Hello and welcome! It has been almost four months since the movie theaters were mandated to close due to the COVID 19 pandemic. Now granted, in the southern part of the United States a couple of theaters (independently owned, mind you) have reopened. In a large portion of the globe and here in New York, the theaters remain closed with no opening date set. Many people online, as well as Wall Street bankers, are saying that the movie theaters are a dying breed. Now with all of this doom and gloom I would like to add my two cents to this discussion, and anyway it is something to keep me busy. For disclosure, I do not have stock in any theater chain, nor do I work for or have ever worked for a theater. With all that out of the way let us begin.
For the most part this is unprecedented. The last pandemic of this magnitude was in 1918, over 100 years ago. I did some research on the 1918 pandemic in regards to the industry and discovered that 82 theaters as well as all filming was shut down in LA, information regarding other places was vague. If you can’t tell by now, that number is a far cry from the thousands if not millions of theaters closed worldwide. Another thing to keep in mind is that movies were completely different back then, so trying to use this as historical precedence is faulty at best. Now, as I detailed in an essay that I did back in 2017, people have been writing the theater’s eulogy for decades. The first eulogy came with TV, cable and then with home media (VCRs and DVDs, etc ), and most recently streaming (Netflix, etc.). Now with the exception of streaming, we did not have a pandemic in play. But besides that, I have a couple of reasons why I am not rushing to bury the theaters (and it’s not that I can’t find a good deal on a shovel).
First of all the movies and shows on Netflix and Disney+ do not make a profit off of their content directly. For example The Mandalorian or the upcoming release of Hamilton, both on Disney+, Disney is basically putting them on the platform for free, as it comes with your subscription. As far as the subscriptions go, you only pay once in a certain period of time, like my family only pays once a year. Just to be clear, I am not declaring doom on all the streaming services, as companies like Netflix are very profitable and content is very important to gain and keep subscribers. But, I do not see it as a steady release model to rely on 100%.
My second reason is the premium video on demand (PVD). Now for my readers that have no idea what I am talking about, it is when you pay a few dollars to watch a movie on a platform such as Amazon. Now during this pandemic, we have seen companies use this model as a way to release their movies, such as Universal with Trolls, and Warner Brothers with Scoob! Now Universal has reportedly made over $18 million on rentals on the first day. Universal has stated publicly that they will be doing “day and date” from now on, meaning that their movies will be released theatrically and digitally simultaneously, which has resulted in a war with the theater industry. I hate to be the bearer of bad news for Universal but I don’t think PVD is that profitable as a release model, on the surface it seems like it will be more profitable, because on a PVD release the studio will get about 90% of the sales, whereas, with theatrical releases, the studio only gets about half of the box office gross. But with PVD it all has to do with pricing. Like if Disney released the Avengers for $5 on Amazon, while people will jump for that, Disney will not be making that much of a profit, due to the Avengers having a $220 million budget. Now if Disney did a release with the same price as a movie ticket which is $15-$20, and the same amount of people bought as they did with the $5 (this is not counting families it is referring to individual people), Disney would easily make a profit, but people will not. With theaters, you are not only paying for the movie you are also paying for the experience, such as surround sound, etc. So overall I do not see it as a sustainable model after the theaters open back up.
Now I would like to address the elephant in the room: AMC is nearing bankruptcy. They have furloughed all of their employees, including their CEO (that is just on paper, he is still working). The problem for AMC is that the pandemic came at the worst time: they had just completed a massive expansion and they launched a subscription service, which had just started to turn a profit. If not for the pandemic AMC would have been able to pay off their debts relatively quickly. Despite this, I have a hard time believing that the largest theater chain will go belly up. There are way too many companies that would lose money should AMC fail, not just studios, but also soda and candy companies, as well as malls. What I foresee happening in the studios will band together with the other companies and AMC will be bailed out or in the worst-case scenario sold (a studio can not buy it as this is illegal).
When the movie theaters open whether, in July or November, movie-going will be different. Billion-dollar movies will probably not be seen for a while. But when we finally get a vaccine, I believe that movie-going will return to relatively normal. I will update you on any new developments.
Goodnight and Bee Happy!™
Mr. Bee
copyright 2020 Bradley Entertainment All rights belong to Mr. Bee and if anybody breaks this copyright they will have to spend ten years as my personal slave, and thanks for your understanding.
image courtesy of AMC Theatres
