April 29, 2020 / 8:59 PM / a month ago

Breakingviews - U.S. moviegoers will never again fill theaters

Deckchairs sit stacked outside a closed movie theater during the global outbreak of coronavirus (COVID-19) in Santa Monica, California, U.S., March 16, 2020. REUTERS/Lucy Nicholson

NEW YORK (Reuters Breakingviews) - Dark movie theaters may just be a taste of the near future. Even before Covid-19 completely shut down projectors at venues offered by the likes of AMC Entertainment, attendance was in decline and streaming services like Netflix on the rise. AMC is fighting back, but the notion that America’s cinemas will fill up again may be as quaint as a silent film.

With everyone stuck at home, Hollywood has time to figure out more ways to cut out the exhibitors. Comcast’s NBC Universal released “Trolls World Tour” on April 10 directly to people’s homes and made several other movies already showing on big screens available to rent for $20.

There are incentives to wiggle around theaters. In general box-office ticket sales are split 50-50 between exhibitors and studios. With streaming services like Netflix or Amazon.com or through traditional cable, studios keep about 80% of the take.

The “Trolls” sequel broke first-day and opening-weekend records for Universal’s home-entertainment unit, racking up some 10 times the previous record receipts for a digital release. It has now brought in nearly $100 million in rentals, the Wall Street Journal reported this week. In terms of revenue for Comcast, that makes it more lucrative than the original’s $154 million in gross domestic U.S. box-office receipts to date.

Netflix has changed the game too. The firm led by Reed Hastings mostly bypasses theaters for its original movies, instead choosing to use releases like “Roma” as a way to hook potential subscribers. Lockdown has accelerated the company’s subscriber growth. Many of the largest studios’ parent companies, notably Walt Disney, Comcast and AT&T, now have streaming services. Disney pushed its upcoming flick “Artemis Fowl” to its online Disney+ platform for a June release rather than wait until theaters reopen.

The number of Americans trekking to box offices is in long-term decline from a peak in 2002 with 1.6 billion tickets sold. From lockdown AMC, which bills itself as the largest exhibitor in America, Europe and the world, is resisting: On Tuesday it said it would boycott Universal’s films in light of the studio parent’s comments about digital releases. AMC’s stock jumped more than 20% the next day, but its market value is still only about a quarter of the $2 billion it was worth shortly after going public in 2013. The fresh damage from the pandemic may never be reversed.


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