A busier movie calendar will lead to a 15% jump in box office sales, JPMorgan predicts

Published Sun, Jan 15 20237:23 AM EST

Christina Cheddar Berk @in/christina-cheddar-berk-b864404/

Slow and steady will win the race at the box office this year, according to JPMorgan analyst David Karnovsky. He is predicting a 15% year-over-year jump in North American movie ticket sales to $8.49 billion in 2023. The double-digit gain is driven by two factors. The first is tied to the depressed state of the box office last year . Gross receipts of $7.4 billion in 2022 were up 65% versus 2021, but were still down 36% from a three-year pre-pandemic average, he said. In other words, the comparisons will be easy. The second reason is much more positive: the movie calendar is better balanced than it's been since the Covid pandemic began. In 2022, consumers may have wanted to go to the movies, but there were big gaps during the summer and the fall, when new films simply weren't in theaters. And some types of movies, like family friendly fare or original films targeted to adults, were in very short supply. This is a key factor in Karnovsky's forecast. "We see at least 30 films with potential for ~$100m plus in revenue vs 18 which reached that mark in 2022," he wrote in a research note last week. Although the total number of films expected to be widely released remains below pre-pandemic levels, the gap could narrow further as the year progresses. Karnovsky called out comments from Cinemark , which said it expects the number of the films in wide release to grow by 20 to 25 this year from 202, as smaller and mid-tier studios shift back to theaters this year. The pace of movie releases will likely be a much bigger factor in the industry's success than the economy. In past economic cycles, movie-going was a recession-resistant pastime. How the calendar shapes up Despite the buzz around "Avatar: The Way of Water," there will be few new films in theaters during the first quarter, but the pace picks up in a big way in the second quarter, beginning with a reboot of the Dungeons and Dragons franchise. Karnovsky expects the second quarter to show some of the biggest ticket sales of the year. The Easter weekend will feature "The Super Mario Bros Movie." Then, in May, some of the biggest films of the year come out: "Guardians of the Galaxy: Volume 3," "Fast X" and then Disney's "The Little Mermaid" for Memorial Day weekend. June continues with other promising titles, including the first Transformers film since 2019 and DC Comic's "The Flash." Pixar also will return to theaters with "Elemental." With titles such as "Indiana Jones and the Dial of Destiny," "The Marvels" and Christopher Nolan's "Oppenheimer," the third quarter of should show plenty of growth compared with 2022, according to the analyst. The gains in ticket sales will be more modest in the fourth quarter, he said. However, if additional movies are released, here's where there could be upside to his box office forecast. The calendar has some wiggle room for potential add-ons. At the moment, the year-end will bring several notable titles, backed by established franchises, including Marvel's "Kraven the Hunter," "The Exorcist" and "Hunger Games - Ballard of Songbirds and Snakes." What does this mean for studios Karnovsky and other analysts say media companies are shifting their focus away from the attention they once lavished on their streaming services. "Elemental," for example, is coming to theaters. Since the pandemic, Disney had saved its Pixar titles, such as "Luca" and "Turning Red," for Disney+. Instead, the goal is to develop strategies that maximize the value of films. DIS 3M mountain Disney shares have gotten a boost from a proxy battle, but box office gains could be ahead. "After a period of experimentation, the industry appears to be consolidating around a 30-45 day exclusive window, or in some instances (e.g. Universal ), a 17-31 day exclusive window, depending on the opening weekend performance," Karnovsky wrote. "There are exceptions to this, such as Top Gun: Maverick or Black Panther: Wakanda Forever, which had lengthier exclusivity periods." While this may be more lucrative for studios than cinema operators, at the moment, he expects there could be benefits for theater chains down the line. For example, underperforming films could exit the theater more quickly, he said. Even streaming companies like Amazon are reported to be planning to release more films in the theaters . And there has been much discussion about the amount of money Netflix could be leaving on the table by not releasing films like the Rian Johnson-directed "The Glass Onion: A Knives Out Mystery" in theaters longer . Still, JPMorgan expects it will be two more years before the industry fully recovers from Covid. Not only did the pandemic interrupt movie releases, it also played havoc with production schedules. The turbulence is still being seen. With all this in mind, he expects Disney will log the biggest percentage gains in global theatrical revenue of the companies he covers. Both Paramount and NBC Universal are expected to see year-over-year declines as they lap strong performances in 2022. Paramount's "Top Gun: Maverick" topped the box office charts last year, while NBC Universal had new films in the Jurassic Park and Minions franchises. And this year will test how much of a "chicken and the egg" situation it is for the types of content that has struggled in theaters since the pandemic. The industry will test whether audiences come back for animated features or original films that aren't part of blockbuster franchises, or fit in special genres like sci-fi or horror. Disclosure: Comcast is the parent company of NBCUniversal and CNBC.