Earlier in the month, movie theaters reopened in an estimated 70 percent of the U.S. The first blockbuster (“Tenet”) laid a dud. Concerned that people did not show up, Hollywood studios decided to postpone the release of other blockbusters. A grim omen for the big movie business.
The last time I addressed the impact of the pandemic on the film industry was back in April. I examined the COVID-19 domino collapse associated with the cancellation of the Cannes Film Festival. It would be interesting to analyze the potential economic domino collapse as the big movie business falters starting with concessions – candy (e.g., less physical units, packaging, logistics), popcorn, beverages, supplies (e.g., cups, lids, napkins), etc. However, for today’s post I would like to focus on theater chains.
Needless to say, all the major theater operators, AMC, Cinemark, Cineworld the parent company of Regal Cinemas, have reported double digit declines since Labor Day. During this period the S&P 500 was flat. Over time, chain theaters will adapt as it relates to audience safety protocol and reduced operating hours to minimize operating expenses. Conversely, the growing popularity of streaming will continue to be a competitive threat making their comeback arduous. Undoubtedly, major theater operators will have to shutter underperforming units.
Space available! One solution I have given thought to is transforming shuttered cineplexes into community learning centers. Starting with K-12, it would enable more students to take advantage of remote learning, especially those who are from low income families or limited by technology. Community junior colleges can offer courses. Specialized certificate programs can be offered enabling members of the community to enhance their job skills.
Space available! Malls.