Widespread optimism months ago that domestic box office might readily return to pre-Covid levels has given way to a new sense of pragmatism about the movie business.

This year’s tally will far surpass last year’s $4.5 billion haul, but it will certainly fall billions short of 2019’s $11.4 billion in receipts, and all bets are off for 2023. Given the uncertainty, Wall Street analysts and media executives are sharpening their pencils and revising the books. Their general sentiment is that there is still money to be made — particularly on the studio side — but that old methods will no longer suffice.

Sony Pictures Entertainment CEO Tony Vinciquerra was asked at this week’s Bank of America investor conference if he thought the box office would eventually get back to pre-pandemic levels. “I hope it does,” he said. “I believe it will get close.” Despite the domestic struggles, he noted, “the rest of the world is still growing in film. There’s a big challenge in China, a big challenge in Russia and Ukraine, obviously,” but territories like Korea, Indonesia and India are “still doing really well.”

Covid production shutdowns months ago are resulting in the current drought of viable new titles, Vinciquerra added, and a strong fourth quarter and 2023 slate will inject much-needed energy. “Next summer is going to be absolutely crazy,” he predicted. “It’s going to be back to where we were pre-pandemic, where you have a lot of films in the marketplace, a lot of marketing going to promote these films, and you’re going to see significant, significant box office.”

Studio owners are adjusting their operations to reflect the new landscape. Even before the Covid struggles began in 2020, the rise of streaming was altering release window strategies and profit sharing formulas. The complexity is likely to only increase. And that’s just on the distribution end — for exhibitors, details of this week’s bankruptcy filing by Regal parent Cineworld highlight the difficulty of resurrecting a business long dependent on Hollywood product.

Jason Armstrong, EVP, deputy CFO and treasurer at Comcast, described the movie business at the BofA conference as “on balance, less risky” than it was before the pandemic. “There are more options and more places to distribute content,” he explained. Controlling both Universal Pictures and the streaming service Peacock affords the company “incredible options.”

The theatrical window is “important to us,” he stressed. “It may not be important in the context of historically 90 days and traditional theatrical, but it’s incredibly important to us.” Jurassic World: Dominion and Minions: The Rise of Gru — summer releases which combined to gross more than $2.1 billion worldwide — are valuable streaming assets thanks to Universal’s revamped window approach. New film releases go to Peacock as their first stop after theaters. After four months streaming exclusively there, they migrate to Netflix and Prime Video before then returning to Peacock as library titles. Over time, in that kind of dynamic environment, Armstrong said, “You can adjust. If there’s a more accretive window to sell into, you constantly get the opportunity.”

Exhibitors have proclaimed the summer box office as a breakthrough after the brutality of Covid, which shut theaters in many markets for nearly a year. AMC Entertainment CEO Adam Aron, in a recent profile in Bloomberg Businessweek, marveled at the intensity of the period. “You know what they don’t teach in Harvard Business School?” he said. “The zero-revenue case.” The Omicron variant at the end of 2021 and early 2022 caused additional headaches.

In a recent note to clients, MKM Partners analyst Eric Handler said the dearth of new releases has led to a “slower-than-anticipated recovery” for theaters. In addition to lowering his revenue estimates for the third and fourth quarters, Handler said he has “questions about the growth trajectory for 2023,” which he predicts will record an 8% year-over-year uptick in grosses to about $8.3 billion. Other forecasters expect the total to surpass $10 billion.

“On a positive note,” he wrote, “moviegoers have shown a willingness to return to theatres when there is product depth, as evidenced by revenue for the month of July topping $1 billion for the first time since the start of the pandemic. However, business hit a wall in August, and trends should remain lackluster until the back half of October.”

Eric Wold, an analyst with B. Riley who has been a longtime bull on exhibition despite the wages of the pandemic, sees “an attractive setup for the exhibitors heading
into the stronger film slates” of the fourth quarter and 2023. In a recent note to clients, Wold emphasized the “positive attendance and per-patron spending dynamics over the past 6-12 months.”

Sony’s Vinciquerra has looked for revenue-producing opportunities to license select films. A multi-year streaming pact with Netflix struck in 2021 includes a co-production component and a first look at direct-to-streaming titles. Unlike its major-studio peers, Sony doesn’t own a general-entertainment streaming service, though it does have two profitable niche platforms in Crunchyroll and PureFlix.

Despite an ongoing stake in moviemaking, though, Sony’s release output has dropped to half of the two dozen or so titles it used to bring to theaters every year. It struck gold last year with Spider-Man: No Way Home (at $1.9 billion and counting worldwide, the third-biggest release ever) and more recently had less-spectacular (though still solid) outings with Where the Crawdads Sing and Bullet Train. Getting to those results, though, is an increasingly complicated process, Vinciquerra says.

“The biggest challenge in film right now,” the exec asserted, is assessing the “level of theatricality” of a given project. The bar for what works in theaters “has risen dramatically, and obviously that line is completely subjective. You have to trust the people who are putting these films together to make that decision and that’s become more and more risky. … You’re taking a big risk with these films now and you just don’t know what’s going to come of it because the audiences are fickle, to get them to come out of their house, to get them away from their SVOD services that they’re focused on, to spend the money to go to theaters and park and popcorn and all the things that go with it. So, you have to have a really good product, and that threshold is higher than it ever was.”

Former Disney chief Bob Iger, appearing this week at the Code Conference in LA, said the pandemic left a “permanent scar” on the film business. “It won’t go away,” he said, “but it doesn’t come back to where it was.”