WILL THE PANDEMIC KILL THEATERS ONCE AND FOR ALL?

Cinemaworld, the second largest media chain and the parent company of Regal Cinemas announced on Oct. 5 that locations will be closed, for the time being, in both the U.S. and in the U.K. Citing a lack of blockbuster films, CEO Mooky Greidinger made the comparison that, “We are now like a kind of a grocery shop that (has) no food to sell.”

While Greidinger cited the absence of upcoming major films, the theater business as a whole may be on its final legs with COVID-19 burying the once-thought-immortal industry.

The world is as dynamic as it has ever been. Every minute counts, and our personal time has become a valuable commodity for people of all backgrounds. As such, even the minutes spent to get to the theater and back home became a noticeable inconvenience for many, even prior to 2020. As a result, on-demand streaming services were invented and saved us those minutes.

Before the pandemic, revenue from these services was still outnumbered from that earned at conventional movie theaters. However, second quarter earnings for AMC (AMC Theatres, another of America’s huge chains) this year was a mere $18.9 million, compared to $1.5 billion in the second quarter of 2019.

In sum, the movie theater industry has been more than decimated by the pandemic.

The lack of blockbusters causes a huge problem for theaters not only because people aren’t going to see, per se. It’s because movies merely serve as the attraction to the physical theaters and the real money for the industry has always been its concession stands – hence, Greidinger’s grocery shop analogy is quite appropriate.

New habits tough to break

Without new blockbusters, what does the future hold for movie theaters? One of the biggest problems caused by the coronavirus pandemic for the industry is just how long the problem has been sustained, say a pair of MHCC instructors.

As Mt. Hood business instructor Andy Wong points out, streaming services have been such a safe and convenient service that consumers have become accustomed to using them often over the last six-plus months. Movie theaters will have a tough time surviving the pandemic, as it continues on, he said. “The only way theatergoers will leave their home is (for theaters) to offer blockbuster movies, like the new James Bond movie,” Wong said. “Even then, there is no guarantee that people will significantly change their viewing habits.”

In another big economic impact, the loss of theaters in 2020 has forced film producers to negotiate even further with streaming services, according to MHCC economics instructor Peter Cunningham. The comfort and safety of watching from home has made home theater viewing the new norm, he said.

While some observers of the movie industry say the theater business will change permanently or was already dying before the pandemic, others remain optimistic. Greidinger, the head of Cinemaworld, said in an interview with CNBC that an eventual COVID vaccine will have not only have a big physical impact on public health and the availability again to theaters, “but also a big psychological effect on people and I guess we will win our business back.” In short, he believes going out for a movie will be embraced as people are happy to return to once-normal public entertainment.

Hopes for a rebound

There are points to be made in favor of either argument regarding whether movie theaters will survive, or not. But will a successful COVID vaccine and some psychological confidence be enough to convince us to revert back to old habits we have reshaped?

It is hard to imagine the movie theater industry being gone, entirely. Before the pandemic, there was already speculation consumers had not adopted streaming services fast enough. In 2019, domestic box office revenue declined by 9% from 2018 revenue, not a huge decrease. Perhaps the industry will evolve, for example, theaters could rebrand themselves as a luxury experience. Theaters could become an attraction that either the nostalgic or the hipster in us will want to continue to experience.

It’s worth noting that drive-in theaters saw a recent spike in popularity and revenue. Virginia drive-in theater owner Jim Kopp told CNBC, “There are a lot of folks anxious to go out and be safe and get some movie entertainment.” This suggests that there is still a market for people to go out and enjoy visual entertainment. However, drive-in theaters are too small of a sample size to determine the overall trend, and the draw for some people might simply have been to try a different experience.

Regardless of whether the movie theater industry will survive the pandemic at its current size, Cunningham assures us that its death is typical of industries over time.

“The automobile industry put the horse and buggy out of business,” he said. “Electric vehicles will dominate transportation this century as a cleaner, more environmentally friendly” trend, and so too, will streaming win out, in the end.

It is a shame that a culturally, historically significant institution such as the movie theater may be gone, forever – the setting of first dates and the launch pad for trend-setters such as the “Star Wars” and “Fast & Furious” franchises. But, just like the horse-and-buggy era, not all industries are immortal.