Film industry faces $ 5 billion loss from coronavirus outbreak

Chinese theaters are closed, while box office receipts in South Korea and Italy have declined and "the outlook is unpredictable".

In 2019, the international box office climbed to a record $ 31.1 billion, contributing to global transportation of $ 42.5 billion, also a historic record. But the celebration by the global film industry was quickly replaced by anxiety caused by the coronavirus, which many public health officials now call a global pandemic – one that could drive people around the world away from public spaces, such as multiplexes, for weeks or months. .

By Monday evening, the virus, known as COVID-19, had infected more than 90,000 people and killed more than 3,000 worldwide. The vast majority of deaths have occurred in China, where the virus first appeared, but there are now more new cases outside of China than within it. South Korea saw its confirmed infections almost double over the weekend to 4,300.

Movie theaters have been closed in China for weeks, but the virus is starting to have a major impact on cinema in South Korea, Italy and even Japan, the world's third largest cinema market. Some analysts estimate that COVID-19 could already result in the loss of at least $ 5 billion due to declining box office and production revenues. This number could increase if cinema weakens in other markets, including the United States, where there have been 100 confirmed cases and six deaths.

In China, the world's second largest box office territory, some 70,000 movie theaters remain closed due to the epidemic and the current moratorium on releases has severely reduced the revenues of Hollywood and local studios. Ticket sales during the traditional Chinese New Year holiday period from January 24 to February 23 this year were miniscule by $ 4.2 million, compared to $ 1.76 billion ($ 11.8 billion). RMB) over the same period in 2019, according to figures from the consultancy firm Artisan Gateway. . Analysts estimate that the loss in China until the end of February could reach $ 2 billion or more. Businesses in multiplexes are not expected to pick up significantly for another few weeks, if not several months.

Over the weekend of February 28 to March 1, box office receipts in South Korea, the fifth largest market in the world, fell 80% year-on-year. Movie # 1 was the horror photo of Universal and Blumhouse The invisible man, which debuted at a relatively lukewarm $ 1.1 million. "Theaters are open, but they might as well not be," noted a distributor The Hollywood Reporter.

In February, South Korea's revenues fell by almost 70%. According to KOBIS, the national ticket service of South Korea, ticket sales for the last month totaled $ 52 million (KRW 62 billion) on 7.3 million admissions, compared to $ 158 million. (KRW 189 billion) out of 22.3 million admissions in the same period last year.

"The situation is now much worse than what we saw during the MERS (Middle East respiratory syndrome coronavirus) epidemic in 2015," said an official with the Korea Film Commission. "The audience dropped to over 40% at the time, but there was nothing like theater closings and the market resumed after about a month. This will not be the case with coronavirus. It is very unusual to see a daily admission drop below 100,000. But this is happening now and the outlook is unpredictable. "

CGV, South Korea's largest theater chain, has closed its nine theaters in the southern city of Daegu, the country's fourth largest urban center, where nearly two-thirds of confirmed infections have been reported. For cinemas outside of Daegu, CGV has cut up to half of its screenings. Other major exhibitors, such as Lotte Cinema and Megabox, are also reducing screenings and reducing staff in order to minimize interpersonal contact. CGV also stated that it checks the temperatures of all staff on site each morning.

"The atmosphere of fear is palpable," said a CGV official. "The situation is similar to what we saw when the swine flu spread in 2009, when there were 80,000 infected cases in Korea."

With the closing of cinemas or the reduction of screenings, many local film releases have been postponed or delayed indefinitely in Korea. A black and white version of Bong Joon-ho's Oscar award Parasite, slated to be released nationwide on Wednesday, made an abrupt announcement two days before the opening that it would postpone until the coronavirus crisis subsides. A spokesperson for CJ Entertainment, the distributor of the film, said THR that all CJ employees have been ordered to work from home until at least March 6. With 476 other cases of coronavirus reported on Monday, bringing the country to 4,212, cinemas in Korea are expected to be deserted for weeks. .

In Italy, around half of the country's cinemas are said to be closed – all in the northern part of the wealthy country – as the government has imposed strict restrictions to curb the spread of the virus after 1,694 confirmed coronavirus infections and 34 deaths.

The Italian box office dropped in response. Turnover dropped 44% the first weekend after the closings. Total revenue last weekend was down 76% from the previous year. The main independent exhibitor Vue International said that it had closed 17 sites in the north of Italy on the instructions of the Italian authorities. "The safety of our customers and staff is of the utmost importance," said Vue in a statement to THR.

"The consequences of the forced closings and the fear that has spread among the public are dramatic," said Francesco Rutelli, president of ANICA, the Italian Association of Film, Audiovisual and multimedia, which noted that Italy was previously experiencing a box office boom. . Revenues in 2019 increased by 14% and this year started on a banner thanks to local successes Tolo Tolo and Gli anni più belli.

"Before the outbreak of this crisis, the cinema was in excellent condition," said Rutelli, noting that the Italian box office in January had increased by 22% before the virus hit.

While Italy may be the first European hotspot for COVID-19, cases are multiplying across Europe – from Italian neighbors, France, Germany and Switzerland to Switzerland in northern Denmark, where a manager of the public broadcaster TV2 tested positive for the virus after returning from a ski holiday in northern Italy.

In Asia, Japan, where infections have multiplied – on Monday, the country had just over 275 confirmed cases of coronavirus and six deaths – fears are just beginning to affect theater attendance. Official data for the most recent weekend has not yet been released, but many local analysts predict a drop of around 10 to 15%.

Japanese Prime Minister Shinzo Abe sent shock waves across the country last Thursday by abruptly closing all elementary, middle and secondary schools until early April to stem the spread of the virus. At a meeting of the virus working group on February 26, he called on national event organizers to "cancel, postpone or organize sporting and cultural events nationwide 39; nationwide at a smaller scale than expected for the next two weeks. "

Japanese studio, distributor and operator Shochiku said THR whether or not he is currently considering pursuing various promotional events for the films in light of the advice of the government. The company then began offering refunds to moviegoers who bought tickets in advance and no longer wanted to attend. Toho, operator of the country's largest chain, also made refunds available to customers on Friday, February 28. The local studio giant has also released its biggest upcoming release, the payment of an anime franchise. Doraemon the movie: Nobita's new dinosaur. The film was removed from its March 6 release window, Toho indicating that a new date would be set once the public health situation became clearer.

Elsewhere, audiences in the Middle East stay away from mass cinemas, following several confirmed cases of COVID-19. Iran, with 245 official cases and 26 deaths, has registered the highest number of deaths from the virus outside of China, but the impact is felt across the Gulf. In Kuwait (43 confirmed cases), sources THR that cinema occupancy rates have fallen below 10%. In the United Arab Emirates (19 reported cases), people stay away from shopping malls, which house virtually all of the country's multiplexes. Beyond the border in Saudi Arabia, although no cases have yet been reported, the country has taken unprecedented precautionary measures to temporarily ban pilgrims from entering the country five months before the annual Hajj pilgrimage, which sees millions of faithful flocking from all over the world to Mecca and Medina.

The UK has seen 39 confirmed cases, so precautions have not yet reached the same level as in other jurisdictions, and there is no indication at the moment of the cinemas being closed or stopping production. But as one of the most dynamic hubs in the world for film and television production, any impact of the coronavirus would have serious repercussions on the industry. One producer says the epidemic is the subject of discussion in the UK industry, claiming that many expect it to strike quickly and to hit hard. "It's not a question of whether, but when," he says.

As COVID-19 continues to march around the world, the epidemic is prompting Hollywood to reorganize its efforts to launch major movies and shows. Disney's late March tent Mulan, a $ 200 million live photo with an all-Asian cast, and MGM / Universal's James Bond film in early April, No time to die, reported their first Chinese. Disney and Pixar have also grown back ForwardKorea's April release date and Disney Korea have canceled all screenings for the local press and the film industry (Forward begins hitting theaters in other parts of the world later this week). "We will select and announce a new release date after taking stock of the situation surrounding the coronavirus," Disney said in a statement.

In Italy, all the major American debuts planned for the weekend have been withdrawn, in particular: Invisible Man. Local versions of Forward, A nice day in the neighborhood, Charlie's angels and The Grudge, among others, are still uncertain.

On Monday March 2, a group of fans on the website of MI6-HQ, Bond's biggest fan blog, called No time to die producers Eon and distributors MGM and Universal are delaying the release of the film until summer, citing concerns about the coronavirus. "It's just a film. The health and well-being of fans around the world and their families is more important," they wrote. "We have all waited over four years for this film. A few more months will not damage the quality of the film and will only help the box office for (No time to die star) Last hurray for Daniel Craig. "

The big studios can't do much about China, as they have no control over when movies reopen or when their films are released.

On February 26, the China Film Administration announced guidelines for the possible reopening of cinemas, but no date has been set for their implementation. The detailed requirements also seem expensive for customers and operators. Cinemas will need to record the names and addresses of all moviegoers, check their temperature, require masks to be worn, ensure there is an empty seat between patrons in all directions and regularly sanitize spaces public.

While Chinese theaters remain bleak, the backlog of unreleased titles, already more than a dozen Hollywood and Chinese tents, continues to grow. Once Chinese cinemas finally reopen and the release date change begins, regulators will face the daunting task of sorting out too many headlines in too few desirable niches. Pending Hollywood titles include Doolittle, Sonic the hedgehog, JoJo Rabbit, Marriage story, 1917 and Little woman.

The main versions of May that could be affected include Disney / Marvel & # 39; s Black Widow (May 1) and Universal’s F9, another franchise that does important business in China (the last installment, The fate of the furious earned $ 392.8 million locally, by far its best performance anywhere in the world.)

Imax CEO Richard Gelfond speaking to investors on February 19 raised concerns that studio titles that aren't airing in China at the same time as the US theatrical release may be heavily hacked. But Geldfond was confident when it reopened cinemas in China, including the 702 Imax screens in the country, "we are confident the business will bounce back."

No studio was willing to officially record its response to the crisis, citing the sensitivity and lingering uncertainty surrounding the problem.

"Nobody knows (what's going to happen). I think things could get really difficult, ”says a manager. A spokesperson for the Motion Picture Association, which represents the major studios in the world, is said to have only said that they "closely monitor reports by public health officials on the coronavirus and protective measures to limit its impact ”and would continue to take“ the necessary precautions to ensure their health and safety ”from their global customers and employees.

Most majors, however, have started to form advisory teams with their production, marketing, finance and human resources staff to assess the potential impact of the disease. Companies are asking employees to delay their business trips to COVID-19 hotspots, including China, Japan, Italy and South Korea, and are developing promotional campaigns for upcoming titles.

Renee Zellweger was to be in Japan this month to promote her Oscar-winning performance as Judy Garland in Judy, due to open in Japan on March 6 – but her visit was canceled and she obtained interviews from local media via Skype. Saoirse Ronan's promotional visit to Japan for Little woman, who was scheduled to bow on March 27, is also said to have been taken aback due to concerns about the virus. The US Department of State raised the alert for trips to Japan to Level 2 on February 22, advising "extra caution" due to the spread of the virus "in Japanese communities through 39; unknown infection ".

Other sectors of the entertainment industry have also been affected, Green day, Superstars K-Pop BTS and Bob dylan any postponement or cancellation of scheduled tours in Asia. Even in Los Angeles, the Korea Times Music Festival has announced that its April 25 concert at the Hollywood Bowl "has been temporarily postponed due to the growing threat of uncertainty from the coronavirus".

The production of a few headlines was also impacted. Tom Cruise to come Impossible mission tranche stopped production in Venice following the coronavirus epidemic in Italy. "We are modifying the production plan for our three-week shoot in Venice, the first planned step of a production Mission: Impossible 7"said a Paramount spokesperson THR in a report. "We will continue to monitor this situation and work alongside health officials and government as it evolves."

Netflix's $ 160 million actuator Dwayne Johnson Red notice, who was to move to Italy in the coming weeks, could now move, although the project, which also stars Ryan Reynolds and Gal Gadot, is not expected to be delayed. On February 28, CBS confirmed that it had temporarily suspended filming for the new season of global competition. Fantastic race. The channel filmed three episodes of the show's 33rd season.

On February 29, the Tokyo Disney Resort in Japan closed and will remain closed until March 15 at least, after the other magic kingdoms of Shanghai and Hong Kong, closed since late January due to the The Walt Disney Co. warned earlier this month that profits from its parks in China could fall by $ 280 million in the current quarter. Universal Studios Japan in Osaka also closed on Friday, February 28.

The organizers of the first Red Sea Film Festival have confirmed THR on February 27 that the event would proceed as planned. First major cinematographic event in Saudi Arabia since its historic decision to lift a 35-year ban on cinemas in 2017, the Red Sea Festival will take place in Jeddah from March 12 to 21 and will feature Spike Lee and Oliver Stone among his guests.

Major US studios, as well as the stars of their next films, are still expected to attend CinemaCon in Las Vegas in late March, although Chinese companies have canceled due to the travel ban.

On the television side, there will be few buyers or Chinese delegates capable of manufacturing MipTV, which is scheduled to run from March 30 to April 2, but organizers Reed Midem have said they are not ; had not yet intended to cancel.

“MipTV 2020 will take place as planned. The health and safety of our exhibitors, delegates and staff is our number one priority, "said MipTV spokesperson Mike Williams. "We are closely monitoring the situation with the relevant authorities and will regularly keep all MIPTV users informed … We are looking forward to welcoming customers who are not affected by travel restrictions at our events as # 39; usual. "

However, the situation could change at any time. Last Friday, the mayor of Nice, Christian Estrosi, confirmed that a woman in Cannes had tested positive for COVID-19, the first case in the region. Attendees may also be frightened by MipTV's plans, first unveiled last year, to confine all 2020 market events to areas near the Palace building. This decision, triggered by the drop in frequentation of MipTV in recent years, could be worrying if the spread of the virus in Europe is not quickly controlled.

The Cannes Film Festival said on Friday February 28 that it "continues to prepare" for the 2020 event, which will take place from May 12 to 23. "The Cannes Film Festival is closely following the developments and the latest guidelines provided by local, national and international authorities regarding the coronavirus and is in direct contact with the Alpes-Maritimes administrative office," the festival said in a press release. "To date, it is still premature to express hypotheses on an event planned in two and a half months."

Cannes is about to unveil its official selection of films in mid-April.

New COVID-19 infections in China have started to slow and there is evidence that the country is moving towards controlling the disease. And, despite new cases in the United States, no one is yet planning for theater closings or slower attendance in North America. AMC Theaters CEO Adam Aron told analysts On February 27, he expected a "minimal" economic impact from the epidemic. "Our theaters, which are primarily in the United States and northern Europe, appear to have experienced little or no pain," noted Aron. "If the coronavirus were to hit the United States in a huge way, it would be a big problem for us. But what has happened (so far) is not. . "

But even in the best of cases, the economic impact of the coronavirus and the fear it generates among the public will be immense. “Films and most of the content work well in favorable economic times, better in unfavorable economic times. However, Force Majeure prevails over the foregoing. If people start to avoid mass gatherings, the film's progress will be affected, as well as production, ”said a source. "The impact will be noticeable on the international scale and will increase. In the United States, the situation could change quickly. "

Ariston Anderson, Soomee Park, Gavin Blair, Alex Ritman and Etan Vlessing contributed to this report.