‘Tenet’ Is Sickened By COVID-19 – Only Streaming Can Save It Now

Everyone would have loved to see Tenet succeed in drawing enough crowds to make it financially viable. It would have been good for theaters, good for Warner Bros., good for Christopher Nolan and importantly good for audiences.

Yet despite hyped headlines like “Tenet Earns Solid $20 Million at US Box Office, Nears $150 Million Globally,” and “Tenet scores $20 million in biggest domestic opening since pandemic upended movie industry,” math is not on its side, at least theatrically.

The positive headlines are less a reflection of financial viability and more a reflection of extremely low expectations and exuberance that some theaters are actually open. But there are not enough butts in seats to dig Tenet out of a financial hole. Only a fast pivot to streaming may keep its head above water.

The film cost a reported $225 million to produce. While marketing dollars have not been made public, we can guesstimate that marketing costs might hover around $100 million which is less than a traditional launch for a blockbuster in normal times. That puts the sunk costs at roughly $325 million. For the studio to cover that nut and break-even, Tenet needs to make about $650 million at the worldwide box office since the studio’s take is about 50% (slightly more domestically and less internationally). This is according to a quick analysis by Eli Assraf, one of my entertainment students at USC. And he’s right. He, too, was wondering why most of the headlines were cheering Tenet instead of sounding a financial alarm.

This is that alarm.

Thus far, Tenet has made $146 million worldwide, comprised of $126 million from two weekends internationally and $20 million from one weekend domestically (note: all numbers may not be in yet). To break-even, it needs an additional $504 million at the box office over its entire theatrical run to reach $650 million. The theatrical shortfall needs more countries to open, more theaters within each country to open, and more audiences to overcome their fears of COVID-19. That’s asking a lot.

A good comparison is Nolan’s previous 2010 film, Inception. Both films have similar genres, filmmakers, studios, and target audience. Inception did $62 million domestically across nearly 3,800 theaters in its first weekend. Tenet did $20 million across 2800 theaters. Not only did Tenet have fewer theaters due to closures, but importantly, its take per theater was far less ($16K for Inception versus $7K for Tenet). That difference may reflect the very first data on audience reluctance to attend theaters, as well as the audience limits due to in-theater social distancing procedures. So even as more theaters open, Tenet may suffer from a lack of audiences.

An added issue is that the second weekend faded across some of the biggest European markets. Tenet in the U.K fell by nearly 61% in the second weekend, France by nearly 60%, and Germany by nearly 26% (one of the brighter spots).

Where does that leave us? A fellow Forbes contributor, Scott Mendelson, estimates that Tenet may ultimately do $360 million at the worldwide box office on the low end, $480 million in the middle, and as much as $540 million on the high end (see his article here). Given that key European markets are fading, I suspect it will be closer to the $360 million mark. The studio’s take of roughly 50% will only provide revenue of $180 million, still shy of the guesstimated sunk costs of $325 million, meaning Tenet needs to make up about $145 million just to cover costs. Yes, this is guesswork, but it is probably close enough for jazz and to illustrate the difference between positive headlines and actual math.

The sluggish response is not the fault of Tenet. Rotten Tomatoes scores are currently averaging 74% among critics and 79% among audiences. It’s COVID-19.

Enter streaming. The current rental rate for a blockbuster-style film via premium video-on-demand (PVOD) is currently $29.99, set by Disney’s Mulan. Tenet would only need about 4.9 million rentals to make up the $145 million difference – not accounting for fees needed to pay third-party distributors.

The upside may be significant, but only if Tenet pivots quickly to streaming while awareness and interest in the film is high. As awareness and interest wanes, the studio may need to commit more future Ad dollars to reenergize the market, making it much more cost efficient to stream asap, perhaps mere weeks after the theatrical launch in each market.

To complete the comparison to Inception, that film did $826 million at the worldwide box office in its original 2010 release. Tenet will not even come close, theatrically, an opportunity lost to COVID-19, theater shutdowns and audience fears.

Tenet was definitely sickened by COVID-19, and only streaming can save it now.