As Christopher Nolan’s newest intellectual adventure begins to roll out on PVOD, the industry can finally get some insights into whether or not Tenet’s box office performance points to a hopeful future for theatrical releases post COVID-19.
Nolan himself has been in the news recently for criticizing Warner Media’s decision to movie Warner Bros.’ entire 2021 slate of films to a dual release in theaters and on HBO Max. Nolan has been a fervent defender of the theatrical experience for movies, which was one of the main reasons he and Warner Bros. decided to give Tenet a traditional theatrical release in the midst of a pandemic that shut down most of the worlds movie theaters.
Christopher Nolan has done it again! The way you interpret that sentence will determine how much you will enjoy this movie.
First off, let’s break down what a typical theatrical situation would have looked like for Tenet. To date, Tenet has made $361 million at the global box office. The film was meant to be a high performing summer blockbuster with a budget of $200 million. You may be thinking, “If Tenet had a $200 million budget and made $361 million, doesn’t that mean it made a profit?” Well, the short answer is no; the long answer is a bit more complicated.
Film budgets are purely indications of a film’s production costs, including but not limited to sets, locations, talent, VFX, etc. A significant element of a film’s journey to theaters that is NOT included in a production budget is the advertising campaign. A major blockbuster campaign can cost between $100 and $200 million (sometimes more, sometimes less depending on the feature).
In addition to the advertising budget, another major factor that must be included is the profit split between movie theaters and the studios. When a film first hits theaters, most of the box office goes directly to the studios, but the longer a film stays in theaters, the more the share split moves in the theater’s direction. At the end of the day, a movie studio typically takes around 50% of the overall box office revenue.
Reports vary about where Tenet’s breakeven point lies. Optimistic projections saw around $400 million, while more realistic projections say $500 million. According to Variety, some within the industry expect the film to lose about $100 million, while more favorable predictions within the studio see the film losing only $50 million. Obviously, a film is meant to be profitable, but given the unique circumstances, let see if Tenet is as much of a failure as some may think.
Tenet may have lost money theatrically, but its PVOD and physical sales numbers have the potential to make up for it. Many people have not had the opportunity to watch Tenet because of the COVID-19 shutdown, so audiences may be eager to watch the film at home. Typically, the home market sales do not count towards a film’s profits because the box office is used as the gold standard for its performance. Still, this additional income for Tenet could potentially lessen the blow for Warner Bros.
When examining its theatrical numbers, Tenet did significantly worse domestically than it did overseas. Nolan’s most recent film made only $57 million at the U.S. box office, which is substantially worse than his previous movie Dunkirk took in at $188 million. Internationally, however, Tenet made about $303 million, while Dunkirk made about $337 million.
The significant reduction in U.S. box office can be reasonably attributed to the extended shutdown of theaters on the east and west coasts. Many states have allowed theaters to reopen with additional safety precautions, but states and cities with denser populations, and therefore more box office potential, have not been granted permission to reopen. Specifically, New York City, Los Angeles, and San Francisco have been cited as the key to a successful box office run. All three of these cities currently have strict restrictions on public gatherings and have not reopened their theaters.
Would Tenet’s box office numbers be any different if theaters in larger cities had been allowed to open? There’s no way to tell. Still, the surprisingly decent international numbers are a glimmer of hope in a year that brought severe damage to the foundations of the industry. The gamble Nolan and Warner Bros. took at the box office remains a decisive failure in the short-term. Still, the long-term value of Tenet’s canary-in-the-coal-mine strategy may be the decisive factor that helps studios develop their post-pandemic distribution plan.
What did you think about Tenet’s decision to stay in theaters? Are you going to watch the film at home? Let us know in the comments or on Twitter @filmnetic.
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