Why 'Tenet' and 'Mulan' Can Succeed Even if Theaters Dramatically Slash Seating

TENET -Publicity Still  3- H 2020
Warner Bros. Pictures

Before COVID-19, it wasn't unusual for 50 percent of seats at U.S. theaters to remain empty on the weekends without dampening business overall.

Hollywood studios and theater owners would normally never discuss what's a taboo topic: the millions of seats across the U.S. that remain empty even when the box office is booming.

But the issue of capacity has become of paramount import during the age of COVID-19 as the entertainment industry sets its sights on cinemas hopefully reopening in time for Christopher Nolan's Tenet on July 17. Nolan has been insistent that Warner Bros. stick to the date as a symbol of the importance of the cinematic experience, despite the risks of launching a $200 million film amid uncertain times.

Movie theaters are expected to dramatically slash the number of consumers allowed in any given auditorium — it could be anywhere from 25 to 50 percent — in what's come to be known as "checkered seating." But can a studio score a box office hit amid a landscape where half or more of theater seats sit empty? If historical trends are any indication, the answer is yes.

"Even at reduced capacity because of social distancing, there would will be plenty of seats for the summer release schedule the way it is mapped out now," says Paramount president of domestic distribution Chris Aronson, who is prepping for The Spongebob Movie: Sponge on the Run, which is set to debut Aug. 7, following Tenet and Disney's big-budget Mulan on July 24.

A number of box office sources who spoke with The Hollywood Reporter say it isn't unusual for 50 percent of seats at U.S. theaters to remain empty on the weekends without dampening business overall. And last week, Walt Disney Co. CEO Bob Chapek — in advocating for Mulan's release — said capacity generally runs at 25 percent Monday through Friday afternoon.

There are at least 40,613 movie screens in the U.S., according to the National Association of Theatre Owners.

Not all are first-run cinemas, however. There could be as many as 25 million to 30 million seats available a day for new Hollywood movies, and 79 million to 90 million seats on the weekend, according to analysts. The calculation is based upon a conservative average of 150 seats per screen and five showtimes a day, the industry norm for big titles. (There are no exact stats on the number of seats).

Not even the biggest weekends have come close to reaching those benchmarks.

When Disney and Marvel Studio's Avengers: Endgame debuted to a record-shattering $357.1 million domestically in spring 2019, overall revenue for the frame came in at an all-time best of $402.1 million, according to ComScore. The feat was accomplished after filling 44 million seats if using the average ticket price of $9.16. "Movie theaters aren't like sold-out Broadway shows," says another distribution executive.

"I'm happy to max out at any capacity we have to abide by," adds Ted Mundorff, who was recently named president and COO of Arclight Cinemas after running Landmark. "It means people want to come back to the movies. And 50 percent would be a very healthy crowd."

ArcLight and other theaters could end up leaving every other row empty, as well as keep empty seats between patrons in the alternating rows. They are also planning on increased sanitary measures.

Tenet has been the subject of intense speculation in terms of whether it will move at the eleventh hour, particularly if New York and Los Angeles cinemas can't resume business. It's the only spring or early-summer Hollywood tentpole that has stuck to its original date (Mulan's original release date was March 26).

While a smattering of theaters have begun or are planning to reopen in more than a dozen states where shelter-in-place orders have been eased, the bigger circuits are holding off.

If all goes as planned, Tenet could have access to an unheard of number of theaters for a Nolan movie. Disney's 2019 blockbuster The Lion King is the current record-holder for the widest opening location count, or 4,752 sites. Nolan's last film, Dunkirk, took in $50.5 million when opening in 3,720 theaters in July 2017, while Interstellar launched to $47.5 million from 3,561 locations in 2014.

In an interview Monday with CNBC's Squawk Alley, Chapek indicated there will be plenty of room for Mulan a week later. Analysts agree.

"While the social distancing protocols that theaters will enact will most certainly limit an individual auditorium's capacity in the early months of the relaunch, this will be more than offset by the sheer number of screens within a multiplex that can be devoted to what is expected to be initially a reduced inventory of brand new films," says Paul Dergarabedian of Comscore.

He adds, "Everyone understands that for any brick-and-mortar business, in the early days of a relaunch, reduced capacity will be a mandated way of life and not a reflection of a lack interest or enthusiasm for the businesses themselves, be it a restaurant, a bar or a movie theater."