The movie theater industry has been changing for years, but recently, it’s gotten especially interesting. As audiences increasingly turn away from traditional theaters to watch movies on Netflix or their phones, the biggest chains are struggling to stay afloat.
Read More »It’s hard to tell what will happen next: Will streaming services continue eroding the profits of big chains like AMC Theaters? Will Hollywood release more theater-only movies? We may not know how all this plays out just yet, but we can still take our popcorn and enjoy some great flicks while we wait.
Are Movie Theaters Shutting Down?
Big cinema chains are struggling to compete with streaming services.
Netflix, Hulu, Disney Plus, and other streaming services are making it difficult for movie theaters to stay in business. While the COVID outbreak may have been a catalyst to people staying home, it made movie theaters seem dangerous, expensive, and inconvenient.
Movie theaters haven’t fully bounced back since COVID restrictions were removed. In fact, most movies are released to movie theaters and streaming services on the same day. In other cases, movies only have 1-2 weeks before going to streaming services.
Buying a movie ticket at the theater is more expensive, and they’re losing money. To get people back into theaters, movie chains are trying new things—but they may not work.
You might have noticed that movie theaters charge a lot more than streaming services like Netflix or Hulu do. But even though you’re paying twice as much for your ticket, that doesn’t mean you’re getting twice as much value for the price tag.
Most viewers can’t see most new releases on their preferred platform until several months after their theatrical release, which means they have to go out and see them in theaters anyway if they want to catch up with friends or co-workers who already saw them (and there’s no guarantee of what will be playing). So why would anyone choose going out rather than staying home?
What many consumers don’t realize is that this has been happening for years: since its peak in 2002-2003 when Americans spent over $50 billion on tickets annually (the equivalent of around $73 billion today), annual attendance has been steadily declining while prices continue rising—even before Netflix started taking over our lives by offering original content like House of Cards and Arrested Development at low cost with no commercials!
Are Movie Theaters Losing Money?
Movie theaters have been losing money for years, even before the rise of streaming.
Despite the potential for major revenue from streaming, movie theaters have been losing money for years. Since before the rise of streaming services like Netflix and Amazon Prime Video, theaters have struggled to compete with alternatives that offer viewers more options at a lower cost.
According to data from Box Office Mojo, per-screen ticket sales have been going down since 2001. Currently, they’re at their lowest point since 1982: only about $3 million per screen on average compared to $4 million in 2001.
Are Movie Theater Subscription Services Worth It?
Movie subscription services like Sinemia and MoviePass, worked great at first, but . The business model of these companies was to offer customers a monthly subscription that would cover the cost of their movie ticket each time they went out to see one. The idea was that people would go more often if they didn’t have to worry about paying for each individual ticket.
However, all of these services were proven too good to be true. MoviePass tried charging $15 dollars per month and couldn’t meet demand; even then it wasn’t enough money to keep them afloat long term.
Sinemia has a different business model than MoviePass—it’s not offering unlimited tickets for a flat rate, but instead offers discounts on individual tickets as well as subscriptions where you pay upfront for three months at once instead of month-to-month.
Both MoviePass and Sinemia were shut down after movie theaters like AMC stopped accepting it. Subscription services are now limited to those run by the movie theater brands, such as AMC Stubs, Regal Unlimited Movie Pass, and Cinemark Movie Club.
However, MoviePass has re-launched in a few cities as of fall 2022, including Chicago, Dallas and Kansas City.
Cost of Movies vs. Movie Theater Prices
The most expensive movies in Hollywood are also the least popular. It’s difficult to show an unpopular film, because people are already not going to the movies as much as they used to.
There’s a reason that the most expensive movies in Hollywood are also the least popular. In recent years, studios have been spending more money than ever on their films, but this hasn’t translated into bigger box office returns. The reason? Audiences don’t like being pandered to.
This makes it even harder for Hollywood to thrive without streaming.
In 2018, Hollywood spent an estimated $8 billion on film production and marketing—the highest figure ever recorded by The Hollywood Reporter. That year saw several high-profile flops like Aquaman ($200 million budget) and Alita: Battle Angel ($170 million budget).
These films were all based on existing properties with built-in audiences and were expected to be hits; however, both tanked at the box office because audiences didn’t feel engaged enough by their characters or story lines for them to justify paying full price for tickets plus popcorn and soda.
IMAX Could Bring in More Moviegoers
In 2019, IMAX is once again making a comeback. The company has announced plans to construct 30 new theaters over the next five years. This means that instead of having one or two IMAX theaters in your town, you’ll have three or four—and maybe even more! And with this expansion comes an increase in ticket prices: $10 for an adult ticket and $7 for kids between 5-12 years old (which still seems like a lot). But what’s the cost? Is it worth it?
Of course it is! Most IMAX movies get more sales than a regular film. You get to see your favorite movies on the biggest screen possible—even when you’re not watching them at home. In addition, these theaters also offer experiences like custom menus from local chefs and personalized wait service from trained staff members who know how best to serve you at an event as unique as seeing movies in IMAX format.
The future of movie theaters may turn to bigger IMAX films that require a moviegoing experience. The latest blockbuster Top Gun: Maverick made $1.4 billion in box office profits, and it’s the 13th-highest grossing film of all time, according to Box Office Mojo, beating out other films like Skyfall, Frozen, and the final Harry Potter movie.
Films like Top Gun: Maverick will likely become the prevalent type of films shown at movie theaters as attendance is higher for IMAX experiences.
What is the Future of Movie Theaters?
The future is uncertain, but we can still look forward to a few more years of fantastic movies at the theater.
Cinema chains are struggling to compete with streaming services like Hulu, Netflix, Disney Plus, and Amazon Prime Video. These services offer new titles at an affordable price—and they don’t require going out in the cold weather or getting out of your comfort zone at all.
Plus, most people have access to them through their existing cable packages and are used to using them every day, rather than once every few months.
It’s clear that streaming services and big movie chains are here to stay, but there’s still plenty of room for growth. The next few years will be fascinating to watch as both sides continue to compete over a shrinking audience.
