The 2025 box office is off to a terrible start. Is the problem supply or demand?

The first quarter of 2025 has been bleak for the movie theater business. The year that many analysts thought would be the one when the film business got back on track has been a bust so far, with few hits and plenty of flops.

As of Sunday, movies have generated $1.34 billion in the U.S. and Canada this year, down 7% from the same period in 2024, according to Comscore. March has been particularly weak. The month is expected to end down 50% year over year. Remember, last year‘s first quarter was down significantly from pre-COVID-19 levels, so business is bad. Really bad.

Last week didn’t help matters. Walt Disney Co.’s “Snow White” opened with a disappointing $43 million in domestic ticket sales, having stepped on multiple cultural landmines while also receiving poor reviews and a tepid response from audiences, per CinemaScore. Warner Bros.’ “The Alto Knights,” starring Robert De Niro, was dead on arrival with $3 million.

Sales are expected to improve in the coming months.

Still, many people have watched the struggles of the theatrical market and concluded that consumer behavior has changed in fundamental ways. With so many entertainment options available in and out of the home, movies in theaters have lost their cultural sway.

There have been major exceptions, including “Barbenheimer,” intellectual property-based blockbusters such as “Wicked” and too many animated films to count. But when people have to choose how to spend their time and money — especially when paying for a babysitter — they’re often choosing something else.

One person who strongly disagrees with that assessment is John Fithian, the former longtime head of the National Assn. of Theatre Owners (recently rebranded as Cinema United). He exited as the movie theater business’ top advocate and lobbyist in 2023 and founded the Fithian Group, a consulting firm, with colleagues Jackie Brenneman and Patrick Corcoran.

With CinemaCon coming soon, I asked Fithian to make his case for what’s ailing the movie business. We also spoke about Attend, the independent theatrical distribution marketplace he and his cohorts are building for filmmakers and small distributors.

You wrote a recent post that was refreshingly candid about the poor state of the first-quarter box office. How did the industry get here?

Well, the movie theater industry has been a roller-coaster ride for decades, where people always pronounce its death, and it’s never the case. As movie lovers found ways to watch movies on television, via DVDs, via streaming, it made them more movie lovers. So the theory that competing ways of watching movies is what’s challenged the movie theater industry, in my opinion, is wrong.

Secondly, the theory that COVID is responsible for the numbers in the movie theater industry not coming back to where they were pre-pandemic is also wrong. Yes, COVID was a massive struggle for the exhibition industry, and exhibitors fought like hell to survive. But the other COVID-impacted out-of-home experiences [Broadway, concerts, sports] have rebounded and grown post-pandemic, and the movie theater industry hasn’t.

Most people I talk to would look at the last 10 years before COVID-19, when attendance was stagnant or declining, and they look at these other industries bouncing back and say, “Well, yeah, why haven’t movies done that?”

It’s about the supply side of the equation, not the demand side. If there is a movie being released theatrically, and if consumers were made aware of that movie, they will come out in numbers very similar to pre-pandemic. The problem is that the number and quality of movies being supplied in theatrical distribution has declined significantly, and that is not purely a pandemic effect. The decline in the quality and quantity of movies was already occurring before the pandemic.

In the mid-budget category of films — movies that might be able to make somewhere between $50 million and $100 million theatrically in the U.S. — there was a decline of 40% in supply between 2004 and 2019. That is $1 billion annually in lost revenues in the U.S. alone in that one category. That means almost 10% was lost just in the mid-budget category. In fact, the only genre that was increasing in supply and total grosses was horror.

I think people intuitively believe that the quality of movies has decreased over time, but do we have evidence?

It’s hard to have good data on quality. But if it’s a diet of Marvel movie after Marvel movie, even as good as they are, the moviegoing consumer is going to say, “You know, there really just isn’t what I want to see in cinemas anymore.” Where is the mid-budget romantic comedy? Where is the mid-budget drama?

Jackie, Patrick and I at the Fithian Group are now working as executive producers of a movie that is in the script stage with an attached cast that’s well known. We took it to every major studio in town, all of whom said, “That’s a great script. That’s a great cast. We don’t make mid-budget romantic comedies anymore.” Probably about $10 million all in, production and marketing. So when we’re done building Attend, and I’m guessing it grosses $50 million domestically.

Many studios employed shorter theatrical windows after COVID-19. How much of an impact do you think that had?

Although it was extraordinarily challenging for exhibitors, COVID did teach the industry about the importance of theatrical windows.

The major studios saw in the data that theatrical windows are actually good for every segment of the industry. They saw that if you release movies simultaneously to the home or with a very short window, the theatrical growth goes down, and the eyeballs on the movie when it hits streaming also go down. So you saw companies like Disney go back to much more traditional windowing strategies. Did they go back to the 80- or 90-day windows of a decade ago? No, but they went back to around 45 days.

What’s going on with independent films?

The data coming out of Sundance is disheartening. You get 14,000 movies submitted to Sundance. About 140 of them were selected to be screened. Two of the 140 movies got picked up for theatrical release during the festival. And then in the month after Sundance, maybe somewhere between four and six deals.

So the old process of saying, “I can make a really good independent film, take it to a film festival, hope it gets noticed and gets into theaters,” isn’t playing out anymore. There are the A24s and Neons, and they’re making and distributing great movies, but that’s a very small set. And no way does that make up for the decline in supply from the major studios.

A24 and Neon are good examples, but there are only so many resources that those two companies can put behind however many movies they can each fit on their slates. What can you do about that?

That is exactly why our biggest project is to totally change how independent and mid-budget films get distributed and marketed. There are quality movies that are not getting theatrically distributed, or if they are, they’re not being distributed in a strategic way. And that’s what we hope to do in building our platform, Attend.

We’ve learned a lot about what’s broken.

There’s an 11% occupancy rate in movie theaters in North America. That is an untapped inventory resource of gigantic proportions. The way you increase occupancy rates is by changing how movies are distributed and marketed.

As an industry, we’re not programming our inventory for the greatest success. There should be a family title at 4 p.m., a PG-13 movie at 7 p.m. and a R-rated horror film at 10 p.m. on the same screen, because horror people don’t want to watch a movie at 4 o’clock and 5-year-olds don’t want to watch a movie at 10 p.m.

The way theaters are booked today for mid-budget films is that you don’t really know what screens are available until the Monday before a Friday release. And if you don’t know what locations and screens are available for smaller titles, you can’t market them locally. There are 15 examples like this I could give you of the ways that movies are being distributed and marketed that do not make sense for mid-budget and independent films.

How will Attend work?

Attend is going to be a tool set that can be used either by a filmmaker who wants to self-distribute or by independent distributors. We’re talking to lots of independent distributors who just can’t take on enough movies because of bandwidth. They’re spending so much of their time booking the theaters by phone call or email, and they’re wasting time on things that need to be automated.

So independent distributors can use the tool set of Attend to do all that stuff online with algorithmic-based booking, and then you can use that same data to target your local marketing spends. You identify where you need to do your marketing, and that makes marketing costs much less expensive.

Whenever I write about movie theaters, the first comment I get is about ticket pricing, and that it’s too expensive for what you’re getting. Do theater owners need to experiment more with dynamic pricing?

Yes, yes, yes, yes.

I don’t want to overstate the importance of ticket pricing, because people always complain about ticket prices, and we always respond with data that says it’s the most affordable form of out-of-home entertainment, and that ticket prices have only gone up at a pace slightly less than inflation.

But that does not mean that dynamic, flexible ticket pricing would not help the industry. Look at what we achieved with discounted tickets on National Cinema Day. The movies that had been in the marketplace for a couple weeks actually made more on National Cinema Day at a discounted price than they made the week before.

It is insane to me that every movie playing at a cinema should be the same ticket price.

The only discounting we have now is for matinees, senior citizens and occasionally a Tuesday discount program. Paramount and Chris Aronson tried a flexible pricing strategy on “80 for Brady,” and it worked, and no one followed suit. Part of the data we want to develop in the Attend platform is how dynamic pricing can grow audiences, because it just doesn’t make sense to me that a $3-million independent drama should have the same ticket price as “Avatar.”

Stuff we wrote

OpenAI takes its pitch to Hollywood creatives after launching controversial video tool. The ChatGPT maker held a screening event in Los Angeles on Wednesday, where several filmmakers touted work they made with the startup’s text-to-video tool Sora. Earlier, hundreds of creatives signed a letter pushing back on AI firms’ approach to intellectual property.

Disney’s Bob Iger announces ‘Coco’ sequel at shareholder meeting. The Burbank giant crowed over theatrical and series successes and emphasized investment in its parks division at its annual shareholders meeting Thursday.

Hollywood producers say they are misunderstood. Here’s what they’re doing about it. As producing credits have expanded over the years, actual producers are trying to better define their roles and get benefits including healthcare.

Endeavor officially goes private as Ari Emanuel and Patrick Whitesell change roles. The Beverly Hills entertainment company closed its deal with Silver Lake, with Emanuel, previously the CEO, becoming executive chairman of WME Group. Whitesell will lead a new Silver Lake-backed media and sports investment platform.

ICYMI:

• Warner Bros. killed a Looney Tunes movie. Now it’s back from the dead
• ‘CBS Mornings’ is leaving its Times Square studio amid cost-cutting
• Ticket platform StubHub files for IPO

Number of the week

A record 51 films shooting in the Golden State will receive a government incentive in the latest round of the state’s film and television tax credit program, according to the California Film Commission. The total includes 46 indie films, my colleague Samantha Masunaga reported.

The state is crowing about its tax incentive program at a time when production in the L.A. area remains depressed. Late last year, Gov. Gavin Newsom proposed an increase to the film and TV tax credit, upping the annual tax credit allocation from $330 million to $750 million in an attempt to keep production in-state.

Film shoots

Local production last week was down 19% from the same time a year ago.

Finally ...

Listen: The latest album from Billy Strings. Yes, I’m in a bluegrass mood.