movie tickets: photo by Raychan on Unsplash

Worldwide cinema box office hits $42.5B record

Also, for the first time ever, International box office will exceed $30 billion.

The theatrical business continued to thrive overseas in 2019, hitting a record $31.1B per comScore’s latest estimates, and an all-time high of $42.5B globally. This is the first time worldwide exceeds $42B and the first the international box office climbs past $30B. The results come in a year when domestic dipped by 4%.

Of the major studios, only Disney saw increases at overseas turnstiles versus 2018 as its mega brands dominated (see chart below). This year is expected to look vastly different, but handwringing can wait. Sure, it would take a lot for the stars to align again the way they did for Disney in 2019, but its 2020 slate of largely fresh IP is also tipped to create some breathing room for other studios to spread out the field (we’re looking at you, Universal). And 2021 looms mightily with potential across the board.

In the year just past, “Some films didn’t have oxygen to hang out in the room,” suggests a distribution exec in the face of Disney’s Avengers: Endgame, The Lion King, Toy Story 4 and surprise hit Aladdin, among others. But execs are realistic on 2020. With fewer true event pictures, say Deadline finance sources, the aggregate net negative cost as well as distribution expenses for studios will be less this year. Thus, box office can be proportionately lower while still maintaining profitability. Overall, 2020 should throw off several big movies instead of nine enormous ones, with certainly fewer crossing $1B worldwide.

It is estimated that 2019 becomes the second year in a row that all studio motion picture divisions will be profitable. Sounds one person, “We are still seeing grosses in markets that are immature and there is still room for the middle classes to emerge and multiplexes to be built all around the world.” Over the coming years, South East Asia still has place to build out its infrastructure (think Indonesia and its massive population). Africa, a continent of over 1B people, has yet to be truly explored and has a growing middle class. There’s also the local language business to consider, particularly in markets that lean largely to homegrown fare like India. We can expect more attention paid to the market going forward. (Certainly Netflix is betting big on the TV side there.)

The international box office remains the lifeblood of the business, repping 73% of grosses in 2019. And while China is still more optics than profit given the 25% revenue share cap, there were a number of Hollywood movies that would have gotten to $1B worldwide in 2019 without that market at all (Joker did and was never released there, making 69% of its money abroad). That points to the global nature of the business, particularly as there was encouraging growth in mature markets like Japan, Germany, Italy and Mexico, and with the emerging hubs continuing to put in extra muscle.

For all the worry about alternative platforms chipping away at theatrical, most execs talk of a symbiotic relationship whereby the more people stream, the more they also see movies in theaters. The streamers are also creating growth in the ancillary markets. Says a source, “They are licensing content at record prices and TV deals are renewing because there are so many players competing for product.” International rollout on the majors’ proprietary platforms has yet to begin and there will remain long term output deals to be untangled. Regardless, says one exec, “Studios can’t just license product to themselves. They have to pay a fair price. I don’t see it affecting the business.”

What streaming does affect is how to make a film that gets people off their sofas. Product can no longer be episodic or overly formulaic, and films need to have something unique that breaks through, or at least a raison d’être. Otherwise, audiences will respond like they did to such 2019 titles as Godzilla: King Of The Monsters, Terminator: Dark Fate or Men In Black: International. Conversely, look at the success of unique original fare from Quentin Tarantino (Once Upon A Time In Hollywood) and Rian Johnson (Knives Out) in 2019. At the same time, studios are being more cost-conscious, figuring out what’s theatrical and making movies for reasonable prices as well as being smarter about spending on P&A.

To cap it off, adds a finance source, “People have to understand this is a long term and cyclical business. The bad and good periods are never as bad or as good as we think they are.”…

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