2023 market forecast: Avatar helps boost our 2023 prediction to $8.8 billion

January 30, 2023

Our market forecast for 2023 has shifted up a bit over the course of January, thanks partly to the enormous box office earnings for Avatar: The Way of Water, which our model thinks will end up with something around $665 million at the domestic box office, but also because of the addition of some new films to the release calendar. September and October still look dismal this year, but the end of August is looking better than it did, and there’s still room for the distributors to fill in the gaps. With a bit of luck, or a few more good films finding their way onto the schedule, $9 billion looks achievable this year.

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Here’s an overview of how everything looks through the end of 2023. The bars in the chart estimate the total box office for all films released in a particular month.

The post-pandemic, end-of-Summer slump still looks brutal this year, but the model is looking forward to a very good June at the box office. In fact, we might see more earned from June films this year than for any month in the pre-pandemic days of 2019 (thanks partly to the fact that there are five Fridays in June this year, to be fair).

To get a sense of why I think $9 billion is achievable overall, it’s worth comparing the model’s predictions for the top films of 2023 to what happened in 2022. Right now, the model doesn’t see anything that individually has a high probability of earning over $350 million. But, given there are six films expected to earn over $250 million, and usually one or two films each year double early expectations, there’s a very good chance we’ll see a couple of films top $500 million domestically. Which ones, we’ll have to see, but, aside from the ones listed above, Spider-Man: Across the Spider-Verse, and Mission: Impossible Dead Reckoning Part One look like good bets to me.

Assuming we get a few more wide releases than we know about for sure right now, and a couple of films break out above $500 million, closing the gap on $9 billion seems likely to me. That would mark a 22% increase in total box office from 2022, which closed at $7.4 billion. It’s still short of pre-pandemic levels of course—the best year ever was 2018, which brought in $11.9 billion in North America—but it at least puts the psychologically-important $10 billion level within reach.

What’s helping right now, of course, is the fantastic run being enjoyed by Avatar: The Way of Water. A subtle change to the model (which was penalizing the film because of Christopher Nolan’s move from Warner Bros. to Universal) also gives Oppenheimer a boost this month to a more-realistic-in-my-opinion predicted $180 million total box office.

Some additions to the release schedule and the welcome over-performance of M3GAN, among some additional 2022 holdovers, also helped this month.

The Holiday Season has helped boost our measure of the overall strength of the market back to around the 70%–75% level. That feels a tiny bit on the low side to me, and it’s partly because for every Avatar we’ve had a film that has underperformed, like Babylon. The way the model works, a huge hit and a modest miss effectively cancel each other out. There are good technical reasons for doing that, but a super-massive hit probably tells us more about the state of the market than a film that (for whatever reason) doesn’t connect with audiences.

The good news in any case is that the trendline is heading in the right direction. The model is still calibrated around a return to 90% of the pre-pandemic market strength by the middle of this year. I don’t see a reason to change that number still, although I revisit the question every month.

The movies that are getting the most audience interest compared to our model’s expectations are Barbie, which has had a great marketing campaign so far, and the newly-announced Kandahar.

For full details of which movies our audience tracking suggests will have breakout performances, a list of predictions for all movies coming out in wide release between now and the end of 2023, plus the latest updates to our Bankability values for acting and creative talent in the industry, purchase or subscribe to our Bankability and Box Office report.

Methodology

Our market prediction is based on the same model as the weekend predictions that we’ve been running since theaters started reopening towards the end of 2020. We are now running the prediction model for every announced wide release on the release schedule and estimating the size of the market as a whole by assuming a relatively small amount of additional revenue from limited releases. The prediction for each movie is based on six factors:

The performance of similar films in recent years, and cast and crew Bankability. So far as possible, the model uses films in the same genre released by the same distributor as points of comparison. The predicted performance of franchise films is based on previous releases in the franchise. Cast and crew Bankability is weighted more heavily for non-franchise than for franchise films.

The current state of the theatrical market. We update our model after each weekend with a wide release to estimate what proportion of formerly-regular moviegoers are currently going to theaters.

Adjustments for specific genres. The pandemic has affected different segments of the audience in different ways. We are currently adjusting movies with romantic content down by 20%, but not adjusting any other genres.

Adjustments for day-and-date streaming releases. This was taken into account when films were being simultaneously released on HBO Max and in theaters on the same day. Since that’s no longer happening, and we haven’t seen a measurable impact from films being released simultaneously on Peacock and Paramount+, no adjustment is currently being made. We are continuing to monitor this aspect of the industry.

Potential breakout hits. Films that have the potential to break out beyond what the model otherwise predicts are identified and their predictions increased accordingly. These films are currently selected based on our measurement of audience interest.

The expected recovery of the theatrical market as the pandemic is brought under control. The model assumes that the market will settle back to 90% of its pre-pandemic size at the end of the recovery. Growth was slow at first, accelerated as more people become confident in going to theaters, and then will slow down as more cautious moviegoers take time to return to attending. This is the classic ''S-shaped'' curve seen in economics textbooks (and in many cases in the real world). (For more on this see my previous article, How quickly can the box office recover?) The model assumes that this recovery started on April 1, 2021, plateaued in July due to the wave in COVID in infections caused by the Delta variant, and started again when cases waned at the beginning of October. The rise of the Omicron variant at the beginning of 2022 caused another slowdown. Those parameters are likely to be adjusted as the market situation evolves.

- Current release schedule
- Recent release schedule changes
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Bruce Nash, bruce.nash@the-numbers.com

Filed under: Christopher Nolan