How has COVID-19 affected film production and budgeting
The chaos brought by COVID-19 has served as something of a reset button for Hollywood.
The COVID-19 pandemic has caused massive disruption across many industries, including film. At the start of the pandemic, studios and theaters were hit with temporary closures, filming delays and plummeting ticket sales. The pandemic has also changed the way movies are distributed, as studios have sought to diversify their distribution strategies and streamers have pushed to expand their content libraries.
Using research from news and industry sites as well as data reports, Giggster has broken down some of the crucial ways the COVID-19 pandemic has changed the way movies are budgeted and made.
The chaos brought by COVID-19 has served as something of a reset button for Hollywood. Studio executives have faced unprecedented circumstances in which popular streaming services such as Netflix have become the primary means of consuming content while movie production at all scales has been halted by COVID-related shutdowns. -19 or had to deal with release schedules that could not be met due to cinema closures.
2021 U.S. box office revenues totaled $4.49 billion, representing a recovery of more than $2 billion from the previous year, which was still a league shy of 11.3 billions of 2019. Many of the top movies of 2021, including “Shang-Chi and the Legend of the Ten Rings” and “Black Widow,” faced limited revenue potential by being released simultaneously on streaming and in theaters.
Success looks different for theatrical and streaming releases
For many Hollywood studios, 2021 provided the rare opportunity to understand the movie distribution models that had piqued the curiosity of people in the film industry long before the pandemic. For years, the only way to see a new movie was at the cinema. Post-COVID, there are no set rules on how a new movie can be released.
In the last year and a half, some films have been released exclusively in theaters before moving to digital platforms; other films were made available on streaming platforms the same day as their theatrical releases. Throughout 2021, nearly every new movie release from Warner Bros. appeared on HBO Max – a move that is now being scrapped as theaters have reopened and Warner and Discovery are set to merge by summer 2023.
Several new streaming services owned by media heavyweights with their own movie studios have drawn huge viewership during the pandemic, including Peacock, Paramount+ and Disney+, which first aired many of its features. live action and animation, most notably “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 the fall of 2021 by Warner Bros., was a box office flop but a major hit for HBO Max.
After a drop in revenue, box offices are ready for a comeback
Throughout the pandemic, movie theaters across the country have taken the brunt of plummeting ticket sales. Cineworld Group PLC, the world’s second largest cinema chain, owner of Regal Cinemas, confirmed in August 2022 that it was preparing to file for bankruptcy due to poor box office sales largely due to the pandemic. Cineworld still plans to continue operations even after the filing, but investors in the company could suffer significant losses.
Nonetheless, there have been definite signs that filmmaking remains a staple for Americans. The best movie of 2021, ‘Spider-Man: No Way Home,’ grossed over $572 million in the United States this year alone and grossed over $800 million overall, making it the third film the most financially successful in history. And so far, 2022 has overtaken 2021 by almost $700 million, with four months to go until the end of the year.
Perhaps the biggest reason? Paramount Pictures and Skydance Media’s “Top Gun: Maverick” was the call sign “smash,” topping $1.4 billion worldwide in its 13th weekend of release.
Studio executives cut production costs due to supply chain issues
As with every other sector of American commerce, the entertainment industry is feeling the brunt of inflation compounded by ongoing supply chain issues. Film productions have been particularly hampered by the pressure on the availability of steel and wood, which, according to a studio manager, has driven up the costs of these materials by up to 30%; in one case, the peak made the price of a film set double what it would have cost to build four years ago.
Since the beginning of 2021, film studios have faced significant delays in acquiring almost all the materials needed to build the sets. This persistent supply chain problem is compounded by rising fuel prices. Many US movie studios are located in California, a state where gas currently averages more than $6 a gallon, making fuel expenses another item producers struggle to control.
Perhaps no recent story out of Hollywood illustrates the studios’ about-face in terms of cost control that the announcement of the CEO of Warner Bros. Discovery, David Zaslav. In August 2022, Zaslav announced that several of his in-production movie properties, including DC Comics’ highly anticipated “Batgirl,” were being shut down and pulled from release altogether for the studio to mitigate what it feared was potential box losses. Desk; in the case of “Batgirl,” in particular, the studio would have to claim the already completed film as a $90 million tax cut.
With cinemas nearly empty for a few years due to the pandemic, film industry workers may be pleased that more and more people are getting up from their sofas these days to go to the movies, but there are now another looming problem, unfortunately. Something that may be missing in theaters this fall is the real movies.
In 2021, 403 films were released in the United States and Canada, a 20% increase over 2020, but far from the 792 films released before the 2019 pandemic. The shortage of new films being made and released is likely to have a negative effect on ticket sales for movie theaters that were already struggling to stay afloat during the heaviest days of the pandemic. Supply chain and production setbacks continue to plague film productions large and small. Additionally, the resource codification of major studios towards large-scale, big-budget productions means that they can afford to produce fewer projects, but also that the load of those projects they release is significantly greater than in the past.
Lack of funding for COVID-19 insurance
While major movie studios have more leeway with their budgets, independent filmmakers are still struggling with financing independent productions – a feat that has become increasingly complicated since the pandemic.
When the pandemic first emerged, insurance companies excluded COVID-19 from their policies. This led to a domino effect, with banks unwilling to accept the completion bonds independent filmmakers rely on for funding. Completion bonds guarantee that productions will stay on budget and finish on time. The lack of insurance coverage coupled with soaring production costs has made it difficult for independent filmmakers struggling to get their projects off the ground.
This story originally appeared on Giggster and was produced and distributed in partnership with Stacker Studio.