After many counted them out, movie theaters are back.

The theatrical exhibition industry is still absorbing one of its most redefining phases in history. Many details about the recovery of the business remain uncertain, but one thing seems increasingly obvious: Movie theaters are far from dead, and consumers want to see blockbuster films on the big screen as much as ever.

"It's come back in a way that a year ago or even two years ago we never would have even imagined," Comscore Inc. senior media analyst Paul Dergarabedian said in an interview.

Total box office gross in the first half reached nearly $3.78 billion. The second quarter alone hit $2.29 billion, outstripping the same quarter of 2021 by 266.5% and marking the best quarterly result since the pandemic began, according to Kagan, a media research group within S&P Global Market Intelligence.

The good kind of gross

So far, the strong numbers in 2022 have been largely driven by high-grossing titles that appealed to younger audiences. For example, the debut of Walt Disney Co.'s "Thor: Love and Thunder" over the weekend of July 8 collected about $143 million domestically and $302 million worldwide. Not only was that a strong performance by any historical standards, but it was also stronger than any of the three prior Thor films.

That comes on the back of forecast-crushing performances from "The Batman," "Dr. Strange and the Multiverse of Madness," "Top Gun: Maverick," "Jurassic World: Dominion" and other blockbuster titles. Even some middle-budget films like "Elvis" and "Everything Everywhere All At Once" have performed reasonably well.

"I think the studios realized that, especially for big event films, ... it needs to be in a theater. It needs to have that exclusive run that needs to draw excitement," Kagan box office analyst Wade Holden said during a recent S&P Global Market Intelligence podcast recording.

Still in production

On the other hand, the industry is still moving much slower than it did before the pandemic. The second quarter performed well for pandemic-era standards, but it was still well below the $3.21 billion in box office receipts printed in the second quarter of 2019.

"There is some aspect of wait-and-see to that, but I think we're at a point closer to normal than we've been at any point since theaters reopened a little over a year ago," Box Office Pro chief analyst Shawn Robbins said during the podcast recording.

Film supply continues to be somewhat restrained compared to levels experienced prior to the pandemic. During a typical summer season, a blockbuster title would often debut each weekend, but through 2022, some periods have seen more than a month between openings that crested $100 million. The opening of "Minions: The Rise of Gru" during the July 1 weekend and "Thor: Love and Thunder" during the following weekend marked the first time in over two years that the industry saw two nine-figure openings back to back.

"We need to see demand for a wider set of films and more than just the one or two high-fliers coming out each weekend to give the box office the recovery strength it needs," B. Riley Securities analyst Eric Wold said in an interview. "The slate remains uncertain, and consumer behavior not always predictable."

The streaming effect

The box office may struggle to ever produce the kinds of numbers it did immediately prior to the pandemic when theaters were enjoying record sales.

During the pandemic, studios negotiated new windowing contracts with the country's biggest exhibitors, AMC Entertainment Holdings Inc. and Cinemark Holdings Inc. The changes allow studios to pull films from theaters earlier than ever before and put those titles on their own proprietary streaming platforms to drive subscriptions and ad revenues. Studios are even making some debut films available on streaming the same day they open in theaters.

These kinds of variable release strategies may be contributing to theatrical underperformance for some films. Not only do theaters have to compete with on-demand releases, but consumers are not yet accustomed to the variability of options, Dergarabedian said.

"If you're a consumer you get whiplash from all the different changes and release model changes," Dergarabedian said.

For example, Disney's most recent Pixar film "Lightyear" far underperformed box office expectations with a $50.6 million opening weekend against forecasts running as high as $80 million, despite opening exclusively in theaters. Since the pandemic shuttered theaters and Disney has increasingly invested in its Disney+ streaming platform, the company has not committed to a defined release strategy, often debuting its family films on its Disney+ the same day they opened in theaters.

"The last three Pixar films just debuted on Disney+," Holden said in the podcast. "So do you have a portion of the audience deciding, 'I'll just wait. I'll wait till it's on Disney+. I don't need to go see it in the theaters.'"

Premium screens

These kinds of shifts in the industry and consumer behavior could lead to box office sales below prior peaks. However, analysts are increasingly confident that it can approach the $11 billion levels it was hitting in the five years prior to the pandemic, even if it takes some time.

For example, Wold at B. Riley said his forecasts model 2023 total domestic gross 7% below 2019, and it could cross the $11 billion mark in 2024. Wedbush Securities analyst Alicia Reese said she believes even the 2023 box office could close in on the $11 billion, aided by increased demand for higher-priced tickets for premium auditorium experiences like those including IMAX Corp. technology.

Both Robbins and Wade expect IMAX and dine-in theaters to play an increasing role in the box office.

"People more and more have access to generally affordable big screen TVs at home. That can't replace the theatrical experience, either in terms of presentation or the audience aspect, but what it does is raise the stakes," Robbins said.

Holden agreed, citing the growing number of "savvy consumers" who subscribe to various streaming services at home and who must decide: "Is this a movie I pay for or a movie I wait for?"

"So it's up to exhibitors to really look at providing a premium experience," Holden said.