Hollywood’s 2021: The Year of the Comeback
By: Christopher Woodrow
Tags: Finance, Movies, Hollywood, Entertainment

“There’s a reason that the Roaring Twenties followed the 1918 pandemic.” — J.J. Abrams

It is no secret that 2020 was a particularly tumultuous and challenging year. The film industry was no exception. The industry did fare better than other industries with some notable bright spots, like massive growth in streaming platforms and successful direct-to-consumer releases, like Universal’s “Trolls World Tour” and Disney’s “Mulan”. However, it is hard to brag about this year’s performance with theater chains being closed for months in almost every country in the world and most of the year’s blockbusters delaying their release until 2021. So, while 2020 served as a pivotal year in accelerating the shift to streaming and digital consumption, it will likely, in hindsight, be viewed as a year of industry restructuring and transformation rather than a year of profit.

Fortunately, 2021 is very likely to be the total opposite — the year of the comeback. With a vaccine on the horizon and a return to “normal”, 2021 is primed to be the most explosive year for the industry in a multitude of ways. First off, Theaters will soon reopen to capture the huge “pent up” demand from previously quarantined consumers. The stacked pipeline of movies set to release is larger than most years. Film festivals are likely to resume, setting off a flurry of deal making and new projects. Production will return to full capacity once again. Lastly, studios will now reap the financial benefits of the massive consumer base acquired by the streaming platforms this year.

A Familiar Phrase: Now in Theaters

The most observable effect of the 2020 troubles faced by the industry was the closing of theaters around the world. For the most part, theaters did not have much say in the matter. With strict restrictions around gatherings, many governments mandated these closures. Some remained closed for only a few months, like in China, while others remained shut all year, like in New York City and Los Angeles.

However, the recent news of COVID-19 vaccines has shown that theatergoing will be a completely different story next year. The major theater chains, including Cinemark and AMC, saw their stock prices skyrocket shortly after the announcement of several vaccine candidates in November, signaling that revenues are expected to rise sharply in the coming months. With the expectation that the vaccine will allow a return to public gathering sometime in the first half of the year, theaters will be open for a mass of movie starved-consumers. Box office performance will once again be a key component in driving film revenues for studios and investors.

Theaters will have a plethora of new releases starting in early 2021. They will be able to capitalize on the pent-up demand from consumers after most people have gone nearly a year without seeing a movie in theaters. For example, a recent consumer survey in China showed almost 70% of respondents listed moviegoing in their top two entertainment choices after the pandemic ends. In October, with the virus largely under control in Japan, the local film “Demon Slayer: Mugen Train” sold 3.4 million tickets, generating $44 million in what was a record-setting opening weekend. It has now become the second-highest-grossing film ever in the country. It was the first time many Japanese citizens went to theaters since the start of the pandemic, another exciting indicator of the demand to come in the rest of the world.

A Backlog of Box Office Hits

Additionally, 2021 has an excellent chance of being the highest box office grossing year ever. It has been forgotten by many that 2019 was the biggest year by box office in history, reaching $42.5 billion in total revenue, with massive growth in international markets, like China, India, Brazil, and many others. If not for the pandemic, 2020 would have easily been on track to surpass it. Now, 2021 has many reasons why it could bring the industry back to new highs.

In terms of the amount and quality of movies released, 2021 is on track to be the biggest year ever. Due to the amount of rescheduled releases, every major studio has a substantial backlog of films to get out, with many top franchises and tentpoles. Some of the biggest films set to come out next year include:

The amount of blue-chip premium content that will finally be available will surely attract a flood of consumers throughout the year. There will not only be massive franchises that can generate billions of dollars but also a host of new Oscar contenders. This will be supported by the fact that the film festival circuit will likely start back up at some point in the year. All of the most notable festivals of the year, including Berlin, Cannes, and Toronto were either canceled or severely reduced in 2020. These festivals are where hundreds of films close financing and distribution deals each year, serving a critical role for the industry’s production output as a whole. So, with festivals returning again, it will give rise to a whole new wave of films for the year.

Quiet Again on Set

With the pandemic and its restrictions on gatherings winding down, the biggest hurdles for large film productions will finally end. While studios were creative at finding ways to continue production this year, it was much more costly, time-consuming, and all-around unpredictable. With a return to normal production logistics, studios will be able to make more films at a lower cost without restrictions. This is not only good news for the millions of workers in the production segment of the industry but ensures a pipeline of new content for consumers for next year and beyond.

New Audiences, New Buyers

An even more exciting development for the film industry, particularly studios and investors, is the explosion of new streaming platforms. Just in the last 12 months, several new major players have entered the scene, such as Apple+, Disney+, HBO Max, and Peacock, garnering hundreds of millions of new subscribers together. Other “incumbent” streaming platforms, like Netflix, Hulu, Amazon Prime, Showtime, and CBS All-Access, have also all seen enormous customer growth during the last year of quarantine and remote work. This means that even beyond the theatrical window, films have another complementary and high-growth segment to generate revenue. For instance, this complementary dynamic is showcased perfectly in Warner Bros.’ recent announcement that, in 2021, they will release all films in theaters and on their HBO Max platform simultaneously for the first 31 days. With theaters back and licensing fees to streaming platforms rising rapidly, the next era of the film business looks to be a lucrative one.

The Start of the Next Roaring 20s

These emerging dynamics for the upcoming year spell out a story of a historic comeback for Hollywood and the broader global film industry. As a co-financer to the studios, MCT is poised to capitalize on these trends. 2021 will be one of the best years to be an investor in the industry. The resurgence of theaters, the mountain of new content, and the return of production all paint a picture of a never-before-seen year.

As J.J. Abrams touted in a recent New York Times article, “There’s a reason that the Roaring Twenties followed the 1918 pandemic. We have a pent-up, desperate need to see each other — to socialize and have communal experiences.” With a better year on the horizon, it will be a refreshing scene to see theaters, red carpets, and popcorn tins all full again as we return to a more connected and entertainment-filled world in 2021.