With the coronavirus sweeping the world, Hollywood productions have been forced to shut down all over the world, movie release dates are being delayed, and studios are shutting down. Because of that, we knew Hollywood was going to take a big financial hit and now we have an idea of how big that is going to be.
All those movies being delayed comes at a cost and studios could lose $30 to $50 million just on marketing losses for each of those films. Then you have all the movie theaters that have been shut down overseas and the theater chains here in the states limiting their theater capacity to 50%.
The dust isn’t even close to settling on the economic impact of the coronavirus pandemic. THR reports that “early estimates indicate that the blow will be unlike anything Hollywood has experienced before and losses will well eclipse the eleven-figure mark, even if conditions remain the same instead of taking a turn for the worse.”
So what kind of numbers are we looking at? The report goes on to say:
As it stands now, the global box office has already taken a coronavirus hit of at least $7 billion. If the remainder of March, April and May are included, lost revenue would climb another $10 billion, making a total loss of approximately $17 billion. And if the crisis continues beyond May, all bets are off.
The report goes on to say that all of the production shutdowns at Disney could cost the studio up to $350,000 per day! One producer explains, “It’s not like you can stop on a dime. You need to keep department heads going and maybe a level down from there through the hiatus.”
It’s also unclear if any of these losses are going to be covered by insurance. Attorney John Tomlinson, who specializes in insurance and risk management law, explains, “If we are talking in terms of protecting lost revenue due to enforced shutdown or scale-down of operations, some property policies may offer limited amounts of coverage, although many have specific communicable diseases exclusions.”
So, as expected, Hollywood is going to be heavily financially affected by all of this and it’s going to be really interesting to see what it’s like when all these studios start to move back into normalization.