Studios are looking at near-zero box office revenue for the foreseeable future in response to the coronavirus social distancing orders. Domestic box office revenue for the third week of March brought in a mere $5,179, a 100% decrease from previous week. It's a devastating hit considering 42 percent of global theatrical and home/mobile entertainment market still depends on theatrical releases.
"People are willing to pay more to watch a movie in a theater than on any other platform," David Offenberg, a professor of finance at Loyola Marymount University, told CNBC. "And so when they can't watch movies in theaters, it is economically disastrous for the studios."
The people who make movies are particularly challenged by the economic downturn. Hollywood has long been known for its gig economy that hires freelancers of various backgrounds and expertise. Hundreds of thousands of them have lost their jobs overnight as productions are postponed or canceled due to the virus.
"The gig economy is a very fragile economy. And I think this virus is exposing that fragility," said Michael Ryan, president of Greyshack Films. Many of these workers live paycheck to paycheck and rely on overtime or secondary jobs to stay afloat. A bigger issue is that many of them don't qualify for traditional unemployment benefits due to their employment status and the nature of their job.
A few companies have stepped in to provide relief. The streaming giant Netflix announced setting up a $100 million relief fund for its out-of-work production crews and cast members but most hope lies on the unprecedented $2 trillion federal stimulus bill signed into law on March 27.
Although the stimulus package does not directly address Hollywood as it did with medical and airline industries, it does provide some measures for studios and freelancers to stay afloat. It allows for more freelancers and part-time workers to be eligible to apply for unemployment benefits, plus $600 per week for up to four months.
Bigger studios can take advantage of the $500 billion lending program, while smaller businesses with fewer than 500 employees can rely on a $350 billion lending program, as long as they do not lay off workers.
Watch the video above to learn more about the coronavirus' impact on the American movie industry.