Movie night was an important pre-pandemic event. But, society is still trying to recover from the pandemic.
Much like other sectors, it is uncertain whether movie theaters will survive the long term, particularly for smaller and independent operators. Many theaters across the nation were shuttered over a one-year period after Hollywood cut back on new releases and shortened the theatrical window before making them available for video.
This weekend, Daniel Craig’s final appearance as James Bond will be a test of the public’s willingness to come out in the same numbers before the virus changed the course of human life.
Some observers are skeptical that the golden age of cinema will return soon, if ever.
“People were visiting movie theaters less often [and] that’s because of the pandemic,” Paul Hardart (director of entertainment, media, and technology program at New York University Stern School of Business) told Yahoo Finance in a recent interview.
The pandemic affected certain aspects of consumers’ viewing habits at home, which isn’t slowing down. Statista found that 14% prefer to watch a movie at home, while 36% prefer to go to a theatre for their first viewing.
At home options are growing fast. According to Nielsen data, 20% of people watched streaming videos last year. The report, which was recently published by The New York Times said that it could reach 33% by end of year.
Another problem has been inflation. The average ticket price for a US-bound event in 2020 rose from $5.39 to $9.16 between 2000 and 2020. This increase is even more alarming than COVID-19.
Hardart stated that everyone can expect the ticket price to rise and that movie choices will change.
“Absolutely ready” to return
However, there are some theaters that have found reason to be optimistic in recent months.
Classic Cinemas locations throughout Wisconsin and Illinois witnessed more visitors this Labor Day weekend than in 2019. This was due to Marvel’s (DIS), “Shang-Chi and the Legend of the Ten Rings” which debuted to a record-breaking $70 million.
After a year-long shut down, this was the first occasion that pre-coronavirus attendance numbers at the family-owned chain were exceeded.
Chris Johnson CEO of Classic Cinemas stated, “The guests have absolutely willingness, able and coming back when they want to watch movies.”
“Shang-Chi,” Marvel’s first film shown only in cinemas following the pandemic, has set a benchmark for moviegoers willingness to return to theaters. July’s release of “Black Widow”, was simultaneously released on Disney+/ theaters and made more on streaming than screens.
Studio T (HBO/Warner) (DISCA) employed a similar hybrid strategy in the aftermath of the pandemic. They hoped it would allow them to wait until mass vaccinations could be implemented to stop COVID-19 from spreading.
But the Delta variant surge upset many moviegoers. The dual release strategy was a perverse incentive. Many consumers decided to watch the movie from home after being offered the option.
Datex Property Solutions has monthly data that shows national chains paid 95% owed rent in August. While collections from movie theaters have increased 81% over 48.9% in the past year, they are still down 48% on sales since 2019, Datex revealed.
However, occupancy prices are up 96% compared to 2019, and chains such as ArcLight Cinemas & Pacific Theatres have closed many Los Angeles locations.
CBRE Group Inc. recently reported that closings have inundated the LA market’s movie theater real estate. They are “an opportunity major chains like Regal AMC, Cinemark and AMC will likely capitalize on as they make up close to 70% of the region cinema market,” CBRE Group Inc. stated.
Yahoo Finance told Johnson from Classic Cinemas that we need consistent supply. “We can build momentum this year, but it depends on the studio product.”
Classic Cinemas suffered the same fate as many of its contemporaries. After its lengthy closure, the theater invested in a new air filtration system, added “cleaning” staff to increase customer numbers, and paid more just about everything.
Johnson stated, “The problem is when you try to spread it out amongst small moviegoing audiences. Everything gets sort of taken care off when you have the right number of people.”
The Paycheck Protection Program and Shuttered Venue Operators Grant money were given to the chain. This money helped pay for labor and overhead during the worst days of the pandemic.
Still, the box-office is returning to normal as more people go back to the movies. According to Gower street Analytics, a London-based data firm, $20.2 Billion is expected to be earned by the global box-office in 2021. While this figure is down 52 percent from 2019, it’s still higher than last year.
Johnson stated that Johnson is confident that the theaters will have enough movies to keep them occupied. “Movie cinemas will return.”
There are signs that movie fans are keen to fill again their seats.
Sony’s “Venom: Let There Be Carnage”, which had an opening weekend of $90.1M on over 4000 screens, exceeded all expectations. This was the $80.73M record Disney Black Widow previously held.
Even though cinemas are showing signs that they have improved from last year, it has been a wild ride in the film industry. Disney, HBO and Comcast, along with more recently Comcast’s Peacock platform (CMCSA) – have made many of its films free to view in cinemas or streaming for a fee (Disney+).
Disney seems to believe consumers are ready for blockbuster features to return to theaters. The company revealed that its remaining 2021 schedule will continue to be shown exclusively in theaters, after “Shang-Chi” exceeded all expectations.
Cory Jacobson is the president and owner at Phoenix Theatres in Michigan. “If you don’t have the theatrical window, it is just lost money.”
Despite “No Time to Die”, the highly anticipated movie that earned $22M in global ticket sales the first two days after its release, the jury is still not sure if movies are viable again.
New headwinds are possible as moviegoers visiting big cities such New York City will now need to show proof that they have been immunized and will be required to wear a mask for screenings.
Hardart of NYU states that Delta variants will cause moviegoers to reconsider going to the theaters, and instead will wait to catch it at home.
“I’m not worried about wearing masks for more than two hours. Hardart said that she isn’t worried about getting sick.
Recent Deloitte studies highlight the pandemic-era problems for movies. 57% said that they still enjoy watching movies at home, while 57% stated that TV and movies were their favorite entertainment options.
Although box office receipts indicate that theaters are recovering, the main beneficiaries have been larger chains.
AMC (AMC), who made many bold moves in order to lay the foundations for its revival, now hopes that consumers will return to their theaters. The company has raised more cash than $1.8billion, mostly through stock sales.
“The retail investor provided AMC a Lifeline,” Alicia Reese a equity research analyst told Yahoo Finance in a telephone interview.
Reese explained that “they have the cash they need to reinvest the company in expanding their footprint with some theatres that are coming up for auction because they didn’t make the pandemic.”
The company will also be paying down $5 billion of debt.
AMC only just avoided bankruptcy this year. However, theaters that are smaller and less well-resourced may not be as fortunate, especially with rising operating costs.
Jacobson shared that they spent $10,000 on hand sanitizer.
The Small Business Administration launched a $16.1 Billion fund in December to grant eligible movie theaters, live theatre operators, and performing art organizations grants that could help them save their businesses.
Jacobson said that people who are committed to the long-term seem happy and optimistic about the future.