Plot twist for movie theaters
Despite a solid summer, final curtains could be run down for thousands of venues in US
The hits just keep on coming. But not the ones movie theaters need.
Unwelcome forces — Netflix, 50-inch TVs, the coronavirus pandemic — have buffeted cinemas for years. Now, staggering debt and a severe shortage of big movies to show in the months ahead imperil multiplex chains once again.
In recent months, the situation didn’t look so dire. Theaters were feeling newly optimistic, largely because “Top Gun: Maverick” and several other blockbusters showed that people still want to go to the movies. The “Top Gun” sequel has taken in $1.5 billion worldwide, and “Doctor Strange in the Multiverse of Madness” outperformed its 2016 franchise predecessor by 41%.
Yet instability lurked. Summer ticket sales still lagged significantly behind pre-pandemic levels. Some studios continue to release films on streaming services and in theaters at the same time, or bypass theaters altogether, and the cost of running a theater keeps climbing.
Almost everyone agrees that the 117-year-old movie exhibition business cannot keep going like this. But hardly anybody agrees on the best way forward.
One obvious if drastic step, analysts say, is for the biggest theater companies to close thousands of underperforming screens. There are 40,700 screens in the United States and Canada, and even some theater executives concede that there should be no more than 35,000. A few think 25,000 is a healthier target.
About 500 screens have closed since the pandemic began, according to the National Association of Theater Owners. More closures are expected this fall: Cineworld, which operates Regal Cinemas, the No. 2 circuit in the United States behind AMC, filed for bankruptcy Wednesday. The company, which is based in London, has reported $8.9 billion in net debt, including $4 billion in lease liabilities. A Chapter 11 reorganization would allow Cineworld to break some of its leases.
Attendance at movie theaters in the United States and Canada peaked in 2002, when about 1.6 billion tickets were sold, according to the Motion Picture Association. The big studios and their specialty film subsidiaries released at least 140 films in theaters that year, with an original drama (“Signs”) and an original comedy (“My Big Fat Greek
Wedding”) among the top five performers. This year, admissions are expected to fall below 800 million, in part because of plunging output by the biggest studios, which will release about 73 films in theaters.
Over that same time, the number of movie screens has increased 14%, as multiplexes have popped up in the far suburbs and theaters
built during a 1990s boom are on life support.
As successful as theater companies view the summer, they sold only 17% of the available seats in the United States, according to EntTelligence, a research firm.
To sell more tickets, theaters have introduced mobile food ordering, expanded alcohol sales
and invested in projector upgrades among some measures. Over the past decade, theater operators have installed roomier recliners, reducing capacity. As for those unsold seats? They say they are needed for breakout hits like “Avengers: Endgame,” which collected $357 million during its opening weekend in 2019.