The State of Cinemas
By Amit Jagwani |
It’s been a tough 18 months for the entertainment industry, which includes not only film studios and production houses but also movie theaters. The sudden closure of nearly all 5,477 US cinemas in spring 2020 spoke to the pandemic’s serious nature and caused theatrical revenue to drop from $42 billion in 2019 to $12 billion in 2020. AMC Theatres, the largest national chain, reported a stunning net loss of $4.6 billion and revenues that fell 77 percent as locations remained shuttered and Hollywood hit pause on making blockbusters. But like most good movies, this one has a hopeful ending. Here’s the scoop.
In early November, President Biden issued a mandate compelling all American companies with 100 or more workers to require Covid-19 vaccines. That followed earlier decrees from several cities around the country—including San Francisco, Los Angeles, New York and New Orleans—which required proof of vaccination for admission to indoor venues like restaurants, gyms, museums and theaters. John Fithian, CEO of the National Association of Theater Owners (NATO), called those decisions “a mixed bag,” acknowledging they may cause businesses some short-term harm as unvaccinated patrons are prohibited from going to the movies. Additional concerns centered on the subsequent studio release delays that might ensue as a result of citywide mandates. Case in point: Sony Pictures’ theatrical offering, Venom: Let There Be Carnage, which was postponed several times during the course of the pandemic, scheduled for a September 24 opening, then delayed again until October 1.“We’re really terrified about what’s going to happen,” said Joe Masher, president of the National Association Theatre Owners of New York.
In the long run, however, Fithian acknowledged the importance of inoculation when it comes to theaters’ survival and success. “The upside, of course, is that we as an industry that represents places where people gather recognize that we need vaccination rates to climb to get back to a full recovery as we go into next year,” he said. In New Orleans, some theater owners reported cases of older patrons proudly displaying their proof of vaccination cards. In San Francisco, managers hoped the new rules would set moviegoers’ minds at ease. AMC and Cinemark also enjoyed a seven and eight percent stock spike, respectively, after the US Food & Drug Administration (FDA) officially approved Pfizer’s Covid-19 vaccine in August. AMC’s share price is up $1,730 percent since the start of 2021—a marked improvement from 2020, when the company was battling bankruptcy. Investors and theater owners alike are hoping FDA approval will inspire consumer confidence and help boost ticket sales.
Redefining Theatrical Experiences
The film industry experienced seismic changes as a result of the pandemic, with many studios now following a hybrid model of simultaneously releasing titles in theaters and on streaming services. This plan has proven overwhelmingly popular, particularly among certain demographics. According to a recent poll from media and marketing services company ENGINE, 72 percent of Gen Z respondents and 71 percent of millennials said they’d be willing to pay to stream a movie at home rather than going out to theaters. What’s more, half of American adults believe watching movie premieres from their own couch is cheaper and more comfortable than being in a cinema. Still, 35 percent of consumers miss the large-screen experience, and Fithian recently spoke with confidence about the future of theatrical attendance by declaring that movie-going isn’t dead. “I applaud artists who refuse to accept the false narrative that movie theaters are a thing of the past and that the future will be one in which every movie is consumed at home,” he said.
Some film critics also remain ardent supporters of big-screen viewings, like the group that issued an impassioned plea for watching Dune in theaters, even though the Warner Bros. highly anticipated title debuted October 21 in both cinemas and on HBO Max. While the sci-fi flick has been hailed as “an absolute marvel,” its spectacular special effects are at risk of getting lost on living room TVs, critics warned. Their pleas may have fallen on receptive ears: Dune, which was filmed in Imax, earned nearly 18 million on opening weekend for that theater chain, marking Imax’s biggest ever October box office gain. Additional titles including Shang Chi and the Legend of the Ten Rings, Free Guy and Black Widow further helped Imax sales jump 52 percent to roughly $57 million for the months of July to September.
Multiplexes have likewise proven advantageous for local businesses, as many attendees combine dinner with a movie. In fact, a NATO-commissioned Ernst and Young study found that consumers spent over $18 billion on tickets and popcorn in 2019, plus an extra $5 billion dining in nearby restaurants and shopping adjacent stores on the same day they went to the movies. It’s now up to theater owners and studios to redefine how in-person screening experiences will look in the future.
Coming Up Next
The future of ticket sales is also shifting, at least for one theatrical chain. In early August, AMC’s CEO Adam Aron first announced that the company will start accepting Bitcoin as payment for tickets and concessions purchased online in all US theaters by the end of 2021. This timeline accelerated to mid-November, making AMC the first cinema group to now process cryptocurrency, including Ethereum and Litecoin. Prices for all three are high, with Bitcoin especially enjoying a recent upswing of almost $68,000 per coin. No one can predict what changes the global pandemic may bring. But the magic of movie-going has captivated audiences for over a century, since the Lumière brothers first projected images on a screen in 1895. We’ll have our eye on whatever comes next!