Is Theatrical at a Critical Point in its Recovery? 

On paper, it has been a fantastic few months for the general box office and the theater chains that support it. Especially as the late summer months have brought some startling successes to the table. However, theaters are still very much in a recovery period, caused first by the global pandemic and then the protracted dual strikes that rocked the industry. It’s a mixed bag with some great improvements and a few dodgy balance sheets coming out of Quarter 2. Our Blake & Wang P.A. entertainment lawyers in Los Angeles, Brandon Blake, takes an honest look at the current state of theatrical.

The Strike-Enforced Issues

In a world where theatrical attendance was only beginning to recover after the lockdowns, the months and months of strike action from 2 sides last year had an even more significant impact than it may otherwise have done, especially with many release date delays and yet another throttle on the production pipeline to contend with.

This supply line issue, in particular, has led to knock-on effects on the 2024 box office performance. With far fewer titles to offer, there has been a significant strain on the releases we have seen happen to deliver not just good but great box office performances. As can only be expected, not every title has managed to match those lofty expectations, with some expected strong performers delivering rather dismal release results. Yes, Borderlands, we are looking at you right now. 

However, this has been significantly offset by some stellar performances. While Deadpool and Wolverine was always billed to be a major moneymaker, the unexpected over-performance of titles like Inside Out 2 has had a very welcome impact, too.

A Promising Future

When evaluating these recent strong releases against the lackluster Q2 results we’ve seen from major cinema groups like Cineplex, it may seem contradictory; it’s important to remember that within the Q2 window for most exhibitors, we are still seeing some knock-on effects from the slow start to the 2024 box office.

The real effects of most of these performances will be felt in the upcoming Q3 balance sheets. For example, Cineplex saw a significant drop-off (32%) in theater attendance in April and May this year, which formed part of their Q2 period. Most of the recent box office rebound started in June this year with the phenomenal performance of Inside Out 2 both globally and domestically. Despicable Me 4, and more recently Twisters, have also delivered solid performances. 

However, seeing these developments as a turning point in the recovery cycle is not unreasonable. While there will still be some effects of the strikes felt in 2025, especially early-year releases, it will be a much-improved landscape from early 2024. We’re even seeing chains open or re-open previously shuttered theaters as attendance grows. And there’s a strong pipeline of (expected) blockbusters coming. We’ve already reached all-time revenue highs across revenue per patron and concession revenue. 

In many ways, the wider economic downturn should be favorable for theaters, too. Historically, people turn to “cheaper” entertainment sources, like cinema, over more expensive entertainment options. While streaming will eat into that space a little, it’s still a strong environment for theatrical growth and recovery.