After the millionaire box office, the tide is about to turn for American theaters

The shortage of blockbusters for the next few months, the closure of theaters and streaming force the sector to look for new avenues

The New York Times – The good news keeps coming. But not for the cinemaeven if they need it.

Undesirable forces – Netflix50-inch TV, the covid-19 pandemic – have plagued cinemas for years. Now, incredible debt and a severe shortage of blockbusters airing in the coming months put multiplex networks at risk again.

In recent months, the situation did not seem so bad. Cinemas were feeling optimistic again, largely because Top Gun: Maverick and many other blockbusters have shown that people still want to go to the movies. The Top Gun sequel grossed a staggering $ 1.5 billion worldwideAnd Doctor Strange in the Multiverse of Madness surpassed the franchise’s predecessor in 2016 by 41%.

“Enjoy the good times,” said Adam Aron, CEO of AMC Entertainment, during an earnings call last month.

However, behind that rosy prospect, there was instability. Ticket sales during the Northern Hemisphere summer are still significantly behind pre-pandemic levels. Some studios continue to distribute films in streaming services and in theaters at the same time, or they ignore theaters altogether, and the costs of running a theater are rising more and more.

Almost everyone agrees that the 117-year-old film business can’t go on like this. But hardly anyone can agree on the best way to go.

The future of cinemas

According to analysts, an obvious, albeit drastic, measure is the closure of thousands of underperforming theaters by large theatrical chains. There are 40,700 cinemas in the United States and Canada, and even some industry executives admit there shouldn’t be more than 35,000. Others think 25,000 is a healthier target.

About 500 of them have closed since the start of the pandemic, according to the National Association of Theater Owners. Further closures are planned for this second semester. Cineworld, which operates the Regal Cinemas chain, the second largest circuit in the United States after AMC, is preparing to file for bankruptcy. The London-based company recorded net debt of $ 8.9 billion, including $ 4 billion in leasing debt. Using Chapter 11 of the US bankruptcy law would allow Cineworld to pay off some of those debts.

“About 20% of cinemas – increasingly those with experiences like IMAX that make them special and profitable – generate 80% of corporate profits,” said Richard L. Gelfond, CEO of IMAX, which licenses its technology to cinemas. “Except for specific cases, no one needs a 20-screen cinema anymore. Period. Exclamation.”

More cinema, fewer spectators

Viewer participation in US and Canadian theaters peaked in 2002, when about 1.6 billion tickets were sold, according to the Motion Picture Association. Major film studios and their special film subsidiaries released at least 140 films in theaters that year, featuring an original drama (Signals) It’s a comedy (Greek wedding) among the top five artists. This year, ticket sales are expected to drop below 800 million, partly due to a drop in production from the biggest studios, which will release around 73 theatrical films, with high-budget sequels representing the biggest box office draws.

Over the same period, the number of theaters increased by 14%, as multiplex cinemas sprung up in the outlying suburbs and theaters built during a boom in the 1990s struggled to function. In a report released Aug. 23, Robert Fishman, senior analyst at research firm MoffettNathanson, described the film screening business as “desperately in need of a makeover,” noting that many cinemas are “installed in shopping malls around the world. zombies “.

As satisfying as the box office was over the summer, theaters only sold 17% of available tickets in the United States, according to EntTelligence, a research firm. (Reinforcing Gelfond’s point of view: rooms with extra-large screens, including those with IMAX technology, can sell out on weekends for sessions between 6pm and 9pm.)

Loyalty program, promotion and alcoholic beverages

To sell more tickets, theaters are becoming more aggressive in marketing. They have created loyalty programs that offer discounts for repeat visits. For the first time in its 102-year history, AMC staged a nationwide advertising campaign, hiring Nicole Kidman to support the “jaw-dropping images on a huge silver screen”. (AMC is working on a second campaign.) On a recent Saturday, most US theaters offered $ 3 tickets for all screenings as part of their first national film day.

Cinemas have also started offering mobile food orders, expanding alcohol sales, investing in better projectors, making rooms available for rent for private screenings, and broadcasting video game shows and tournaments. Over the past decade, movie chains have removed thousands of traditional seats and installed more spacious recliners, reducing theater capacity. What about the seats that remain empty? They say they are needed for blockbusters like Avengers: End of the gamewhich grossed $ 357 million during its opening weekend in 2019.

The Hollywood summer season, which runs from early May to early September, has historically accounted for 40% of annual ticket sales. This summer, the blockbuster of numerous films, including Jurassic world: domination, Minions 2: The origin of Gru And Thor: Love and thundershowed that cinemas are still a viable activity: that watching movies on the go in the dark with strangers was not extinct, as many feared at the start of the pandemic.

Elvis wowed older viewers, grossing $ 278 million worldwide. A place away from herean adaptation of a book e All everywhere at the same timean unusual indie, had a small-scale audience.

But as the summer went by, the spectators disappeared. The pent-up demand from the pandemic has been met, and high-budget sequels and spin-offs have become less of a feature in theaters where original screenplay films have had a chance.

No! Do not look!by Jordan Peele, had about 40% fewer viewers than his previous film, Wereleased in 2019. High speed traina highly commercialized Brad Pitt action comedy produced mediocre results. Easter Sunday, The fall, Vendetta, Mack and Rita And Once upon a time there was a genius debuted without any expectation of success.

“Some films work very well in theaters, but not all,” said Richard Greenfield, founder of research firm LightShed Partners.

The highest-grossing film in North America recently was damn invitation, a low-budget horror film that grossed $ 6.8 million, the lowest first weekend gross since 2000, regardless of the period during the pandemic when many cinemas were closed, according to the comscore. (It was the lowest on record for inflation.)

The more less famous comedies, dramas, documentaries and auteur films fail, the greater the chances that studios will turn to streaming services, ending the need for so many cinemas.

Alternative businesses

“We will see smaller theaters that are not owned by the big chains start disappearing in greater numbers,” said Eric Wold, senior analyst at B. Riley Securities. “In fact, this is good for the networks that survive.”

About half of North American cinemas are owned by AMC, Cineworld, and Cinemark Holdings. All of them lost money in the last quarter.

Between early April and late June, AMC reported $ 1.2 billion in revenue and a $ 122 million loss. AMC has more than $ 5 billion in debt, a colossal amount for a company that generated about $ 5.5 billion in annual revenue before the pandemic.

To regain balance, AMC attracted amateur meme stock investors, announced plans to sell AMC-branded microwave popcorn in supermarkets, and even acquired a stake in a Nevada gold mine. AMC has closed 98 theaters since the start of the pandemic and opened 45, largely occupying seats previously occupied by smaller chains that closed during lockdowns.

Aron, CEO of AMC, recently told shareholders that, unlike Cineworld, his company would be able to withstand a period of weak box office receipts. “We are very optimistic and confident in our future,” he tweeted on August 18. In a press release, AMC noted that it had about $ 1 billion in cash.

Yesterday, Cineworld / Regal (our next biggest competitor) issued a fairly bleak prognosis for its short-term performance and liquidity. On the contrary, at AMC we are quite optimistic and confident in our future. Especially only thanks to our new APE security. Our statement today: pic.twitter.com/Z0t9XhALpZ

– Adam Aron (@CEOAdam) August 18, 2022

More expensive cinema and shortage of films

Inflation is a challenge for cinemas. Almost everyone is raising their prices, even though many consumers already see a trip to the cinema as too expensive. This summer, tickets averaged $ 12, up from $ 11.16 last year, according to EntTelligence.

The scarcity of films poses an even greater problem. Just a movie, the independent comedy Honk the horn for Jesus save your soul, was due to premiere on the Labor Day holiday weekend earlier this month and was simultaneously made available on Peacock, the streaming service, limiting four-day ticket sales to an estimated 1.5 million. dollars at the box office. Last year, Shang-Chi and the legend of the ten rings it grossed $ 94.7 million in the same period.

The owners of the theater mattered Halloween ends for October, but Universal Pictures has decided to make it available on Peacock at the same time.

Industry executives say they see only two chances of success on the horizon: Black Panther: Wakanda foreverout November 11, e avatar 2scheduled for December 16.

Stream out

In some cases, the films do not even reach theaters, but go directly to the streaming platforms. Disney + subscribers will have exclusive access to Abracadabra 2 And Pinocchio, with Tom Hanksthis month. Between knives and secrets grossed $ 311 million worldwide in 2019; a sequel arrives on Netflix in December.

The studios have also delayed theatrical previews due to the disruption caused by the pandemic in the production stages. Aquaman and the lost kingdom, Spider-Man: Through the Spider-Verse, I believe III And Super Mario Bros they have all been postponed to 2023.

The cinema schedule for next year continues without too many expectations. Currently, major studios have around 75 films coming out. Fishman, the analyst, has forecast about $ 8.5 billion in ticket sales for 2023, down 26% from 2019. As for world sales, he is more optimistic, expecting a 7% decrease. / ROMAN TRANSLATION CACIA

Source: Terra

Emily

Emily Jhon is a product and service reviewer at Gossipify, known for her honest evaluations and thorough analysis. With a background in marketing and consumer research, she offers valuable insights to readers. She has been writing for Gossipify for several years and has a degree in Marketing and Consumer Research from the University of Oxford.