Perhaps no industry is being damaged as quickly—or as widely—by the rapid spread of Covid-19 as entertainment.
Analysts estimate the virus has already cost the global box office as much as $5 billion, mainly due to theater closures in China (the world’s second biggest film market, behind only the US), but also in Japan, South Korea, Italy, and France.
Theater attendance in many other Asian countries is down significantly from the same period last year. Hollywood studios are being forced to postpone the releases of blockbuster movies and to drastically alter production schedules around the world.
A truly global industry
The film industry is particularly vulnerable to the outbreak because both the production and also the consumption of its output require that large numbers of people huddle together in small spaces. It is also a truly global industry: Studios and production companies have offices and film sets in several countries, and they often require employees to frequently travel between them. One need only look at the end credits for most major films to see just how many locales a single two-hour film relies on in order to reach theater screens.
For instance, No Time to Die, the upcoming James Bond film whose planned April release was delayed until November, was shot in the UK, Italy, Jamaica, and Norway. Thousands of people from all over the world worked on the film. And they did so in extremely close quarters.
All hands on deck
Unlike many workplaces, you can’t work from home when working on a film shoot. Directors can’t teleconference with actors. Makeup artists can’t do their jobs via Slack.
Because of the global nature of film and TV production, those in the industry are more susceptible to infection. But they’re also at a higher risk of spreading the virus as well, due to how much physical contact is typically required to make a movie. Hairstylists have to touch the actors’ faces. Actors often have to touch (and kiss!) other actors. Crew members are all constantly handling the same pieces of equipment.
Some film sets are now requiring that their makeup artists and hairstylists only touch performers with gloves and masks on. If a principal actor gets sick and goes out of commission for an extended period of time, it can throw an entire production schedule into chaos.
What’s been cancelled or postponed
Many Hollywood productions are already feeling the effects of the outbreak, and more are announcing changes every day. Unsurprisingly, any productions shooting in one of the outbreak zones (namely China, South Korea, and Italy) have been forced to either alter schedules, move locations, or shut down entirely. And several conferences and festivals that were expected to have attendees from those parts of the world have done the same.
- The next Mission: Impossible movie, which was in the midst of planning an elaborate three-week shoot in Venice, sent its crew home last week. Sets were abandoned, and some local crews were unsure if the film would ever return.
- After a number of media companies, including Netflix, Apple, Amazon, and WarnerMedia, pulled out of this year’s SXSW film and TV festival, the city of Austin, Texas cancelled the festival altogether for the first time in its 32-year history
- The popular CBS globe-trotting reality series The Amazing Race suspended production and sent its contestants home “due to increased concerns and uncertainty regarding the coronavirus around the world,” CBS said in a statement.
- Netflix is searching for alternatives to Italy, where it was planning to shoot some of its upcoming action film Red Notice, starring Dwayne “The Rock” Johnson.
- The Bachelorette wanted to film part of its upcoming season in Italy. Now it is looking elsewhere.
- Disney+ cancelled its European press launch in London this week.
- Dozens of other concerts, festivals, and conferences around the world have been cancelled.
China’s new protocols
China’s 70,000 movie theaters have been closed since January. The country has lost an estimated $2 billion at the box office since the outbreak, and there is no official word from the government about when theaters will be reopened and film sets revisited.
But when they are, the country will enforce strict rules about how they’re allowed to operate. The Beijing Center for Diseases Prevention and Control and the Beijing Municipal Film Bureau have instituted a joint directive, Variety reported. Theaters and film sets must do the following if they want to resume operations in Beijing, China’s largest cultural and entertainment hub:
- Cinemas must only sell tickets in alternate rows—meaning they can only be at a maximum of half capacity
- Moviegoers must register with their full names and other details.
- Theaters must be disinfected after every screening.
- Film crews with fewer than 50 people can resume working, but only members with body temperatures at or below 37.3 degrees celsius can participate.
- All film crew members (other than performers) must wear masks during production.
- Film crews with more than 50 people cannot resume working until the coronavirus outbreak is over.
How Hollywood is responding
It’s possible that Hollywood productions enact similar guidelines—especially as the virus makes its way into more US states, including California, which declared a state of emergency this week. At least 24 Americans have died as a result of the coronavirus so far.
In the meantime, most American film studios are in waiting mode. Quartz spoke with representatives from several companies and Hollywood unions about how they’re responding to the outbreak, and most responded with versions of the same thing: They’re listening to what WHO and the CDC recommend, but are otherwise proceeding as normal, with a few extra precautions for employees and members.
Some studios have convened cross-department “strategy teams” to figure out how employees in infected areas can remain safe, Variety reported. Sony Pictures closed its offices in London, Paris, and Gdynia, asking its employees in those places to work from home this week. IMAX is encouraging its employees around the world work from home as well, and to teleconference instead. Amazon, including its film and TV studio, has halted all non-essential employee travel.
The CAA talent agency is forcing all travel to be approved and wants representatives to meet with its valuable clientele virtually, rather than face-to-face.
Even as the virus spreads across the US, American theater chains aren’t yet worried. AMC Theatres CEO Adam Aron, for instance, said the company has “felt little or no pain” on a recent earnings call. No US theaters have yet closed due to the virus.
But tell that to investors. Since the outbreak began, AMC’s share price has lagged well behind even the Dow Jones average, which plummeted more than six points March 9, in part based on coronavirus panic. AMC’s stock, meanwhile, is down 14% today. Though it has no theaters in China, South Korea, or Japan, the company does own theaters in Italy, where the box office was down 95% this weekend from the same time last year, due to widespread closures.
With a few big Hollywood movies set to come out soon, the situation could still change quickly. Studios are waiting to see how Disney handles its rollout of Mulan before taking any drastic steps to its spring release schedule. The film is set to come out in the US on March 27, but has no release date set for China—where it was expected to be a big hit—due to Covid-19. Thus far, Disney has no indicated any changes to the film’s global theatrical rollout.
The two biggest blockbusters to follow are likely Black Widow (also a Disney film) and the latest Fast & Furious installment, F9, in May. The Fast & Furious franchise, which has long been a favorite in China, could be especially hurt at the box office if Chinese theaters remain closed when the film opens on May 22.
The theater’s loss could be streaming’s gain
Hollywood studios were already beginning to move some of its mid-budget movies out of theaters and onto their burgeoning streaming services. The coronavirus could provide an excuse for them to move even more content onto the internet, where consumers can avoid crowded public places.
Streaming services like HBO Max and Peacock were not created with a pandemic in mind. But the unpredictability of the global theatrical market was certainly priced in, and the virus underscores just how challenging the box office can be to navigate. Streaming provides these companies an extra out in an emergency.
So far, no studios have said that they are cancelling the theatrical release of a film and debuting it online instead. But the longer the virus goes on—and the more the US market is affected—the higher the likelihood a studio decides to cut its losses at the theater and release an upcoming film on a streaming service. WarnerMedia’s HBO Max launches in the US in May, while NBCUniversal’s Peacock launches in July, with early access available to Comcast TV customers in April.
As many Hollywood stocks plummet in the midst of the outbreak, Netflix’s stock has been hit only modestly. Many analysts are encouraging investors to buy now. While the company’s film sets around the world are affected just like those of any other Hollywood studio, it doesn’t have to worry about getting people to theaters.
WarnerMedia CEO John Stankey doesn’t seem too concerned about the virus for the same reason, arguing it could, in fact, be a boon for the upcoming HBO Max service. “Maybe if a few more people are going to be staying home, they might find more utility in watching TV for a period of time that might help us in the short term,” he said this week at the Morgan Stanley Technology, Media and Telecom Conference in San Francisco.
A harbinger of doom?
While it will no doubt be a rough year at the global box office for the industry, most analysts expect it will eventually recover. But the virus has already showed how incredibly vulnerable the entertainment industry is to something like this in just a few months. In the event theaters in China and other countries remain closed for the entire year—or if the US begins to shutter theater doors—then the industry could conceivably collapse.
Film production, distribution, and exhibition all rely on one another to keep the industry churning out content. If one of those functions grinds to a halt, the other two will suffer. Distributors and theatre companies could go under with no movies to buy and show.
Longtime Hollywood reporter Richard Rushfield outlined the possibility in his weekly newsletter, The Ankler:
It’s not like the world is addicted to movie-going these days anyway that it will be such a gaping void in their lives if they avoid multiplexes for a few months.
The prospect that movie theaters could be shut down in much of the world for much of this year has to be considered within the realm of possible scenarios, perhaps edging towards likely.
It’s hard to imagine how all these studios that teeter on the precipice of solvency sustain that. What for instance does Sony do if its film division is deprived of most of its box office revenue for the year?
There’s very little studios can actually do about this, aside from pivoting entirely to streaming. The very nature of both filmmaking and filmgoing demands that humans gather in close quarters. That idea of community and shared experiences is what makes the movies such a revered art form. And it’s also what could ultimately cause its annihilation.