Study Abroad: How the Pandemic Has Accelerated a Shift in the Film Industry

With the pandemic situation worsening as the year wraps up, and a hesitancy by major studios to release films through traditional means, can the film industry survive as we know it? 

Global box office revenue for 2019 was estimated at $45 billion. That was a record number, with more international openings and tickets sold than ever before. This was despite a lackluster performance in North America, which had traditionally been the strongest movie market. Indeed, the “domestic market” has, on average, been shrinking for almost two decades now. When adjusted for inflation, box office proceeds in North America peaked in 2002.   

But, as we are all aware, 2020 has been something differently entirely. While the year has not yet wrapped up, we can be assured it will be the worst year for box office proceeds in the modern era. For example, estimated a $11.2 billion box office gross in 2019, with 1.2 billion tickets sold in the US. Current projections show a $2.157 billion total for 2020, with about 202 million tickets sold. This year’s projected total is less than a quarter of last year’s, and the estimated number of tickets sold is only 17% of last year’s totals! 

That is a significant change, and unfortunately the part of the industry that will feel the impact of this economic shortfall will be theaters. Movie studios won’t stop making movies. They are too profitable. It may change the way they make movies (lower budgets! – we’ll talk about that next week), and will certainly change the way they distribute movies. 

But lack of movies will not be a problem moving forward. What will be a problem is how willing people may be to go see those movies, and how frequently they are able to. Studios can’t control how willing people are to go to the movies, but they can control whether or not they are able to do so in the first place. Tenet was the only major film to release into theaters during the pandemic. The performance of this film, and the studio’s reactions to that performance give us insight into how the industry will conduct business moving forward. Unfortunately, major studios’ reactions to the performance of Tenet raise a lot of red flags pertaining to the future of the industry as we know it.   

Tenet was the guinea pig of the industry. A big-name movie that a major studio didn’t want to release digitally for fear of losing money. Rather than delay the film into a very crowded 2021, WB decided to release the film into theaters as soon as enough locations had reopened. While the film performed well overseas, it floundered in the US. Part of the reason for its lack of success has to be blamed on the economy. As people were losing their jobs, they didn’t want to spend money on a trip to the movies when they had more important things to worry about. 

But in tough economic times, Hollywood has always persevered. If anything, the movies are an escape from the troubles of our normal life. Even in the darkest times people have shown up to theaters to be entertained. So, I can’t say with any certainty if the economic situation was part of Tenet’s problem. At the very least, the experience of Tenet is an illustration of how much things have changed. 

WB’s decision to release the film in 2020 was based on the hope that audiences were hungry for a film to see in theaters. Having been cooped up at home for the previous 3 months, they thought that once the economy opened up again people would want to do normal things again like go to the movies. They were wrong. 

People who normally would have gone to see this film chose not to. Either they had economic reasons to skip out, or they didn’t feel safe. But I think there is another reason why they may have chosen not to go see Tenet. Having spent 3 months without watching movies in theaters, many people may have realized that they don’t need theaters after all. Besides the high cost associated with actually going to the movies, there is the inconvenience of leaving your own house. 

The pandemic lockdown has changed many aspects of our everyday lives. And this includes our leisure habits. The time we spent away from theaters made us reconsider our relationship with them. We found new ways to occupy our time. We found new ways to watch movies. More importantly, the underwhelming box office performance of Tenet has caused the film industry to reconsider its relationship with theaters. 

Maybe Tenet was just too early. Maybe if the release to theaters had been delayed another month or two it would have found more of an audience. But one bad box office performance of a very expensive movie has not ever had as much of an impact on the industry as a whole as Tenet has had. Shortly after Tenet’s uneventful foray into theaters, we saw other studios begin to announce changes to the release dates of their equally big and expensive movies.

Studios saw the writing on the wall for the remainder of 2020. Keep in mind, this was BEFORE the pandemic started getting worse. Those studios which did not have confidence in making money on streaming services (i.e. everyone except non-MCU Disney) had no choice. If no one was going to see Tenet simply because it was the only major release out there at the time, what chance does a big name movie have if it has the additional complication of competition in theaters? 

But worst of all is the fact that now this has caused nearly every big name movie from 2020 to be pushed back into 2021. First, we don’t know if the pandemic situation is going to improve enough to allow people to venture into theaters as freely as they did pre-2020. Second, you now have 2020 movies competing with some 2021 movies. It’s more competition. We’ve seen nothing yet to indicate people are willing or able to go to theaters in numbers anything close to those in 2019. Common sense says fewer customers plus more competition yields decreasing returns. 

After No Time to Die got moved into 2021 (in response to Tenet’s experience), Cineworld announced they would be shutting down their theaters (Regal in the US) until next year. Worldwide this is impacting the employment of over 45,000 people at Cineworld theaters. Without major releases exclusive to theaters, theaters have no draw. Will other theater companies follow suit? Surely the industry cannot survive without a product to drive revenue, and in this regard they are entirely at the mercy of major production studios who are controlling that source of revenue. 

 No Time To Die’s delay was announced back at the beginning of October. If its current April release date stands, that would be about seven months that theaters will have to survive without a major release. IF the film doesn’t get delayed again. We’re only one month into that 7 month stretch and the situation is already deteriorating with regards to the course of the pandemic and the economic influence that will have. Studio’s decisions to delay their films is causing theaters to have to basically find a way to survive on their own for 6 months in an increasingly worsening pandemic situation. 

But I don’t think we can put the blame on Tenet, even though it may be Tenet/WB’s insistence on having a theatrical release which has led to this situation. I think instead, the blame has to lie on an old-fashioned approach by movie studios. The consensus after seeing the box office results of Tenet was that it underperformed. But did it? Let’s look at the numbers. According to, Tenet has grossed $345 million so far. Of those proceeds, $291 million of them were earned internationally – leaving a domestic total of $53 million. For a movie with such high box office hope, the earnings are low, but the film did remarkably well internationally. 

$291 million in international box office would place the film within the top 300 of all films released. And this is a high-brow, science fiction film released in the middle of a pandemic. That’s not too shabby, and Christopher Nolan himself has recently commented on how impressed he was by the film’s international showing. So why is the film still deemed a failure? Because it didn’t meet expectations in the domestic market, where it was expected to make the majority of its money. 

Let’s compare Tenet to Nolan’s last release Dunkirk, from 2017. Dunkirk earned a total of $520 million worldwide, with $193 million coming from the domestic market. That leaves $330 million from the international market. Really, that’s not too far away from Tenet’s international total so far (12% higher). 

So, there are two ways to look at this. Comparing domestic results, Tenet is indeed a failure compared to Dunkirk. Dunkirk earned about 63% of its proceeds domestically, vs. 18% for Tenet. So, if studios use their traditional approach of counting on the domestic market to make up for a majority of the proceeds of a film, then by this thought process Tenet was a big flop. If this was an indication of domestic theater performance moving forward during the pandemic, then certainly there is reason to want to delay releasing a major film into theaters until conditions approve. 

But I am here to say this approach may be fundamentally flawed. As I mentioned in the opening paragraph, the domestic marketplace has been shrinking for more than a decade. For studios to continue to rely on the domestic marketplace to make their big expensive films profitable is shortsighted and old-fashioned. Looking at the international numbers, you could argue that Tenet overperformed. In an economically-down environment with a pandemic going on, it still made nearly as much money internationally as a film of similar statue from 3 years ago when everything was “normal”.

Also, you have to realize that the US economy was not as open as the economies of other countries had been where Tenet had also released. So, in that regard the lower domestic total is understandable. It doesn’t make the situation for studios better, but at the very least it offers a partial explanation for the reduced domestic earnings. And as I discussed previously, maybe we are simply reaching a critical point in the domestic market where people are just not as interested in going to the movies as they once were. Certainly the pandemic has accentuated that (lack of) behavior. The question is whether or not that change is temporary or not. If you look at the numbers over time, the end of films making most of their money in the domestic market is coming sooner rather than later. Has the pandemic accelerated the arrival of that threshold? 

More concerning is the increased competition set for 2021. We’re going from the extreme of no big movie releases to all of the big movie releases. With so much happening, will people forget about some of the films they were looking forward to? Will they have to decide between which films they will go see? Will they even want to go to movie theaters if there are going to be increased options available to stream at home? 

I don’t have any answers. The only thing I can say is that the studios’ knee-jerk reaction to go ahead and delay everything for the hope of making more money next year will hurt them in the long run. In the short term the burden of that decision has to be dealt by the theaters and it is a waiting game to see if they will be able to survive long enough. I fear that with a collapse of exhibitors, international markets could also see a restriction in the short term. With both the domestic and international markets on the ropes, the only option studios will have left is streaming, and the profitability of that avenue has yet to be seen. 

Rather than investing in the international market by releasing films for theaters (and the studios) to make good money on, the studios are hindered by their traditional approach to the domestic market. Next year, the impact of this decision will come to fruition. I’m not arguing for the release of films into places where the pandemic makes it dangerous to do so. But for the brief few months where the pandemic was retreating in the international market and economies were opening up again, the major film studios missed their opportunity to take advantage. Now, with cases on the rise again, the economic uncertainty in the long term is much worse domestically AND internationally. It’s time for film studios to realize the shift in the marketplace and to stop resisting the change because as I’ve shown, it hurts all of us who enjoy the movies, not just the studios trying to make a profit.