I’ve been thinking a lot about businesses impacted by Coronavirus.
Which businesses thrive, which survive and return back to “normal” in the coming months and years…
And which businesses don’t come back, or come back completely different.
As an avid moviegoer, movie theatres are one of the most interesting businesses at risk to me.
Today’s article in Variety about Cinemark — one of the three biggest movie chains in the world — caught my eye.
From the article:
“Studios have pushed many of their upcoming releases back until later in 2020 or 2021, meaning that the summer blockbuster season will essentially be a wash. That’s catastrophic for the movie business, which makes more than half of its revenues during the summer.
“Cinemark has furloughed employees and shut down nearly all of its nearly 350 locations nationwide. CEO Mark Zoradi and Cinemark’s board of directors will forgo their salaries during the crisis.”Source
From another article in Deadline, with the CEO of Cineworld (which also owns Regal):
“We have stopped all new projects because we need to be careful and responsible from a cash point of view.”Source
When we come out of this pandemic, I think movie theatres will see massive changes.
Here are my best guesses on what happens:
- A lot of cinema locations will close — and we might lose a big chain (like AMC) in the process. I wonder how many people will be comfortable going to a movie theatre after regular activities are deemed “safe”. As a luxury, I expect movie theatres will see thinned crowds for a while… and some theatres, or an entire chain, might not survive. Everyone unemployed having to to find new jobs, and when they find new jobs, having to pay for necessities for food, rent, and clothing means that people’s entertainment will come from more affordable options like Netflix and Disney+.
- The movie theatres that survive will move to more intimate, smaller locations. Like Alamo Drafthouse. This means that movie theatres can reduce the square footage real estate they use, and save a lot on rents and leases. Smaller venues with less seating, and less screens.
- Less movies will be on the big screen. With smaller venues and less screens, more movies are going to get kicked to video-on-demand right away. There might be a new digital powerhouse that’s created because they buy up a bunch of mid-tier, indie movies and help them with distribution and marketing on digital.
- We’ll see less time between theatrical and streaming releases. I think there’s a future that movie theatres don’t exist, but I don’t think that’s going to happen for a while. People’s home theatre setups don’t rival the quality of movies on the big screen. I think a large enough percentage of the population cares about getting the full experience at theatres to keep theatres afloat. But to subsidize the decreased revenue that studios get from less people at theatres, they’ll release on digital while the iron is still hot (I’m guessing 4-6 weeks after release keeping the same ~$20 price per movie).
- Movie theatres will get more creative about generating more revenue. To increase the average revenue per customer, I think movie theatres will need to get creative. If they have a slim margin for a customer seeing a movie… how can they increase their profit margin another way? An interesting idea could be movie theatres partnering with other entertainment venues. See a movie at a brewery. See a movie, go do laser tag with your kids after. See a movie at a concert venue, and see an artist perform songs from the movie after. I’m sure movie theatres will try a bunch of things, and kickback partnerships are a good way to get revenue fast.
- Drive-in theatres won’t make a large comeback. Lots of attention on drive-in theatres recently, and I think we’ll see a small resurgence because of physical distancing, but not a huge comeback when this is all over. It still requires a lot of real estate to operate, even if costs to maintain are much lower.
It’ll be interesting to see what happens.