2020 was already expected to be a weak year at the box office, coronavirus could mean 'cinematic disaster'

2020 was already expected to be a “light” year in the U.S. movie industry. The coronavirus pandemic will make it exponentially worse.

“Near-term, it’s the single-greatest cinematic disaster financially,” Eric Schiffer, CEO of private equity firm Patriarch Organization and chairman of Reputation Management Consultants, said.

The consequences of the pandemic have ranged from shuttered cinemas and lowered attendance at theaters that remain open to Hollywood films being postponed and production shutting down. The current situation has no easy comparison with past events. It is impossible to say how long it will take to contain the virus’ spread. And once the outbreak has ceased, it will take longer still to coax people back to their usual habits. This weekend’s box office results already started to show signs of what could be ahead. 

Clearly, the financial ramifications are likely going to be felt by studios, filmmakers and theater owners for years to come.

In 2018, box office receipts hit an all-time high of $11.9 billion in North America. But even before the coronavirus, analysts expected ticket sales in 2020 would be lower than 2019, despite a strong start to the year.

Adjusting for leap day 2020, North American box office sales were trending up 3.7% from last year, from Jan. 1 through March 1, according to Comscore data. However, a recent estimate from Wedbush analyst Michael Pachter projected ticket sales this year will fall 2.6% to $11.1 billion.

“We expect 2020 box office to end lower than the last two years, as the release slate is relatively soft compared to the two highest box office years on record,” Pachter wrote in a note to investors on March 2.

When Pachter wrote that note, there were just over 100 confirmed COVID-19 cases in the U.S. As of Sunday, the number has climbed to more than 2,952. 

The expectation had been that films like “Mulan,” “Black Widow” and “Wonder Woman 1984” seemed destined for box office success, but “Ghostbusters: Afterlife,” “Jungle Cruise” and “Fantastic Beasts 3″ were question marks.

Other titles on the calendar like “F9” and “Minions: Rise of Gru,” are franchises that have seen massive success outside the U.S., and need an international audience to perform well. 

As the coronavirus spread and became a pandemic, studios began to react by postponing release dates. “Mulan” has been pushed from its March 27 release — it does not currently have a new debut date — and “F9” won’t come out until 2021. Nearly a dozen other films set to be released in March or April have also postponed debuts.

“I just think it’s kind of a disaster for the second quarter,” Doug Stone,  president of Box Office Analyst, said. “It’s just going to be horrible.”

Major studios like Disney, Universal, Sony and Warner Bros. should have enough of a cash reserve to weather this storm, although this pandemic is truly uncharted territory for these companies.

In the past, recessions and depressions have actually helped boost movie ticket sales, as movies are seen as an affordable escape from everyday life. Even in the wake of the 9/11 terrorist attacks, movie theaters only saw a temporary loss in ticket sales, and that could have also been exacerbated by a lighter movie slate during the back-to-school month. By October and November, movie ticket sales were back to normal, according to data from Comscore.

The coronavirus pandemic seems to be more akin to when a big blockbuster flops and studios have to write off the loss. Although even that isn’t a perfect comparison. Eventually, these films will come to theaters, but the studios will see weaker comparisons during the second quarter to the same time last year.

One fear is that the second half of the year will be a little too packed with movie releases and audiences will pick and choose between films instead of going out to see all of them.

Smaller studios have had to be a little more adaptable. MGM pushed its James Bond flick “No Time to Die” to November from April earlier this month. MGM is only set to release five films this year, all but one of which is co-financed with another studio. Far and away, the 25th James Bond film is expected to be the company’s biggest film of the year. 

For comparison, a company like Disney is expected to release more than 20 titles in 2020. So the stakes are higher for MGM. It must give “No Time to Die” the best chance of success as it doesn’t have much room for error when it comes to securing ticket sales.

That decision appears to have been the right one as more theaters internationally shutter completely and major chains in the U.S. begin to operate at 50% capacity. Theaters are closed in China, Italy and France. South Korea has largely left theaters open, but it is seeing its lowest box office tally in years.

On Friday, AMC announced plans to cap its ticket availability for all U.S. showtimes, allowing for only 50% seat capacity until April 30. B&B Theaters and Regal, a unit of Cineworld, also has taken this measure. 

Representatives for Cinemark were not immediately available to comment on their plans.  However, a note on the company’s website said the theaters had added precautions such as more frequent cleaning of the theater. 

Schiffer said that most theaters, particularly smaller chains, will not be able to succeed with capacity reductions. He expects theaters to shut down soon.

“The box office is under attack economically in a way that the world has never seen and many will suffer significantly because of it,” he said.

The concern is reflected in the stocks of movie theater operators. AMC shares closed Friday up nearly 11% at $3.22, as the broader market rebounded from robust selling. The stock, which has a market value of $335 million, is down nearly 55% since the start of the year, and more than 77% since the start of the year. 

Rival movie theater operators have also taken a hit on their stock. Cinemark, which has a market value of $1.7 billion, has seen its stock tumble more than 56% since January. 

A survey of 2,200 U.S. adults, conducted from March 5-7, had shown 38% of U.S. adults would support closures of movie theaters, while 44% would oppose such a measure. But the attitudes in that report from Morning Consult and The Hollywood Reporter may have shifted since the poll was conducted as events have quickly unfolded and the spread of the virus accelerated. 

Last week, there were no clear signs in the U.S. that ticket sales were being hurt by coronavirus fears. But Sunday’s box office receipts told a different story.

For the weekend of March 13 through March 15, the North American box office only took in $55.3 million in ticket sales, 60% lower than the same weekend last year, according to data from Comscore. It should be noted that last year during this time “Captain Marvel” was in theaters, so part of the discrepancy is that the current slate of films is not quite as strong as that blockbuster.

“This was a clearly a tough weekend for the industry as movie theaters are appropriately taking measures to deal with an unprecedented and ever-changing situation by limiting capacity while still delivering big screen content to consumers,” Paul Dergarabedian, senior media analyst at Comscore, said.  

“The key will be to see how this situation evolves going forward, and once resolved and things return to some sort of normalcy, people will likely be chomping at the bit to get back to their beloved outside-the-home activities, like going to the movie theater and I think we will see that eventually reflected in the numbers,” he said.

Disclosure: Comcast is the parent company of CNBC and NBCUniversal.