Photo Courtesy of Mollie Sivaram via Unsplash
Walking into a movie theater may feel like a memory from ages ago. You would smell the warm, buttery popcorn in the air and hear the chatter of people around you. At the concession stand, you would find the overpriced drinks and snacks that seem to be calling your name. Now, it’s a different story. Despite movie theaters charging high prices for their refreshments, they are facing numerous financial challenges, almost to the point of bankruptcy, due to the coronavirus.
Movie theaters all across the country have had to close their doors because of social distancing guidelines and safety restrictions. Several movie theater chains have even shut down some locations completely. Sadly, business isn’t doing so well for cinemas.
Even the world’s largest movie theater chain, AMC, is suffering financially. So far, AMC has seen an approximate 91% drop in revenues, with sales clocking in at $119.5 million. Smaller franchises are facing similar issues as well, some suffering even bigger losses. For instance, Cinemark saw revenues drop nearly 96%.
Some movie theaters are still operating, but receive very little attendance. For example, AMC saw only 10-20% attendance, but needs at least 25% in order to have sustainable profit. This leads to the possibility of going bankrupt. Both AMC and B&B Theatres have warned that bankruptcy may be in their future if their profits continue on this trend. In fact, Studio Movie Grill, a dine-in theater chain based in Texas, already declared Chapter 11 bankruptcy in Oct. 2020.
To keep revenue coming in, movie theaters have come up with creative ways for the public to enjoy movies while following safety guidelines. Some cinemas have transformed their parking lots into areas for concerts and drive-in movie theaters. Others have offered curbside takeout of concession stand foods, selling popcorn, drinks and snacks.
Some movie theaters have decided to still keep their doors open, which means they have to rigorously follow COVID-19 protocols to keep their customers safe. This includes always wearing masks or face coverings, sitting at least six feet apart in the theater, installing quality ventilation systems and cleaning and disinfecting after every showing.
However, not everyone is willing to head back to the cinemas. Instead, people have found other alternatives that allow them to enjoy movies from the comfort of their own home, including streaming services like Netflix, HBO Max, Disney Plus, Hulu, Amazon Prime Video and more.
With streaming services, customers pay either a monthly or yearly subscription to gain access to numerous movies, TV shows and podcasts. An advantage of these streaming services is that the content can be viewed on various devices, like a phone, tablet, computer or TV. Also, customers can watch whatever they want, whenever they want.
Since almost everyone is stuck at home due to COVID-19, streaming services provide an easy and convenient form of entertainment. While movie theaters are struggling, business is booming for these streaming services.
During the first quarter of 2020 alone, Netflix announced that it had gained 15.77 million more subscribers. As subscriptions increased, the company’s revenue surged as well. In the third quarter of 2020, the streaming service generated a total of over 6.44 billion dollars in revenue, which was 1.2 billion dollars more than that gained in the third quarter of 2019.
Other streaming services like Quibi, Apple TV+ and CBS All Access have offered free trials in an effort to attract more customers. Quibi, for instance, offers a 90-day free trial for customers who download the app. Despite only being around for a few months, the streaming service managed to gain more than 1.7 million downloads in its first week.
Now that streaming services have come into the spotlight, the need for movie theaters has started to decline. It’s still uncertain whether or not people will return to the cinemas once things get safer. After all, you can still sit down with some popcorn and enjoy a movie at home.