The second quarter of 2022 ran from Friday, April 8th through Thursday, July 7th. When it began, the industry was coming off a disappointing first quarter, which could only manage 56% of the grosses earned during Q1 of 2019. Q1 2022 was also down 14% from the prior quarter, the first such quarter-to-quarter drop in the prior five quarters.
Doubts began to creep in about the true health of the box office recovery after the brutal impact of the pandemic over the prior two years. By April 2022, the majority of American adults had been vaccinated and virtually all government health orders to close theatres had been lifted. The COVID effect could no longer be blamed for soft results. Virtually all studios had resumed a theatrical-first release model, albeit with a shorter 45-day window. The upcoming release schedule seemed loaded with proven franchises and new concepts which had been postponed by as many as two years by the pandemic. Clearly, the second quarter would be the truest test of the progress made in climbing out of the pandemic chasm.
How well did the industry do? Quite nicely indeed, with the best quarterly performance since the beginning of the pandemic. Q2 of 2022 produced 76% of box office earned during Q2 of 2019. We will discuss the following three factors behind this success:
- The “Tom Cruise / TOP GUN: MAVERICK” Phenomenon
- Standing up to AVENGERS: ENDGAME
- A delayed, “positive echo” effect of COVID
The “Tom Cruise / TOP GUN: MAVERICK” Phenomenon – It would be unfair to credit a single movie or actor for the second quarter’s rebound. However, we also should not underestimate the momentum that these actors and this movie created when it was released on 5/27 for the Memorial Day holiday weekend. No one invests himself more completely in making and marketing a movie than Tom Cruise. He saw that making a sequel after 36 years to one of the most iconic films of all time was a risk and that the new story would have to be compelling. Perhaps it took all that time to get it right, but the picture opened to rave reviews after four high-profile premieres and relentless work with the media.
TOP GUN: MAVERICK scored 97% fresh with critics and 99% with audiences on Rotten Tomatoes, a good indication that all these efforts were about to pay off. And boy did they ever! Prior to its opening, industry estimators predicted that the sequel would open to $50M-$60M, and go on to earn $200M overall. One of the more optimistic estimates had it coming in at $250M. In fact, TGM opened with $127M in its first three days and has since earned a total box office of $596M, and still counting. This booster was badly needed by exhibitors, and it may well have spurred moviegoing across the board. This chart shows where the industry stood thru May 26th before TOP GUN opened and how the quarter finished up after that point.
During the first seven weeks of the quarter, theatres were operating at 60% of the grosses from the same period in 2019. Starting with TOP GUN: MAVERICK’s opening, the remaining six weeks of the quarter generated 94% of the grosses compared with those same weeks from 2019 – a 26% improvement! More importantly, the entire quarter hit 76%, which was the best comparison for any quarter against 2019 since the beginning of the pandemic. Certainly, other pictures did their part as well, including JURASSIC WORLD: DOMINION and DOCTOR STRANGE IN THE MULTIVERSE OF MADNESS, but it seems that the impact of TOP GUN: MAVERICK was by far the biggest factor in Q2’s healthy performance.
It is shocking to consider what would have happened had TOP GUN: MAVERICK not opened during the quarter. The following chart shows the second quarter results minus TOP GUN: MAVERICK.
Instead of picking up steam after May 27th, the quarter would have petered out to 59% compared with Q2 2019 and this would have dragged down the entire quarter to a 56% comp, a full 16 percentage points lower than what actually occurred. Of course, had TOP GUN not opened on Memorial Day then another major studio film would have taken its place, but it is unlikely that it would have had anything close to the impact of Tom Cruise – the right man with the right movie at the right time. TOP GUN: MAVERICK was well worth the 36-year wait.
Standing up to AVENGERS: ENDGAME – Most theatre owners were optimistic about the second quarter studio release schedule. However, in a game of comparisons, one major hurdle loomed from the second quarter of 2019. AVENGERS: ENDGAME was a smashing success when it opened on 4/26/2019 and went on to earn $842M within the quarter and $858M overall, making it the second highest-grossing picture of all time. While Tom Cruise was unable to do it all by himself, the second and third highest performers were able to offset, for the most part, the deficit left after factoring in ENDGAME’s record-breaking results.
The top three movies of this year’s second quarter produced nearly as much as the top three movies of Q2 2019. This may the strongest indication yet that the industry is well along in its road to recovery.
A Delayed “Positive Echo” Effect from COVID – In our previous quarterly reviews, we have focused on the difficulties studios faced in making and scheduling movies as a result of the pandemic. When COVID shocked the world in March 2020, no one could predict when normal life would return. At any given moment, literally hundreds of movie projects are in different stages of development.
Suddenly, production ground to a halt, and theatres across the country closed. It took a full year until most theatres were able to open again. Even then, moviegoers were wary of returning and most pictures that were released to theatres performed poorly. Meanwhile, production on the stalled projects resumed and a flow of finished products forced studios to make decisions on whether to open them in theatres or change direction to launch them on streaming.
With Disney’s DOCTOR STRANGE IN THE MULTIVERSE OF MADNESS, Paramount’s TOP GUN: MAVERICK, and Universal’s JURASSIC WORLD: DOMINION, all three studios decided to hold off an immediate release once production was complete and wait for the right time to return to theatres for a traditional, theatrical run. Note that production had already begun on all three films when COVID shut down the industry in March 2020, and they were completed under strict health and safety protocols during the pandemic.
All three wound up opening within a 6 week period from early May to early June. One could say that their success was a notable “positive echo” effect of the COVID pandemic, with the trio grossing $1.334B for the quarter, which was 52% of the box office for all films during the quarter.
The Memorial Day 2022 release of TOP GUN: MAVERICK will be considered a significant event, and a turning point for the industry. Long live the big screen. Next week we will present our preview of the third quarter.
