March needs a hit. Last year it was The Hunger Games, the year before was Rango, and the year before that was Alice in Wonderland. March hits are kind of like spring weather though--unpredictable. Last year the top three March releases earned $758 million. In 2011, though, the top three only added up to $285 million. 2010 was good year, with the top three totaling $618 million. So March is fickle, but so are Wall Street analysts. Analyst Eric Wold of B. Riley Caris recently downgraded the ratings of Carmike, AMC, and Cinemark from buy to neutral, sending their prices sliding downward.
Caris' main reason for the downgrade was the low opening of Jack the Giant Slayer, which should have been a bright spot in six weeks of disappointing box-office returns. He now predicts there will be a year-over-year decline of 15% in the first quarter, instead of 10%. This Friday's release Oz the Great and Powerful should do better than Jack, but it's unlikely it will approach the huge success of Alice in Wonderland.
The unfortunate thing is that the downgraded ratings have nothing to do with the theatres themselves. As many theatre owners have told me during interviews, it's all about the product. If there are good movies, people come. Theatres can dial up the experience with great service and presentation, but without great movies, people stay home.
Now for the good news. Wall Street analysts only care about the next quarter, not the long-term future of the business. This may be a bad March, but what about the summer and winter ahead? Or the amazing lineup of Oscar nominees a few weekends ago, most of which earned over $100 million at the box office? In the wake of so much change, whether it's day-and-date on-demand releases or digital projection, the exhibition industry has been holding strong, and a few bad movies aren't anything the industry hasn't seen before or won't see again.