Just this past week, AMC Theaters, the country’s largest movie theater chain, managed to hold off bankruptcy proceedings by raising nearly a billion dollars in equity and debt capital. Regal Cinemas and Cinemark have taken similar steps in recent months in attempts to survive. But in the long-term, will they?
COVID-19 fears and official protocols have resulted in greatly reduced audiences. In turn, this has led to major studios premiering films via streaming services, either alone or in conjunction with theater chains. This pattern does not bode well for the survival of movie theaters. But, experts say, all is not necessarily lost.
Let’s see how the factors weigh out. First, the arguments against survival:
A Lost Year of Revenue
As soon as COVID-19 protocols were officially put in place, movie theaters were among the first public settings to get put on the chopping block. Traditional movie theaters have fairly close quarters, which doesn’t align well with 6-foot social distancing guidelines. Nor are they “essential” businesses. The result was, if not closed completely for a time, movie theaters had to drastically reduce audience sizes.
COVID-19 protocols themselves greatly reduced revenue from ticket sales as well as those from concessions. Combine that with the relatively high overhead of running a movie theater, and you have a recipe for economic disaster.
So far, the major chains have been able to stay afloat. But that has been due to permanently closing some locations and taking out large loans that will need to be repaid. How long until such arrangements are no longer feasible?
Movie theaters need to get back to something close to normal attendance, and soon, or face irreversible ruin.
The Rise of Streaming Services
Even before COVID-19, in-home TV and movie streaming services had begun building steam. Now, the major players–Netflix, Hulu, Amazon Prime Video, HBO Max–produce hours upon hours of exclusive and engaging content. Why go to a movie theater when such great entertainment is available at home with the click of a button?
Adding to this are the direct-to-streaming releases by the major movie studios. It makes sense. The studios want to get their films viewed by a sizable audience. At least for now, that audience is not necessarily in a movie theater. Yes, most new releases are still going to some theaters, but they are also going to streaming services at the same time. It’s a distribution pattern that only serves to further undercut theaters’ profitability.
With COVID-19 protocols still in place, it may be necessary for studios for right now. But then the question arises: What about when things get back to normal? Will movies go back to exclusive theater releases after doing so well when concurrently released online?
Streaming services are popular. This means that it wouldn’t necessarily make sense for studios to cut back on such an obvious revenue stream.
But there are still reasons to be optimistic about movie theaters’ survival:
Desire to Get Out of the House
There is every indication that, once given the green light to do so safely, many people will resume public activities in large groups. It isn’t likely to happen right away. Nor will everyone necessarily feel comfortable doing so.
But people want to get out of the house. They want human interaction. They want normal. Going to watch the latest blockbuster at the local cineplex, complete with a bucket of hot buttered popcorn, is the kind of normal experience that many people are set to clamor for.
The Movie Theater Experience
This is where movie theaters have a definite advantage. Yes, streaming services offer a certain level of convenience. But how much will that convenience actually compete with the exclusive movie-going experience that theaters offer? The enormous screen, surround sound, and sense of community that comes from being among a larger audience is just not something that can be replicated at home.
For those theaters that up the sense of luxury involved–food service, plush reclining seats, etc.–there is even greater opportunity to market movie-going as an event. It goes beyond the movie itself to include everything that’s involved in its viewing. You don’t just see a movie, you “go to the movies.”
In summary, movie theaters are special. They can easily coexist with streaming options–and even thrive–since they offer a unique experience in a unique setting. Assuming that they can hold out a few more months, and that audiences start to come back then, there’s no reason why theaters cannot resume their rightful place as palaces of entertainment.
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