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Transition of Movie Theater Industry After COVID-19

Rachel Loeb


As COVID hit and forced people into quarantine, movie theaters suffered a significant blow, an aspect often overlooked amidst the chaos. The pandemic caused disruptions in both film production and exhibition, resulting in movies being shelved for extended periods and keeping audiences away from cinemas. As movie theaters became inaccessible, the demand for streaming video services surged, leading to massive growth in subscribers. According to Forbes, 99% of households in America now subscribe to at least one or more streaming services. In 2020, as Hollywood studios began releasing films simultaneously to streaming services and theaters, or bypassing theaters entirely, movie theaters, experienced an 80 percent decline in their domestic box office revenue. While the movie theater industry is showing signs of recovery emerging from COVID-19, it has required necessary adaptations to navigate through the challenges. This resurgence, nonetheless, signals a hopeful trajectory for the future.

When AMC, the largest movie exhibition company in the US, closed its cinemas, director Christopher Nolan issued a plea in the Washington Post, claiming that “we need what movies can offer us” and that “when this crisis passes, the need for collective human engagement, the need to live and love and laugh and cry together, will be more powerful than ever". As regulations like capacity restrictions were gradually lifted, studios began to put movies in theaters again. This led to great success; Spiderman: No Way Home, Jurassic World Dominion, and Top Gun: Maverick all reached $1 billion in global box office grosses, and Avatar: The Way of Water was one of only five other films to have reached over $2 billion. This success, after a harsh 22 months, proves that movie theaters provide an experience that can not be replicated on Netflix or any other streaming service. As Paul Dergarabedian, a senior media analyst at Comscore, put it “if the right movies are in the mix, people will rush out to the movie theater to see them." However, this success has mainly been for big-budget films with massive marketing campaigns. Other films, without these resources, have performed much worse. Even films with large production budgets like West Side Story, Nightmare Alley, The King’s Man, and The Matrix Resurrections have performed much worse than expected. 

As the movie theater industry attempts to recover in the aftermath of COVID-19, cinemas are undergoing a significant transformation, investing millions to elevate their offerings and reimagine the moviegoing experience. In 2020, numerous theaters earned narrow profit margins and relied entirely on federal pandemic relief programs. Since the premium experiences that movie theaters offer, like IMAX theaters, generate around 80% of the business, they are trying to capitalize on this in order to increase revenue and incentivize people to come back to theaters. Among these new additions include heated lounge chairs that fully recline and have buttons to call waiters. Some theaters also offer seats that move in sync with the actions occurring in the movie and provide special effects like blasts of air, fog, water, or various scents. In general, theaters have increased the sound quality, and the size of the screen, seats, and food. There are theaters that offer screens on the side, and the menus now include bowls, salads, and sushi. Theaters have also introduced mobile food ordering, expanded alcohol sales, upgraded their projectors, offered private rentals, and tried simulcasting concerts and hosting video game tournaments. Overall, theaters are focusing on quality over quantity, with auditoriums accommodating fewer patrons in favor of roomier recliners. In line with this strategy, theaters are experimenting with premium pricing for the best seats, as well as for highly anticipated movies on their opening weekends. Some Cinemark locations are planning to revive their older locations with arcades and laser tag, however, these additions would cut out about half of the movie theater's screens.

Even with these upgrades, many movie theater companies are still struggling financially, which has led to some chains dropping locations. Some theaters didn’t make it, as there are currently around 5,000 theaters in America, down from 5,869 theaters pre-COVID. AMC  is facing over $5 billion in debt. About half the movie screens in North America are controlled by AMC, Cineworld, and Cinemark Holdings, and each of them has lost money in the most recent quarter. Not only are the movies underperforming, but the investments in technology, that the theaters are undertaking are expensive — an IMAX system costs about $1 million, not including installation.

Although doing better than the last few years, movie theaters are still struggling to retain the patrons they once had. That being said, theaters are successful when screening big blockbuster movies and have found ways to adapt by upgrading their theaters. 



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