Summer box office struggles imperil theaters' post-Covid recovery

The theater industry's hopes of a return to summer box office glory has been met with storm clouds as many expensive releases underperform.

Why it matters: This summer is giving theater owners an uncomfortable truth: The pre-covid box office days may never come back.

The big picture: The lower-than-expected box office totals are particularly worrisome for Cineworld. The world's second-largest theater owner was betting on a strong summer movie season to jumpstart its post-bankruptcy life.

• Cineworld is expected to formally exit bankruptcy in the coming weeks.

Of note: This morning, Empire Cinemas, a small U.K. chain, entered administration (the U.K. version of bankruptcy).

Between the lines: The higher cost of tickets and increased reliance on premium formats like Imax also mean that the number of people going overall is lower than you think.

• That's even worse for theaters, who rely much more on ancillary sales like concessions for their revenue, as opposed to ticket sales, which are shared with the studios.

By the numbers: This year is still pacing ahead of last year, but the pace has slowed since Memorial Day.

• Before Memorial Day, this year's box office was ahead of last year's by 22%. That lead has since shrunk to 16% heading into this weekend.
• Compared to this point last summer, the current summer movie season is slightly behind last year, $2.02 billion to $1.92 billion.

Zoom out: The summer struggles of big-ticket films "The Flash," "Elemental" and "Indiana Jones" have put dark clouds over what had been a very encouraging box office year.

• Even this summer's biggest performer, "Guardians of the Galaxy Vol. 3," fell short of its predecessor.

What we're watching: It's once again up to Tom Cruise to save the movies, with some help from a pink-clad plastic doll and Chris Nolan.