Exhibition outlook improves with box office rebound driven by content recovery

lcome to the second SCO newsletter of 2025. This year has already swung from one extreme to another. March was one of the weakest months for the box office in 25 to 30 years (based on U.S. data—Australian data is not yet available). However, the release of A Minecraft Movie, a major blockbuster, has significantly turned things around.

The key takeaway: consistent, high-quality content drives not only individual film success but lifts the performance of surrounding titles as well. While the slate for the rest of the year is still lean, it is more compelling, which should provide a welcome boost to industry morale.

In this issue, we cover recent industry events (CinemaCon and ICTA), explore current box office trends, and discuss emerging challenges and opportunities for exhibitors.

Australian Box Office shows signs of recovery.

The first quarter of 2025 delivered a devastating blow to the Australian box office. However, A Minecraft Movie has provided a much-needed boost. We are now trending towards surpassing 2024’s results, though still likely to remain below pre-pandemic levels.

Despite the weak March, April's performance shifted projections from -3% to +2%. This outlook may improve further with other high-profile releases. A 5–10% increase in box office revenue by year-end is plausible. That wide margin reflects increasingly unpredictable consumer behaviour.

Key Trends:

1. Established IP (e.g., Minecraft, Barbie, Super Mario, Inside Out 2, Sonic 3) continues to drive viral success. Sequels and reboots dominate.
2. Original IP struggles to meet traditional expectations. Films like A Working Man and Amateur earn high audience scores but fail to attract footfall. Streaming habits and shorter theatrical windows appear to be the primary culprits.
3. General releases are still about 25% below pre-pandemic levels. The pandemic and strike disruptions can no longer be blamed—other underlying issues are at play.
4. Drama, romance, and comedy genres are faring poorly theatrically and increasingly go straight to streaming.
5. The box office is polarising: big films are performing better; small films are doing worse.
6. Studios are doubling down on established IP—sometimes awkwardly. Ballerina (from the John Wick universe) is undergoing reshoots to insert John Wick himself. Even thumbnails on YouTube now highlight him. This trend may harm long-term sustainability.
7. Attendance begets attendance. The post-holiday drop-off wasn’t as severe as expected. A well-timed blockbuster boosts awareness and encourages viewers to return for less hyped films. Smart slate planning (distributors, take note) is more critical than ever.

These trends are mixed and outcomes will vary based on location, demographics, and the strength of programming/curation.

Overall, cinema remains a fundamentally strong industry. However, to sustain and grow attendance, exhibitors must now operate with more intention and adaptability than ever before.

With current attendance levels still well below pre-pandemic norms, we are likely to see continued rationalisation of screens, sites, and seating in areas with high screen density. This may take the form of reducing screen counts or seating capacities to better align with actual demand. While this contraction could reduce profitability for larger complexes, it still allows for commercially viable operations—and may, in fact, create leaner and more sustainable business models in the long run.

CinemaCon Highlights

March 2025 brought the lowest box office in decades, prompting urgent industry discussions at CinemaCon about reversing this trend. Fortunately, April's turnaround provided optimism.

1. Theatrical Windows:
   • Strong calls for a return to minimum 45-day windows.
   • EU's faster recovery linked to longer windows on local content. 
   • Industry analysis suggest short windows have limited  impact, see: https://the-numbers.com/news/259070830-Numbers-Business-Report-short-theatrical-windows-cost-domestic-theaters-about-100-million-a-year-The
   • See “The Windows struggle” below for more analysis.
2. How to grow attendance level.
   • Regain frequency.  
   • More genres.
   • More variety.
3. Preshow length rcomendations
   • Limit trailers to 4 (Max).
   • Keep number of Ads down or none at all.
   • Max Length 15-20min.
   • Shorter Preshows. (May allow an extra session per day per screen?)
4. Ticket and overall cost of going to the cinema.
   • In a cost of living crisis, lifting prices may cause more friction to attendance.  
   • How much is too much for your region. 
   • Regional expectations should guide pricing models.
5. Amount of tent poles being released.
   • Overlapping major releases cannibalise each other.
   • See topic “Content supply Issues” topic below for a deeper analysis.
6. Slate awareness.
   • Better awareness of upcoming films needed.
   • Improved marketing techniques. (Social media)
   • Cinemas take on more of the promotional burden.
   • Free Trailer showcases encouraged.
7. Social Media Effectiveness
   • Need for a better understanding of social media and how to effectively utiise it.
   • Tools to make social media easier and cheaper for smaller cinemas.
   • Calls for industry-wide standards to streamline cross-platform campaigns.
8. Family Entertainment Centres (FECs) and competing with expanding out-of-home entertainment.
   • See “Family Entertainment Centres (FECs)” topic below for a deeper analysis
9. Push into PLF (Premium Large Format).
   • This includes Including, 4DX, ScreenX, ICE, Dolby Visions, BarcoHDR, IMAX.
   • Does this grow attendance levels or simply affect the locations customers choose to see a film?
   • How does this factor into the changing behaviour of consumers willing to go to fewer films, but spend more money on the films they go to?
   • How does it effect smaller locations?
10. Laser Projection & Energy Efficiency..
    • With new projectors up to 70% more efficient, is not-upgrading-now actually costing you money over the mid to long term?
    • Power costs are expected to rise even more, how important is this factor in your region?
    • How soon will solar and battery technology be the most profitable path? (Years based on new battery tech coming)
11. AI and can small cinema take advantage of it?
    • AI typical improve efficiency but does not replace processes or oversight by humans. (Promotional Artwork creation etc)
    • Are smaller cinemas in a position to leverage AI benefits, or are larger chains only in a position to do so?

Cinema System Summit - Technical Takeaways

As part of CinemaCon, a special day called, “Cinema System Summit”, organised by InterSociety, ISDCF (InterSociety Digital Cinema Forum), ICTA, (International Cinema Technology Association), Cinema Foundation was held.  This summit is designed to help socialise the technical aspects of running a cinema and to pull interested people into the technical side of cinema exhibition. For example, encourage more people to take up the job of cinema engineer.  Australia is not the only region having issues with finding servicing agents.

The conference covered many topics, but those of note are:

1. The current supply of traditional studio movies is insufficient to sustain the exhibition industry. The utilisation rate of theatres remains low, posing a challenge to their viability. Several entries are actively exploring ways to bridge this gap by introducing alternative, non-traditional studio content to these screens. It is imperative that we closely monitor the emergence of novel distribution methods tailored to theatres and content producers.
2.  Other theatres are investing in enhancing their multiplexes to incorporate FEC (family entertainment centres) activities at their locations. This strategy aims to reduce the reliance on movies as the sole attraction for patrons. For instance, a smaller four-screen site has implemented an IMAX screen, traditional screens, and a flexible screen for multipurpose use. These innovative approaches are being explored by smaller local theatres, and we can learn valuable lessons from their experiences.
3.  The marketing landscape for movies and theatres remains dynamic. It is evident that social media has become a pivotal tool in engaging customers and attracting them to theatres for movie experiences and other activities. However, it is clear that the role of social media in marketing extends beyond mere interest-generation, and theatre operators should allocate more resources to this area.
4. LED screens were also a topic of discussion. While acknowledging the installation challenges, we explored the advantages for customers and potential drawbacks. 
5. A major theatre chain shared their experiences in addressing technical support issues. They had experimented with outsourcing and in-house solutions and concluded that in-house technical support was the most suitable option for their specific needs. However, it was acknowledged that a one-size-fits-all approach may not be applicable. 

Attendance level contraction

There is a growing frustration with the industry's fixation on box office revenue and attendance numbers. These metrics, while important, do not always reflect a cinema’s true commercial viability. A decline in average visits per person per year simply means that a cinema needs a larger catchment area to remain viable.

This pattern has emerged repeatedly over the decades—whether it was the rise of radio, television, VHS, DVD, or now streaming, each innovation led to a contraction in cinema visits.

Each time, the industry has adapted by adjusting the supply of sessions and seats to better align with demand.

This shift does not undermine the fundamental commercial viability of cinema or the value of the cinematic experience. What’s essential now is focusing on how to reach sustainable attendance levels for each location. Eventually, after a period of difficult contraction and rationalisation, supply and demand will rebalance.

The opportunity before us is to leverage innovation and evolve traditional cinema-distributor business models to boost industry turnover by aligning with changing consumer behaviours.

Consider the audio streaming world: listening habits have shifted heavily toward older content, driven by the availability of an extensive back catalogue and AI-based curation systems that often recommend legacy content due to its lower cost.

This trend is mirrored in video streaming platforms, where older, repertory content is gaining popularity. Cinemas can take advantage of this. A recent example is the re-release of Star Wars: Episode III, which far exceeded expectations.

Since digital cinema operates much like a complex version of a streaming set-top box, there is no technical reason cinemas couldn’t offer a "view-on-demand" model—screenings scheduled a week after a minimum booking threshold is met. The only real barrier is the current licensing and business model restrictions.

Distributors tend to prefer maximising returns through newer content, and while this approach is logical from a short-term ROI perspective, it may harm long-term cinema viability. By limiting repertory content and squeezing more box office value from new releases, the risk is reducing screen utilisation and, ultimately, profitability.

A more sustainable approach could involve enabling alternative content models during off-peak periods. This would provide cinemas with additional revenue opportunities while preserving premium slots for new releases.

The Windows Struggle

The prominent call for 45-day theatrical windows at CinemaCon was a direct response to falling attendance levels—some of the lowest seen in the past 25–30 years. This decline signals that more consumers are content to wait for films to appear on streaming platforms.

However, April proved that when there is a consistent supply of appealing content, cinema attendance can bounce back strongly.

So, who is right—and what should the industry do?

As an exhibitor, it’s clear that longer theatrical windows are preferable. They encourage consumer behaviour that benefits cinemas, incentivising audiences to see a film in theatres rather than waiting. While the exact impact of longer windows is hard to quantify, the logic behind their effectiveness remains compelling.

From the studios' perspective, shorter windows are financially advantageous. The cost savings and strategic benefits of pushing content to streaming faster are significant—so much so that studios continue to shorten windows, despite the revenue decline observed by exhibitors.

Complicating matters is the opaque nature of studio accounting. Many blockbuster films never officially show a profit due to what’s colloquially known as “Hollywood accounting.” Given these practices, it’s fair to conclude that theatrical exhibition is no longer the primary concern for major content producers.

Historically, the Paramount Decree was introduced to prevent vertical integration in the industry. But with the rise of streaming, studios are now more vertically integrated than ever. The Paramount Decree has effectively been abandoned in today’s internet-driven landscape.

Studios have made massive investments in their streaming platforms, which now represent the core of their long-term strategies. These investments heavily influence how content is distributed. Exhibition is no longer a strategic priority—it’s become secondary.

This is the reality we must accept. We can, and should, continue advocating for longer windows. But we must also prepare for the likelihood that they won’t return. The major studios are simply no longer in a position—financially or strategically—to offer them.

Family Entertainment Centres (FECs)

According to a newly released report by Exactitude Consultancy, the global Family Entertainment Centre (FEC) market is forecast to grow from $15 billion in 2024 to $27 billion by 2034, representing a compound annual growth rate (CAGR) of 6.1%. The study positions FECs as a key sector within the broader leisure and attractions industry, with growth being fuelled by rising demand for immersive, socially inclusive entertainment options across global regions. See: This analysis 

Given the struggles currently facing the cinema sector, it may seem contradictory that FECs are thriving while cinemas are contracting. However, this divergence is best explained by changing consumer behaviour. The proliferation of streaming has fragmented audience habits and caused a long-term decline in per-capita cinema visits. Cinemas, by design, offer a singular entertainment option, which limits their appeal when groups are choosing where to go for a shared outing.

In contrast, FECs offer a diverse mix of attractions, making them more versatile and socially appealing. Cinemas have historically marketed themselves as premium, single-purpose destinations—optimised for minimal staffing and reduced customer interaction to maximise profitability. Meanwhile, FECs focus on creating experiences, often enhanced by extended engagement with welcoming, service-oriented staff. The operational cultures between the two are fundamentally different.

Cinemas have traditionally served as key anchor tenants in shopping centres, generating significant foot traffic that benefits neighbouring businesses. In many cases, it would be economically sensible for large shopping centres to charge cinemas little or no rent, as the surrounding retail uplift offsets it. This is likely a factor keeping many large cinemas commercially viable despite declining attendance.

However, as shopping behaviour shifts increasingly online, the traditional mall model is being disrupted. Consumers now place greater emphasis on experiential outings, pushing foot traffic toward FECs, which are designed specifically for entertainment, rather than shopping. This reversal of roles suggests a broader trend: where once shopping centres relied on cinemas to add value, cinemas now need FECs to remain part of the entertainment conversation.

This is a complex issue and needs deeper analysis, however, I would like to leave the readers with some data to ponder.

1. Everyman Cinemas (UK) continues to expand rapidly by delivering a more experiential and service-oriented cinema model. A recent infographic from Entertainment Solutions Services on LinkedIn illustrates their growth and strategy. It can be found on linkedin HERE.
   
   
   
   This shows you how, with the right offering, there are significant opportunities in the market.
2. While at the same time, larger traditional chains are still struggling to return to profit base on the most recent fillings to the markets.
   • Vue: Cinema chain loses over £90m despite Deadpool & Wolverine boost
   • Cinemark Swings to First-Quarter Loss Amid “Suppressed Box Office Environment”

These examples highlight the need to reimagine where and how the cinema experience is delivered. It's not just about the content—it’s about the context and the consumer experience surrounding it.

(If you’re interested, I’d be happy to explore this issue further in the Australian context. Please contact me if you'd like a future newsletter focused specifically on how this trend is likely to play out locally.)

Content supply issues

Statistically, box office turnover closely correlates with the quantity and quality of films released. For example, if the number of tentpole films is halved, box office revenue typically drops by a similar margin. This is why the Hollywood strikes were such a critical issue for exhibition—fewer films mean fewer reasons for audiences to visit cinemas.

In past newsletters, we've discussed how early indicators suggested Hollywood was not returning to its pre-pandemic production levels. This slowdown was likely to have long-term consequences for the volume and calibre of theatrical releases.

However, at the same time we have the following “Global Film Production Hits Historic High, Surpassing Pre-Pandemic Levels”.  How can both issues be true?  As always, when you get into the detail, can we have a better understanding of what is going on.  For example, see the following graph from the story linked above:

The answer lies in the detail. While global film production numbers are indeed up, production of Hollywood tentpole films—the kind that drive major box office revenue—remains significantly down. Much of the growth is coming from regional and streaming-focused content targeting localised audiences. As discussed earlier in this newsletter, the film industry is fragmenting in much the same way the music industry did, into smaller demographic-specific segments.

There may be more films overall, but there are fewer titles with broad, mainstream appeal—the kind that cinemas rely on to fill seats.

This reduction in tentpole output helps explain why some long-standing service providers in Hollywood are facing severe challenges:

1. Technicolor Begins to Shut Down Operations ‘Due to Inability to Find New Investors - Due to a major contraction in the need for their services, Technicolor has unfortunately fallen.
2. Panavision Hollywood closing down - Luckily this in only the Panavision shop in L.A. but this is still a major blow. Hopefully it well re-establish a presence in L.A. at a later date.
3. MAJOR DEVELOPMENT, Trump considering tariffs to bring more production back home, See: “Donald Trump announces 100 per cent tariffs on movies 'produced in foreign lands” read more HERE on the ABC.net.au  

Another angle worth exploring is how studios are reassessing production spending. A recent comment from John Fithian, former CEO of NATO and now an industry consultant, sheds light on the internal decision-making processes that are reshaping how and where content is distributed:

See John Fithiian post HERE

—

ANOTHER EXAMPLE OF HOW THEATRICAL DISTRIBUTION IS BROKEN AND IN NEED OF DISRUPTION

[this is an accurate summary of real conversations I have had recently, with names/companies kept anonymous for obvious reasons][and to my journalist friends on LI, I cannot identify those involved even if you want me to, with apologies]

LUNCH CONVO with a LEADING FILM PRODUCER (FP)

FP: I am working with a great script on known IP owned by a major studio. That studio wants to take the movie straight to streaming and skip a theatrical run, and I really believe this movie should go theatrical.

JF: Mind if we offer Attend as a theatrical release platform to the studio?

FP: Go for it.

CONVO with DISTRIBUTION LEADER (DL) AT THE STUDIO

JF: Heard about [movie in question]? Are you going to do a theatrical release?

DL: Not sure, let me check.

JF: This movie deserves a theatrical release and could make big box office. Hope you take it theatrical. But if you don't want to distribute it, we could distribute it through Attend and create theatrical buzz that would drive your streaming premiere.

LATER BREAKFAST CONVO with same DISTRIBUTION LEADER

JF: Did you discuss [movie in question] with the studio chief and will it go theatrical?

DL: It won't go theatrical through Attend because the studio doesn't want to give up the IP. And it won't go theatrical from us because the guild contracts require us to pay people more if it goes theatrical. So it's going straight to streaming.

Arrgggghhhhhhh

—

This off-the-cuff remark highlights how significantly the priorities of major content producers have shifted—particularly those now owned by large streaming platforms.

It illustrates that resolving the industry's content issues goes beyond production volume. The very business model underpinning film creation and revenue allocation has evolved, increasingly sidelining theatrical releases. Until this imbalance is addressed, we are unlikely to see more equitable access to the types of films that once had guaranteed theatrical windows but are now funneled straight to streaming.

Additionally, streaming platforms have an inherent incentive to hold back broad-appeal, tentpole films for exclusive release on their own services. Just as a cinema can enhance the overall profitability of a shopping centre by drawing in foot traffic, flagship films can drive subscriptions and boost engagement across an entire streaming catalogue. As streaming platforms represent the largest capital investment for today’s content producers, it’s only logical—if not inevitable—that some of the most attractive content will remain exclusive to those ecosystems.

Final words

We are not out of the woods yet. Depending on your location and circumstances, there may still be challenges ahead before the industry reaches a new equilibrium. In the meantime, it's important that we support one another.

SCO understands the strain many small cinema owners are under, particularly when it comes to long-term capital investment. For those not currently in a financial position to invest in new projection systems—which typically represent a 10-year commitment—SCO offers the following advice:

• Deep Cleaning of Projectors: Projectors older than 10 years, even those serviced annually, often benefit significantly from a more comprehensive internal clean. Ask your integrator to service components usually avoided due to being sealed. This includes the cold mirror, light-pipe entry, notch filter, and lens assembly. A deep clean of the full light path can potentially restore 10–15% of lost light output.
• Spare DCI Players Available: SCO has two older but lightly used DCI players available to help operators stay on screen. These include a GDC SX-2001 and a Doremi DCP-2000. Both have only a few hundred hours of use. They are available for $1,000 each, plus shipping. (Originally $15,000+, they are a cost-effective option for bridging projector failures without full system upgrades.)
• Inexpensive second hand Cinema Chairs: please contact me and I can put you in contact with an entity that can help in this area.
• Free CRU Drive Caddies: SCO also has a limited number of spare CRU drive caddies available at no cost—just cover your own shipping.

We hope these resources assist those doing it tough. The road to recovery requires collaboration, practical solutions, and a willingness to support one another along the way.

Thank you for reading this edition of the SCO Newsletter.

If you have feedback, would like to share your own experiences, or are interested in exploring any of the topics mentioned in more depth—especially from an Australian perspective—please don’t hesitate to get in touch.

Until next time, stay strong, stay connected, and continue bringing great cinema to your communities.

Warm regards,

James GardinerDirector, SCO Newsletter