Hollywood’s box office recovery needs a rewrite

This year’s holiday season has largely been a lump of coal for the film industry. Domestic box office receipts for the season that begins the first week of November barely crossed the $1 billion mark. That’s actually less than the same period in each of the past two years, which was helped by the release of blockbuster films like “Avatar: Water Road” and “Spider-Man: No Way Home.” It’s also less than half the $2.3 billion average for the holiday season in the pre-pandemic years from 2015 to 2019, according to Box Office Mojo.

there are many reasons. Hollywood labor strikes, which halted production from May to mid-November, pushed back several big releases from the latter half of 2023. The once bankable superhero genre has begun to decline, with Aquaman and the Lost Kingdom underperforming “Waterlogged. ” being just the latest example. The film grossed just $27.7 million in its opening weekend on December 22 — less than half of its 2018 predecessor and the fourth straight film in Warner Bros. Discovery’s DC franchise to have a disappointing debut.

This came just weeks after Disney’s “The Marvels” posted the weakest opening ever for a Marvel franchise. It did not improve over time; “The Marvels” has barely crossed $205 million worldwide after nearly two months in theaters. No Marvel film has finished its theatrical run with a global gross of less than $370 million since Disney acquired the studio in 2009, according to The Numbers, a website that tracks the movie industry.

The year was not all misfires. Moviegoers are turning to familiar brands like Barbie and Super Mario that have yet to be tapped by Hollywood, while the surprise success of Oppenheimer’s three-hour biopic featuring challenging material could also find an audience. However, the weakness of two superhero franchises combined to gross over $36 billion at the global box office has made a notable impact, and with less than a week left in the year, the 2023 domestic box office total stands at just over $8.7 billion, up 18%. from the previous year. year but 23% less than 2019’s total, according to Box Office Mojo.

That’s not a great sign for an industry still recovering from the disruptions caused by the pandemic and the booming growth of live streaming. The effects of labor strikes will also continue into the new year. Many analysts now expect 2024’s domestic box office to be lower than 2023’s, due to changes in the release schedule that also led to some 2024 films being pushed back to the following year.

Much of the 2024 timeline remains unclear. In a Dec. 18 report, Morgan Stanley analyst Benjamin Swinburne predicted 30 large-scale films would be added to the 2024 schedule during the first half of the year. “In our view, it is up to theatrical release to match theatrical demand for box office revenues to approach pre-pandemic levels,” he wrote.

This has Wall Street already looking towards 2025 when things will finally improve for the industry. Wedbush’s Alicia Reese expects the domestic box office to reach about $9.7 billion in 2025, up 12% from 2024 and about 15% below the pre-pandemic average of about $11.3 billion annually. Consensus estimates for theater chains Cinemark and AMC Entertainment reflect a similar trend, a decline in admission revenue in 2024 followed by double-digit growth in 2025.

Swinburne believes the industry could return to something close to pre-Covid levels in 2026, although he acknowledges that much is still unknown about the production line yet. Given the two- to three-year production window for most big-budget films, 2026 will be the first year we see how much Hollywood has absorbed the brutal lessons of 2023. Hopefully, Barbie won’t be in its fourth installment by 2023. Then…

Write to Dan Gallagher at dan.gallagher@wsj.com