Can AMC Entertainment survive post-COVID?
In an interview with Third Bridge Forum, the specialist said the US box office is entering a “new normal”where estimated revenue will hit USD 6-8bn a year compared with USD 11bn before the pandemic. The specialist told us COVID-19 has caused consumers to break cinema “habits”, which they said are hard to form and even harder to re-form. Streaming has also hit the cinema industry like a “massive asteroid”, benefiting film studios with streaming platforms such as Disney, which are now able to “have [their] cake and eat it too”.
The specialist told us the movie theatre market in the US is over-screened by 25%. Despite this and the fall in cinema footfall, the specialist doesn’t anticipate AMC closing theatres, claiming it is “very proud of its position of being the largest theatre operator in the world”. Instead, the specialist said they can envisage AMC acquiring more “high-profile distressed names” to add to the theatres it recently acquired from the now defunct Arclight Cinemas.
As of 2019, AMC has 24 million-plus members for its membership programme Stubs. The specialist categorised these customers as “resilient” to existential crises like COVID-19 and said they are likely to spend money on food and beverages when at the cinema. The specialist said AMC offered to pause memberships for its 1 million top-tier subscribers in an attempt to halt mass cancellations, which they said would be “hard to get back”.
Although cinemas were attempting to find additional revenue streams by using theatres to host concert movies and sports streaming, the specialist said these moves were unlikely to offset the USD 3-5bn box office shortfall expected this year. The specialist also questioned whether AMC’s business model could survive in a USD 6-8bn cinema market, having been “built to win the most in a high box office environment”.
To access all the human insights in Third Bridge Forum’s AMC Entertainment – US 2022 Box Office Expectations & AMC Stubs List Opportunities Interview, click here to view the full transcript.
The information used in compiling this document has been obtained by Third Bridge from experts participating in Forum Interviews. Third Bridge does not warrant the accuracy of the information and has not independently verified it. It should not be regarded as a trade recommendation or form the basis of any investment decision.
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