After a challenging 2020 caused many movie theater operators to close locations and file bankruptcy, box office revenues appear to be picking up again. According to a recent report by CBRE, which analyzed movie theater performance in the Greater Los Angeles area, pent up demand from movie-goers has caused a significant increase in traditional theater sales that could help in the film industry’s recovery.
Nationwide, the report showed that box office revenue totaled $90 million over the 2021 Labor Day weekend alone, breaking a previous 2007 record of just $30.6 million. Overall, box office revenue has increased 53.1 percent from 2020 to 2021. However, at $3.4 billion, it is still 72 percent below pre-pandemic levels, which topped $11.26 billion in 2019.
“Much of this recent activity is driven by a surge in revenue and overall ticket sales buoyed by pent-up demand from movie-goers headed back to cinemas over the summer,” the report stated. “…Though SVOD (streaming video on demand) has taken a significant bite out of the global cinema market share in 2020, the silver screen hasn’t lost its luster as some of the biggest players in the industry move to increase their regional footprint.”
As the industry continues to bounce back, major movie theater operators are continuing to take up space throughout the Greater Los Angeles region. For instance, AMC Entertainment, the largest movie theater operator in the world, announced in July that it would be signing a 30,000 square foot lease at The Grove in West Hollywood as well as a 43,412 square-foot lease at The Americana at Brand in Glendale. The spaces were previously occupied by ArcLight Cinemas and Pacific Theaters, but were recently vacated after both companies filed for bankruptcy amid pandemic-related challenges earlier this year.
While currently seeing a sudden uptick in revenue, theaters across the nation struggled in 2020, causing many theater operators to close locations. In Southern California, more than 400,000 square feet of movie theater space is currently available as a direct result of this, the report showed. However, with ArcLight and Pacific Theaters having previously taken up 70 percent of total cinema space in the region, CBRE expects the area could see a wider variety of theater operators move in.
As traditional theaters closed doors during much of 2020, streaming revenue continued to pick up. According to the report, digital entertainment revenue in the U.S. increased 33 percent to $26.5 billion, while at the same time, the amount of streaming platform subscribers increased to more than 300 million in 2020. At the same time, box office revenue decreased 82 percent from 2019 to 2020.
In a similar report from CBRE, which looked at trends in the film industry as a whole, theaters took the hardest hit, with $12 billion in revenue in 2020, compared to $42.3 billion in 2019. global entertainment revenue in general fell to $80.8 billion during the COVID-19 pandemic, an 18 percent decrease from the year prior.
However, as reopenings began to take place across the nation and In the Greater Los Angeles Area, the report showed that occupancy in the Greater Los Angeles film industry has remained at or above 95 percent in the past several years, which has led to the creation of additional studio space. According to CBRE, more than 1.2 million square feet of new sound stage space is either being developed currently or being planned within the region.
As revenue continues to pick up, the film industry as a whole is anticipated to continue to succeed. While traditional movie theaters struggled the most, more studio space being occupied and film productions now able to be carried out, CBRE expects the uptick in revenue for the film industry to continue.
“Very clearly we’re in a period of flux, and over the next couple years, we will continue to see evolution as all these players enter streaming, or more and more of these streaming platforms move to traditional distribution…we are very optimistic about the path for the film industry.” Eric Willet, former director of CBRE’s Research and Thought Leadership, said in a previous statement.
CBRE declined to give an updated comment for this story.