy levels were relatively low.”

International box office was also at the heart of Warner Bros.’ decision to open Dune in several top overseas markets ahead of its U.S. release, which in turn would have made the film immediately accessible on HBO Max. The early overseas rollout provided a cushion of theatrical exclusivity for some foreign markets and helped the film establish a sizable international run (not to mention positive word of mouth) by the time it reached domestic audiences. Weeks earlier at CinemaCon, Paramount president of international distribution Mark Viane remarked that he could see a future in which every international market would have its own theatrical exclusivity window. “Every market plays very differently for how long a movie normally stays in theaters,” he said. “Whichever window we set in the future, it will be a window that’s going to be appropriate for that marketplace.”

Tensions around content availability and exclusivity aside, the biggest challenge currently facing exhibition and distribution isn’t about reconnecting with one another, but with a global audience that lost the moviegoing habit during the pandemic. Reconnecting with moviegoers is a burden both sides of the industry share, and there has never been a more important time for collaboration.

“Cinemas have had an extraordinarily hard time during the pandemic. So have the studios,” said Alamo Drafthouse co-founder and executive chairman Tim League at CinemaCon. “There’s been this divisiveness between us, an ‘us versus them’ mentality, that puts us in a really unhealthy position. We look back on the year—there’s a lot of experimentation that happened, experimentation that we’re not all that happy about—but I don’t begrudge any of it. We have partners in this business who make billions and billions of dollars of investment, and they’re scared as well, and they need to try to find a path towards recouping that investment. It’s important to cement our position as a partner to the studios; they make those investments on our behalf. It’s our job to have a seat at the table and be a part of recouping that investment for them.”

Reaching those estranged audiences and marketing a return to the movies has already emerged as one of the most critical priorities for exhibition’s survival through the pandemic. The first part of that challenge is to address the risk factor of visiting a cinema during the pandemic head-on. “We need to better convey the message that cinemas are one of the safest places for out-of-home entertainment. Safer than a restaurant, café, concert, club, or sporting event,” said Cinépolis’s Ramirez Magaña. “If you want to get out of your home and be safe, cinema is probably the safest option.”

National and citywide mandates requiring proof of vaccination to enter a cinema, instituted in places like France and New York City, began to pop up in the second half of the year. Despite initially affecting box office earnings, the policies have helped cinemas regain consumer confidence—with box office earnings returning to comparable levels despite the social uproar. In locations with no vaccine mandates in place, independent exhibitors like New Hampshire’s Peterborough Community Theatre and Philadelphia’s Bryn Mawr Film Institute have voluntarily implemented vaccine-only showtimes and play dates to assuage their audience’s perception of risk in going to the movies.

With the studio release schedule (more) firmly in place following a string of studio hits during the month of October, like Sony’s Venom: Let There Be Carnage, MGM/UA’s No Time to Die, and Warner Bros.’ Dune, exhibitors are now looking for ways to market moviegoing beyond studio-driven promotions tied to specific titles. “Market the experience, that’s what it’s all about,” said Paramount’s Aronson. “That’s the trade-off. We can work with [exhibition] very closely to market our movies … but the [exhibitor’s] job is to market the experience; that’s how we get people back to the cinemas.”

This has led to some innovation in how the country’s largest exhibition circuits communicate with their audience. In September, AMC launched a $25 million ad campaign starring Nicole Kidman under the slogan “We Make Movies Better.” Cinemark has also partnered with tech manufacturer Cinionic to promote its adoption of laser projection technology across many of its locations.

Premium technology has emerged as one of the biggest drivers for the return to cinemas, particularly for blockbuster titles, regardless of whether they are readily available at home. In North America, over half of the tickets sold for Dune on its opening weekend were for premium large-format (PLF) auditoriums. The film was available day-and-date on HBO Max, but cinemas in the U.S. and Canada nevertheless sold $20 million worth of tickets—above average price—to people looking to get the best possible cinema experience outside the home.

The pace of growth of PLF auditoriums around the world has continued unabated for the last decade, even in a pandemic-stricken year like 2020, according to research firm Omdia. In a study published in the Q3 2021 issue of Boxoffice Pro magazine (“Premium Formats Come of Age”), Omdia analyst Charlotte Jones noted that PLF screens are most prevalent in regions like Asia and the Middle East, where there already exists a higher concentration of development for new cinemas.

The trend is now reaching mature markets as well. PLF was a recurring topic at the inaugural edition of the Boxoffice Forum, a live event hosted by Boxoffice Pro in Paris immediately following CineEurope, which featured panels and roundtable discussions by leading industry figures. The occasion provided a glimpse of how a market known, if not defined, for its adherence to traditional exhibition practices is gauging the appeal of PLF as a way to introduce new technologies that will appeal to younger audiences. Days earlier, ICE Theatres, an immersive screen format created by French circuit CGR Cinémas, announced a deal with Spanish exhibitor Ocine that would add to its existing footprint in the United States and the Middle East.

MPA president Charles Rivkin at the Boxoffice Forum. Photo by Isabelle Negre

Premiumization will continue to play a role in the immediate recovery of the exhibition business, just as all cinema technology innovations have kept the industry relevant for audiences. Warner Bros.’ Cripps sees the effort as vital for exhibition’s future. “We’ve got to recognize as an industry that mediocre is no longer good enough,” he said at CineEurope. “We are competing with people’s living rooms. We are competing with seven or eight global streaming services that are out there. We’re competing with a ton of content that people can sit on their couch and get on their own. Mediocre isn’t good enough. We all have to up our game.”

While Vue’s Richards sees the value of PLF for tentpoles titles on opening weekend, the executive says the entire cinema experience—not just a handful of screens in each city—has to raise its standards. “Our experience is that premium screens are very effective for big movies, very effective on the weekends, but they’re not really a 365-day business,” he said. “Our focus right now is on trying to get recliner seats in every single screen, make every screen special and not differentiate as much.”

Richards calls recliner seating “one of the game changers of the last 20 years in exhibition.” It’s also part of a trend that can be seen in new auditorium designs around the world: optimizing the capacity in each auditorium to better reflect each screen’s occupancy rate. In October 2021, Alamo Drafthouse opened its first theater in Manhattan after six long years in development. The site exemplifies the latest trends in cinema design: 14 auditoriums, each equipped with laser projection and all of them with a capacity under 60 seats; a full kitchen for dine-in service; a retail area in the lobby; and a stand-alone bar area that can serve as a live-event space. By forgoing auditoriums with a high capacity and making each screen feel just as special, Alamo Drafthouse’s Lower Manhattan location optimizes interactions with a smaller customer base while offering them additional purchase opportunities beyond the box office and concessions stand.

“Now that we’ve had this downtime in the worst year and a half this industry has ever experienced, our task is to focus on the essentials,” said Alamo Drafthouse’s League at CinemaCon. “We are an experience economy. We need to make sure every possible aspect, every touch point of somebody leaving their home and coming out to choose cinema for their entertainment, is performing at its best.”

At CinemaCon, Zoradi announced that two-thirds of Cinemark’s domestic circuit has already been refurbished with recliners. The chain is currently installing laser projectors across all its theaters in the United States. They’ve already installed laser projectors in every single screen of one of its most important domestic markets, Dallas–Fort Worth, a short drive from the circuit’s Plano, Texas, headquarters.

“I think the industry as a whole is changing from the exhibitor side,” he said. “We no longer think of ourselves as a theater exhibition company; we think of ourselves as an important retailer. And as a retailer, how do you get to the consumer? What is that consumer experience? How do you put together a subscription model that is easy to implement? We’re spending more money out of our own pockets for marketing while also cooperating with the studios like never before to put together joint marketing campaigns … the exhibitor’s responsibility is to create the immediacy to get that ticket sold, to act and market themselves like a retailer.”

In October, Cinemark introduced upgrades to its website and mobile app to make it easier for consumers to buy tickets and concessions. During the pandemic, many circuits continued to make similar improvements to their online presence—from social media marketing to e-commerce—as part of the second digital transition for movie theaters this millennium. “We’ve seen a lot higher uptake of online ticketing coming out of the pandemic,” said Mark Way, president of AMC Europe and managing director of Odeon, one of the U.K.’s leading circuits. “We are seeing 75 percent of tickets being bought online in advance in the U.K. Before the pandemic, we’d be sitting at around 40 to 50 percent.”

During a press briefing at CinemaCon, NATO’s John Fithian shared that at the start of the pandemic, in March 2020, he feared nearly half of the cinemas in the United States could go out of business. By August 2021, approximately 42,000 of the country’s 43,000 screens prior to the pandemic were operational. Around the world, and after more than a year of closures, cinemas are reopening and welcoming patrons back as they forge ahead in a difficult and protracted recovery effort. “When we came out of lockdown, we weren’t bruised—we were beaten down and bloodied, all of us. I think the next 12 months are going to be about rebuilding and surviving,” said Vue’s Richards. “It’s been really tough, and I think the fact that most of us made it out of the pandemic still in business is a testament to what a great business we all have—and will continue to have in the future.”

If 2020 is etched in history as the year of the pandemic, 2021 will be remembered as the year of the vaccine. And like the vaccine, this year’s cinema recovery effort did not provide an instant solution or relief to the damage and disruption caused by the pandemic. Cinema isn’t back just yet, but it’s well on its way. 

“There was a $42 billion business out there before the pandemic came, and it’s still out there,” said Paul Higginson, Universal’s executive vice president of EMEA, at CineEurope. “There are many people who don’t believe that—people that have a glass-half-empty approach to life. I don’t think anyone in this room can afford to have that approach. There’s never been a time in the history of cinema when there’s been more community about what we seek to achieve … the name of the game is to win that business back.”

Photo by David Becker/Getty Images for CinemaCon

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