How COVID-19 has changed the way movies are budgeted and made

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How COVID-19 has changed the way movies are budgeted and made

A cinema with people wearing masks during COVID-19.

The COVID-19 pandemic has caused massive disruptions in numerous industries, including the film industry. In the early days of the pandemic, studios and cinemas were hit by temporary closures, movie delays and plummeting ticket sales. The pandemic also changed the way movies are distributed, as studios looked to diversify their distribution strategies and streamers wanted to expand their content libraries.

Using research from news and industry sites and data reports, Giggster has laid out some of the crucial ways the COVID-19 pandemic has changed the way movies are budgeted and made.

The chaos caused by COVID-19 served as a sort of reset button for Hollywood. Studio executives were faced with unprecedented circumstances in which popular streaming services such as Netflix became the primary means of consuming content, while film production of all sizes was interrupted by COVID-19-related shutdowns or faced with release schedules that could not be accommodated due to theater closures.

2021 US box office revenue totaled $4.49 billion, representing a recovery of more than $2 billion from the previous year, which was still miles away from the $11, crop. 3 billion from 2019. Many of the top films of 2021, including “Shang-Chi and the Legend of the Ten Rings” and “Black Widow,” faced limited earning potential due to being released simultaneously on streaming and in theaters.

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Success looks different for theatrical vs streaming releases

A drive-in cinema full of cars.

For many Hollywood studios, 2021 presented the rare opportunity to uncover movie distribution patterns that had piqued the curiosity of movie industry people long before the pandemic. For years, the only way to watch a new movie was in a movie theater. After COVID, there are no hard and fast rules about how a new movie can be released.

In the past year and a half, some movies were released exclusively in theaters before moving to digital platforms; other films were made available on streaming platforms on the same day as their theatrical releases. Throughout 2021, nearly every new Warner Bros. movie release appeared on HBO Max — a measure that is now being halted now that theaters have reopened and Warner and Discovery are expected to merge in the summer of 2023.

Several new streaming services owned by media heavyweights with their own movie studios attracted massive viewership during the pandemic, including Peacock, Paramount+ and Disney+ — with many of their live-action and animated films streaming first, including “Turning Red,”.” Black Widow” and “Raya and the Last Dragon.” Such initiatives have changed the way success is measured. For example, “The Many Saints of Newark,” released in Fall 2021 by Warner Bros., was a box office flop but a big hit for HBO Max.

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After a decline in income, the cash registers are ready for a comeback

The TCL Chinese Theater is promoting ‘Top Gun: Maverick’ in Hollywood, California.

During the pandemic, cinemas across the country suffered from plummeting ticket sales. Cineworld Group PLC, the world’s second largest cinema chain, which owns Regal Cinemas, confirmed in August 2022 that it is preparing for bankruptcy protection due to poor box office sales, largely due to the pandemic. Cineworld still expects to continue operations even after the filing, but investors in the company could incur significant losses.

Nevertheless, there are clear signs that going to the movies remains a staple activity for Americans. The top film of 2021, “Spider-Man: No Way Home,” grossed over $572 million in the US alone that year and grossed over $800 million in total, making it the third most financially successful film. is in history. And so far, 2022 2021 has made nearly $700 million, with four months to go before the end of the year.

Perhaps the biggest reason? Paramount Pictures and Skydance Media’s “Top Gun: Maverick” has been dubbed “smash”, over $1.4 billion worldwide in its 13th weekend of release.

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Studio executives cut production costs amid supply chain challenges

The Game of Thrones Prequel movie set under construction.

As with all other corners of US commerce, the entertainment industry is feeling the weight of inflation exacerbated by ongoing supply chain problems. In particular, hindering film productions put pressure on the availability of steel and wood, driving the cost of these materials up by as much as 30%, according to a studio manager; in one case, the spike caused a movie set to double in price compared to what it would have cost to build four years ago.

Since early 2021, movie studios have faced widespread delays in acquiring nearly all of the materials needed to build the sets. This ongoing supply chain problem is exacerbated by rising fuel costs. Many U.S. movie studios are located in California, a state where gas currently averages over $6 a gallon, making fuel spending another line item that producers struggle to control.

Perhaps no recent Hollywood story exemplifies studios’ turnaround in terms of cost containment than the announcement by Warner Bros. CEO David Zaslav. Discovery. In August 2022, Zaslav announced that several of its in-production movie properties, including the highly anticipated DC Comics movie “Batgirl,” were being discontinued and discontinued altogether for the studio to mitigate what it feared potential losses were at the box. . office; in the case of “Batgirl” specifically, the studio is expected to declare the already completed film as a $90 million tax write-off.

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Movie Shortages

People queue to buy cinema tickets at the box office.

With cinemas nearly empty for a few years now due to the pandemic, film industry staffers may be excited that more people are getting off their couches to go to the movies these days, but sadly another problem is lurking now. . Something that should be missing in cinemas this fall are the real movies.

In 2021, 403 films were released in the US and Canada, a 20% increase from 2020, but far from the 792 films released in pre-pandemic 2019. The shortage of new films being made and released is likely to negatively impact ticket sales for cinemas that have struggled to survive during the worst days of the pandemic. Supply chain and production setbacks continue to plague film productions large and small. In addition, the codification of resources by the major studios for large-scale, high-budget productions means they can afford to produce fewer projects, but also the responsibility for those projects they release is significantly greater than in years past.

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Lack of financing of the COVID-19 insurance

A person does a temperature check on an indie film set.

While larger movie studios have more leeway with their budgets, indie filmmakers still struggle to finance independent productions — an increasingly complicated feat since the pandemic.

When the pandemic first broke out, insurance companies excluded COVID-19 from their policies. This resulted in a knock-on effect with banks not willing to accept completion bonds that independent filmmakers rely on to get financing. Delivery guarantees guarantee that the productions remain within budget and are completed on time. The lack of insurance coverage coupled with rising production costs made it a challenge for indie filmmakers struggling to get their projects started.

This story originally appeared on Giggster and was produced and
distributed in association with Stacker Studio.

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