Following up on Tristan’s post from a few days ago, it seems that one person’s crisis is another’s opportunity. As Netflix seems to be outperforming the market (at least in the short term), brick and mortar movie theatres seem to be looking into the face of oblivion. Already struggling to remain relevant in a world of online subscription-based entertainment services, theatres now face the prospect of remaining closed for months on end, with no clear idea of when they will be able to reopen (and if/when they do, if anyone will show up). AMC entertainment (the largest movie theatre chain in the world), recently had there credit rating downgraded from B to CCC-, with credit rating agencies citing a lack of sufficient sources of liquidity to cover the company’s negative cash flow throughout the summer.
To add to these problems, the recent decision of Disney to release summer blockbuster Frozen 2 three months ahead of time on their exclusive online streaming service Disney+ does not bode well for movie theatres’ futures. As of February Disney+ had 28.6 million subscribers, and I would guess that this has increased as a result of the COVID-19 pandemic. As the movie industry continues to consolidate into a few large studios (Last year’s merger of Disney and Fox means a single company controls 35% of the market) and physical movie theatres face an uncertain future, one wonders if mega-corporations like Disney will have the ability to completely forgo traditional movie theatres.
This could mean trouble on the horizon not only for theatres but for Netflix as well. If Disney could shift to a majority (or perhaps exclusively) online platform, how will much smaller companies like Netflix, who, as Tristan mentioned, are increasingly building their image around original content, be able to compete with the production capabilities and intellectual property rights that behemoths like Disney posses? This is not a new concern for Netflix and other online streaming services, as Disney has already established itself as a competitor in the market, but the COVID-19 pandemic and the possible collapse of physical movie theatres could make them a whole lot worse.
Sources:
AMC credit ratings downgrade: https://www.hollywoodreporter.com/news/amc-entertainment-gets-ratings-downgrade-covid-19-impact-1288300
Frozen 2 early release: https://globalnews.ca/news/6682664/frozen-2-disney/
Disney+’s subscribership: https://techcrunch.com/2020/02/04/disney-plus-subscribers/
Disney and Fox merger: https://www.theatlantic.com/entertainment/archive/2019/03/disney-fox-merger-and-future-hollywood/585481/
I think theatres should take this opportunity and offer digital downloads of movies that would be playing in the theatres. This way they could perhaps charge ~$8 for a 48 hour stream of a new movie and some other incentives like coupons for their next visit to the theatre. If they do not take any actions I see theatres taking a huge hit because of Covid-19. Them charging $8 for a stream does not affect them in anyway because they have no costs associated with that money. They could offer free popcorn on their next visit because the markups on popcorn are ridiculous anyways as well.