Preet Bharara:

From CAFE and the Vox Media Podcast Network, this is Stay Tuned In Brief. I’m Preet Bharara. The holiday season is a key time for the film industry. And with each passing year since the height of the pandemic, more people are returning to theaters. However, with the advent of streaming, recent industry strikes, and now the emergence of generative AI, there is some uncertainty about the state of the movie industry. So as we head into the holiday movie season, joining me is Scott Mendelson, a longtime film critic and journalist. He’s currently a box office columnist at Puck News and the author of The Outside Scoop newsletter on Substack. Scott, welcome to the show.

Scott Mendelson:

Thank you for having me. It’s an absolute pleasure to be here.

Preet Bharara:

So I am a lifelong movie fan and one of my favorite experiences has always been to go to the movie theater, see a film on a big screen with a bunch of popcorn and a soda. Are we still doing that in this country?

Scott Mendelson:

Yes, we are. And there’s 100,000 caveats, but the short answer is yes. People are still going to the movies. People are still spending what in many businesses would be an incredible amount of money at the movies on an annual basis. And the fact that there’s a lot of ebb and flow in terms of, “Oh, can theater survive? And are theaters on the way out? Is streaming the future?,” partially, that’s because theaters have generally a very low overhead. So they don’t have a lot of wiggle room. And they’ve been kneecapped from circumstances not their doing over the last several years. They didn’t cause a global pandemic to shut down theaters for basically a year and a half, including during times when almost every other business, it seemed like, was open for business. They didn’t cause a dual labor strike last summer.

Preet Bharara:

Can you give us a sense of scale about how movie going dropped and by what percentage when the pandemic was at its height and how much it’s bounced back?

Scott Mendelson:

Generally speaking, movie going dropped by about 90% in 2020. And to be fair, most theaters were not open for most of the year. And then in 2021, you had a measured act one of the theatrical recovery. 2022, you had a number of big, big movies like Avatar: The Way of Water, Top Gun: Maverick, Jurassic World Dominion and the Marvel movies, but you still had a total theatrical slate that was basically a third less than what was “normal” in 2018, 2019. As a result, overall box office was down by about a third, give or take. So conventional wisdom suggested that once studios started giving theaters movies in volume on the level that we had prior to COVID, that box office would pretty much return to normal.

2023 was the first year where we had something resembling a normal theatrical slate, and we’re probably going to end the year with around $9 billion domestic. Now is that as much as the $12 billion that the theaters and studios earned? Obviously theaters, studios get 50/50 et cetera, et cetera. The $12 billion that was earned in 2019, no, but for one thing that was a fluke year. Disney was having a fire sale. You had the last Avengers, the last Star Wars, Toy Story 4 and Frozen II, et cetera, et cetera. Second of all, yes. I mean, there is some movie going that has been lost, possibly permanently, as a result of the COVID pandemic and the push to streaming. Not to be a horrible person, but a lot of people died in the COVID pandemic, and those are people that will never go to the movies again. And for every one person that passed away during the pandemic, there are friends and family left behind that are probably a little bit less interested in seeing the latest Marvel movie or the latest Warner Bros fantasy film than they might’ve been in 2018, 2019.

Inflation is an issue. And while movie tickets prices have generally risen with the cost of inflation, right now, inflation across the board has been high for run-of-the-mill, necessary goods. That leaves less money to take a family of five to see the newest Disney animated film. That being said, as we come down to the end of 2023, we’ve had a relatively normal amount of movies with the overall box office that is going to get pretty close to $10 billion. So I think going forward, as long as the studios are giving theaters an ample amount of movies, then theatrical box office should be over under what it was before COVID.

Preet Bharara:

If the box office is approaching $9 or $10 billion, which is a bit off from the pre-COVID $12 billion, isn’t fair to add in the revenue or however you would calculate the box office for people watching movies at home, add that in? And if you did, would that exceed the pre-COVID $12 billion or not?

Scott Mendelson:

That is a fascinating question that I wish I had a real answer to. Unfortunately, studios keep the VOD and the PVOD revenue locked in a safe within a safe within a safe. And streaming, I mean, it’s never been a one-to-one in terms of people watch a show or a movie that they want to see and they are now lifetime subscribers to that streaming platform.

But yeah, generically speaking, I would’ve to say yes in terms of the people watching a movie either in theaters or at home is probably on par with what it was before COVID, just because if there are less people watching movies in theaters, there are more people watching that movie at home, whether it’s in PVOD or streaming or even DVD and Blu-ray, which contrary to, popular belief, still is a major revenue driver. But what we’re seeing is something that was in play well before COVID, something that I first started noticing late 2015, early 2016, which is that you had a large segment of general moviegoers, casual filmgoers, that used to go to the movies just to go to the movies, and they would be the people that would see the tent pole movie and the just a movie movie or the studio programmer or the non-franchise film for adults, call it whatever you want, or they would just see the movie movie. But unfortunately, that audience started gravitating to streaming for their casual home filmed entertainment consumption.

So since 2016, studio programmers, the non-event films have been struggling. And obviously the pandemic and the circumstances related to a push to streaming, which wasn’t just COVID-related. I think, and this is my opinion, I think the studios used the pandemic as an excuse to shatter the theatrical window and put a push to streaming and VOD that they had wanted to do for years. And I think those circumstances created a new normal where even fewer people that might’ve gone to the movies just to go to the movies still went to the movies on a regular/casual basis.

So what we’ve seen since 2016 is that prior to 2020 overall box office was up, up, up, up more or less, ticket sales were down, down, down, down, but I would argue not to an insane degree. And with declining ticket sales, you also had circumstances where more people were seeing movies in premium theaters like IMAX and 3D and D-Box and what have you. And they were going to, let’s call them, dinner theaters, where you had major mainstream multiplexes that had full service menus. And the more people see films in those formats, the more money they’re going to spend on their night at the movies, which means the more money the theater gets per ticket sale, which in some ways accounted for the declining overall ticket sales. And I think you’re going to see that more and more where people are still going to the movies but the films on which they’re spending a greater and greater amount of their annual theater going dollar is going to be a smaller and smaller amount of the overall theatrical marketplace.

In 2011, and I’m going off memory, so forgive me, the top six grossing movies of the year domestically made about 12% of the overall domestic box office. By 2018, it was 26%. And by 2019 and onward, partially because of COVID, it’s been 40%. So the top movies of the year are making up almost half of the overall movie going ticket spent. So is that a problem for studios? Yes, because fewer of the movies that they’re releasing in theaters are making enough money to justify the production budget and marketing spent. However, is that a problem for theaters? I don’t know, because as long as people are showing up.

Preet Bharara:

Yeah. Well, the theaters don’t care what they’re seeing, right?

Scott Mendelson:

Yeah, because a large popcorn that you buy during Spider-Man: Across the Spider-Verse costs the same amount of money as a large popcorn during Joyride.

Preet Bharara:

You said on the Bulwark podcast recently the reason we’re in this entire mess that we’re in is because Wall Street basically “bullied the entire industry to be like Netflix, led them off a cliff.” What cliff is that? What do you mean by that?

Scott Mendelson:

Well, in around I would argue 2017, 2018, 2019, there was a feeling that Netflix was, I would argue, overvalued because it was being treated like a tech company but it’s really an entertainment studio. And then there was the assumption pushed by Wall Street, and I would argue, embraced by a lot of the studios that if they also had their first-party streaming platforms and basically walled up all their studio specific content, they would also have subscription figures on par with Netflix and then Wall Street would be as friendly to them as they were to Netflix. So 2019 and then into COVID, obviously, 2020, 2021, the number one priority became, release your streaming platform and get those subscription figures up at all costs, even if it hurts theatrical, even if it hurts DVD, even if it hurts VOD. The most important thing was to signal that you were serious about first party streaming and that you were going to make choices that would build that subscription figure. And the conventional wisdom was that the more money you spent on streaming content, the more subscribers you would have and the more Wall Street would like you.

However, in early 2022, I would argue almost on a dime, Wall Street changed their mind to say, “No, no, no, no. Now we want revenue and profits,” which put the studios in a real pickle because they had just spent billions and billions of dollars on these first-party streaming platforms that may well take years to be profitable, if at all. And all of a sudden they’re being forced to show revenue and profits when it was more or less proven that there wasn’t necessarily a one-to-one ratio between putting this kind of X, Y, Z content on a streaming platform and boosting subscription numbers. And so the new motto was, “Cut costs. Cut costs. Cut costs.”

And while I’m not saying that that single-handedly caused the dual labor strike that took place this summer, I do think a lot of the issues in terms of writers and actors and, I would argue, most other below-the-line talent not being paid perhaps what they were used to in a pre-streaming world was partially because of the new normal and the push to streaming. And simplistically speaking, there’s a case to be made that the entire push to streaming was basically do a reinvent cable in a form in which you could pay the artist less and you could keep more of the money at the top and, I would argue, and this, forgive the conspiracy, tinfoil hat-thinking, you would create an environment where massive consolidation became necessary because the little guy could not survive on his own in a streaming world.

Preet Bharara:

Putting the economics aside for a moment, with respect to the rise of streaming, is it the case that that has been good for content, diversity of content, quality of content? I mean, I think there are people who are saying there’s an embarrassment of riches in terms of what to watch on a streaming platform. So do you agree with that?

Scott Mendelson:

Yes and no. And I apologize for the yes and no. Certainly, people who make films and television have had a lot more opportunities in the last several years with the streaming platforms cutting checks and green lighting a lot of stuff that maybe couldn’t be justified in theatrical ecosystem. Now, whether that’s going continue to be the case, I don’t know. Obviously, there’s a lot of fear that the new normal is going to be a lot less streaming films and streaming TV shows because if nobody’s watching this stuff and you’re no longer getting credit for it merely existing as a widget on a streaming page, then we’re going to see a lot less stuff just for the sake of stuff than we did in 2018, 2019, 2020. So a lot of these opportunities, especially for underrepresented demographics, I fear, are going to dry up.

And frankly, that was always my fear because if you followed Fox Television and UPN in their early days, they made their name by gravitating toward underrepresented voices, but as soon as they became “mainstream,” I would argue they pivoted to focus on “generic”, mass market, mainstream crowd-pleasing entertainment, which stereotypically speaking meant focusing on white guys. So the In Living Color of the world that made Fox a name no longer had a place at the network. And Netflix used the films and television it made courtesy of underrepresented voices partially as a critical shield frankly. Steven Spielberg allegedly said something bad about Netflix, which he didn’t actually say, that was misinterpreted. He was somehow being critical of the women and people of color that were making Netflix shows and movies. And on one hand, that was terrible, but as long as those films were still being made by people that wouldn’t otherwise have those opportunities, well, good. It stinks that not a lot of people seem to have watched They Cloned Tyrone, but that’s a very good movie that I’m glad exists.

Preet Bharara:

Can we talk about the trend among young people? I noticed anecdotally that many young people don’t have TVs in their homes. I have three kids who can watch entire theatrical releases on their tiny, little iPhone screen. What is the trend among people 25 and under and going to the movies?

Scott Mendelson:

Well, I mean, stereotypically, speaking the line is that, “Kids don’t go to the movies today. They’d rather watch stuff on YouTube and TikTok.” And to a certain extent, that’s probably true, just because… I mean, the older generation always likes to say that the younger generation is less than because they’re taking advantage of the technologies that weren’t around when they were kids. “Oh, kids today are inside playing video games all day when we were outside and playing baseball,” or whatever. Well, when you were a kid, they didn’t have video games. If they had video games, you might’ve been inside playing video games too.

That being said, I think one issue that Hollywood’s been dealing with is that for the last 10 years, there’s been a lot of push toward franchises and IP aimed at people my age or slightly younger or slightly older. In the old days, when I was a kid, I would drag my parents to the new Ninja Turtles movie, which was based on a property that was brand new, and they would probably roll their eyes and have a miserable time, but that’s okay because they’re my parents and they’re happy that I had a good time at the movies.

But what we’ve seen over the last several years was parents dragging their kids to Indiana Jones 5 because they’re interested in it while kids are going, “But, Dad, I don’t care about Harrison Ford as Dr. Henry Jones Jr. again.” “Shut up, kid. I’m excited about this and you’ll like it too.” Or, “But, Dad, I don’t care that Michael Keaton is back as Batman in The Flash. I only saw those films once. Christian Bale is my Batman,” or, “Robert Pattinson is my Batman.” “Shut up, son. You’ll like it or else,” which is why one of the most positive stories this year was one of the worst movies of the year, which is Five Nights at Freddy’s, which was a terrible, terrible film that my son, who’s 12 years old, who loves the game, had a great time watching.

And let me tell you, even though I hated the film, I loved watching it with him because that’s how it’s supposed to be, damn it. And the fact that that film made about $300 million worldwide because it was aimed at today’s children, at a property that’s relatively new, that wasn’t generational nostalgia aimed at people my age, that has to be part of the future. And me as a parent might roll my eyes at PAW Patrol: The Movie Part 2, my kids have mostly grown out of PAW Patrol, but I watched my share at PAW Patrol, but that is a franchise that, yes, it’s 10 years old, but it is aimed at today’s kids, not me.

Preet Bharara:

Right. And that’s okay, right?

Scott Mendelson:

Yeah. That’s wonderful. That’s why I love The Minions franchise, even when I don’t like each individual Minions movie. There was the big thing a couple of years ago with Minions: The Rise of Gru or you had teenagers on TikTok going in suits to go to the new Minions movie. And no, I don’t think that’s the difference between that film being a hit or being a flop. It’s negligible in terms of overall dollar amount, but for them, they were nostalgic for that franchise, which began when they were very young kids.

Preet Bharara:

Do you have a theory as to why, or is there a theory as to why some movies flop, fail at the box office and then find a second life after that and become huge cult classics? And among those movies, I count The Princess Bride and others. Is there a reason for that?

Scott Mendelson:

Well, unfortunately, the reason for that is stuff that no longer exists generally speaking. A film could come out in theaters like The Princess Bride, which I think made like $35 million, which by today’s standards, especially adjusted for inflation, would be great for a… I call it a new to you, which means it’s an adaptation. Let’s be honest, most people didn’t read the book. A new to you adaptation that’s original to most people that underwhelms at the box office, but because you had a vibrant post-theatrical ecosystem with VHS, cable, premium cable, regular cable, network television and then eventually DVD and then what have you, children had a chance to discover that movie on their own in a way that allowed people to say, “Hey. I missed that in theaters but I really like that movie.”

And because films were frankly cheaper, a movie like Princess Bride didn’t cost $100 million to make, so it could make enough on VHS and cable and what have you to eventually become profitable. So there was still a viable reason for studios to greenlight that movie, that even if it didn’t make a killing in theaters, the game wasn’t over yet.

And there are two problems. First of all, that’s not something that can happen in today’s ecosystem when a movie costs $100 million dollars, it only makes like $30 or $40 million worldwide. The amount of money that studios lose is not going to be made up for on streaming or unbearably declining home video sales. Unfortunately, it’s not the way the world works. And there’s also just so much more for people to watch that a kid who doesn’t care about discovering old movies… And that’s not a criticism. When I was a kid, it’s not like all of my classmates were going, “Oh, yeah. I caught up on all the Alfred Hitchcock movies I missed this month. I really liked Vertigo.” I was weird because I did that. That made me unique among my peers. And that’s fine.

Preet Bharara:

Well, you chose the right profession then.

Scott Mendelson:

Yes. In the long run I did. But again, the idea, you see it on Twitter all the time, it’s like, “Oh, kids aren’t interested in old movies and that’s a tragedy.” It’s like when I was a kid, most of my friends weren’t interested in old movies. I mean, it’s not like I had a big sleepover and got all the friends around and we all had to watch Casablanca. We watched Terminator 2 because that’s what was new and cool.

Preet Bharara:

If you’re prepared to say, what was the best movie so far of 2023?

Scott Mendelson:

John Wick: Chapter 4.

Preet Bharara:

Really? So I just saw that on cable twice.

Scott Mendelson:

Twice? What does that tell you?

Preet Bharara:

And why was it the best film?

Scott Mendelson:

I think there are nitpicks in terms of if I were writing a review, I’d say, “Well, this is whatever,” but I think in terms of how it was made, in terms of the craftsmanship and the quality and variety of the action along with the visual majesty of how it looks and feels, it’s one of the best-made American action movies ever made.

Preet Bharara:

So looking forward to the holiday season, what upcoming film are you most excited to see?

Scott Mendelson:

Well, the caveat that I’ve seen most of the Oscar-y movies already, Poor Things is a lot of fun. The Holdovers is very good. It’s a heartwarming old-school movie that would’ve been a studio programmer 20 years ago. American Fiction is really, really funny, and it’s that biting satire and a poignant family melodrama.

I may be the last idiot on a sinking ship, but I am still looking forward to Aquaman and the Lost Kingdom because I love the first Aquaman and I’m a huge James Wan fan, and I don’t care how it does or doesn’t fit into the DC Universe or whether or not Batman makes a cameo or to what extent Amber Heard is in it or not in it. I still believe that James Wan, even with his back against the wall, is capable of making a spectacular, IMAX-friendly, over-the-top fantasy action crowd pleaser because he did it with Furious 7 under impossible circumstances. And I love Malignant. I love Aquaman. I think Furious 7 is one of the best Furious films after Fast Five. I think he’s basically reinvented the horror genre twice, once with Saw and once with Insidious. And I think if Malignant had come out during normal times, he might’ve done it for a third time. And if there’s anyone that can pull it off and make Aquaman 2 be a good movie, despite everything working against it, it’s James Wan.

Preet Bharara:

I got to roll the credits now, Scott. Scott Mendelson, thanks so much for spending some time with us.

Scott Mendelson:

It has been an absolute pleasure. I hope I didn’t ramble too much. I hope I actually answered all your questions. And I would love to come back whenever you need me. You know where to find me.

Preet Bharara:

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If you like what we do, rate and review the show on Apple Podcasts or wherever you listen. Every positive review helps new listeners find the show. Send me your questions about news, politics and justice. Tweet them to me at Preet Bharara with the hashtag #AskPreet. You can also now reach me on Threads, or you can call and leave me a message at 669-247-7338. That’s 669-24-PREET. Or you can send an email to letters@cafe.com. Stay Tuned as presented by CAFE and the Vox Media Podcast Network. The executive producer is Tamara Sepper. The technical director is David Tatasciore. The editorial producer is Noa Azulai. And the CAFE team is Matthew Billy, David Kurlander, Jake Kaplan, Nat Weiner and Claudia Hernández. Our music is by Andrew Dost. I’m your host, Preet Bharara. Stay tuned.