I have been binging on Netflix’s foreign language TV shows – streaming crime dramas and heists. In its quest to appeal to global audiences, Netflix is ushering in the new television era. Actually, binging is a byproduct of the pandemic lockdown. Overall, streaming services exhibited robust growth disrupting the entertainment business.
Throughout the pandemic, I have published numerous posts about the COVID-19 domino collapse associated with different segments of business – travel, luxury watches, etc. For today’s post I would like to focus on theater chains.
Globally, analysts project 2020 box office revenue losses of $20-$31 billion. In the spotlight, market leader AMC threaten with bankruptcy, raised $1 billion to stop their hemorrhaging. Despite burning through some cash, Cinemark by contrast, thanks to innovation (e.g., private watch parties, where families or small groups rent full auditoriums for $99), believe they will come out of the pandemic relatively intact. Regardless, interesting week ahead for the entertainment business. New York Gov. Andrew Cuomo announced New York City theaters can begin opening at 25% capacity on March 5. Theaters will need to assign seating to maintain social distancing, and a maximum of 50 people will be allowed per screening. California is expected to follow suit within the month. Note: New York and Los Angeles combined, account for 15% of domestic box office revenue.
Good news movie theaters are reopening. However, the market for streaming services (new services and subscribers) has exhibited strong growth (37%) during the pandemic lockdown of 2020. Back in 2020 Variety magazine conducted research about consumers’ anxiety over health and safety in public venues, specifically movies, thanks to the pandemic. Key findings: 70% indicated if costs were roughly the same, they would more likely favor watching a first-run feature from their couch; 13% at a local cinema, with 17% not sure.
Sounds like a COVID-19 domino collapse for movie chains:
- Less box office revenue.
- Less employees to run the theaters.
- Less concession stands sales (e.g., soda, popcorn, candy, etc.).
- Less concession stands packaging materials (e.g., cups, popcorn containers, napkins, etc.).
- Less sanitation products (e.g., cleaners, bathroom materials, etc.).
Long-term, how do you think major movie chains will manage in the new COVID era?