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Movie Theaters’ $1.3 Billion Stock Collapse

Friday, August 4th, 2017

2017 hasn’t been that great for movie box office figures – what does the future hold?

As Anousha Sakoui and Emma Orr report on the Bloomberg News website, “Hope is fading for a feel-good ending at the U.S. box office. After several months of flops like Warner Bros.’ King Arthur and EuropaCorp’s Valerian, movie studios and theaters are beginning to acknowledge that their streak of record-setting ticket sales may be coming to an end. AMC Entertainment Holdings Inc., the world’s biggest cinema chain, laid out a worse-than-projected outlook for the North American box office this week.

That announcement dragged down shares of theater stocks, wiping out $1.3 billion from the value of the top four cinema operators in North America since Aug. 1. Even with a new Star Wars, a Marvel superhero movie and the sequel to Blade Runner on the docket for the holiday season, the box office is unlikely to make up for a ‘severe hit’ in the third quarter, according to Bloomberg Intelligence. To date, receipts are down 2 percent in 2017, and AMC is projecting a 1.5 percent decline for the full year.

The concern is that the slump isn’t just a run of bad luck. Cinema operators have managed for years to keep increasing sales by raising ticket prices amid stagnant attendance, but a sharp drop in film going would make that harder to sustain. And the tried-and-true formula of churning out big-budget sequels and cinematic universes populated with super beings seems to be wearing on film goers. Movies featuring once-reliable draws Jack Sparrow, the Transformers and the Mummy did poorly in the U.S.

Meanwhile, competition is heating up. Netflix Inc. and other digital distributors are creating more original movies, and consumers have more demands on their attention than ever, from Snapchat to YouTube. Further exacerbating the trend, studios are expected to push for a new premium video-on-demand window this year.

It’s possible that Hollywood could reverse the trend next year, when a new movie about Han Solo, an Avengers film, and sequels to Deadpool and Jurassic World are scheduled. ‘This is very typical of the movie business,’ said Paul Sweeney, an analyst at Bloomberg Intelligence. ‘You could make the argument that the slate for next year looks really good, which should grow the market next year in North America. That part’s a cyclical thing, and it’s likely to come back.’

And movie-theater operators Regal Entertainment Group, Cinemark Holdings Inc. and Imax Corp. aren’t facing the same level of pressure as AMC, which is carrying almost $5 billion in debt after expanding its empire to Europe, with acquisitions in the U.K. and Sweden.

Controlled by Chinese billionaire Wang Jianlin’s Dalian Wanda Group Co., AMC has become the poster child for China’s incursion into Hollywood. Concern that Dalian Wanda’s international investments may wane is adding to AMC’s troubles. ‘With China cracking down on funding for AMC’s majority shareholder, Dalian Wanda, the cinema chain faces murky prospects given its high debt level and appetite for global M&A,’ wrote Geetha Ranganathan, a Bloomberg Intelligence analyst.”

Now, it could be that we’re just going through a run of bad films – or it could be, as Sakoui and Orr note, that “the tried-and-true formula of churning out big-budget sequels and cinematic universes populated with super beings seems to be wearing on film goers.” I’d argue it’s the latter, and though a new Star Wars or Marvel film may come along that rocks the box office, eventually this is a formula that’s bound to collapse. The figures above show it – theatrical box office is steadily going down.

But then again, what are the theaters to do? Audiences have been force fed junk for so long that they no longer know what a more thoughtful, challenging film looks like – they wouldn’t know how to approach anything that doesn’t have three act plot format, cardboard cutout characters, and a massive dose of CGI. Can you imagine if Ingmar Bergman’s Persona were released theatrically today? Or Federico Fellini’s La Dolce Vita (which incidentally, holds the record for the biggest box office success for any foreign subtitled film to this day, adjusted for inflation)?

No one would come. Contemporary audiences only want genre films, franchise films, spectacle films, and superhero/heroine films. That’s it. And furthermore, theaters are locked into multi-year contracts stretching into the next decade for upcoming films from Marvel, DC, Disney, Lucasfilm (bearing in mind that Marvel and Lucasfilm are part of Disney) so they have to run their films no matter what.  What are theater owners to do? They could convert their auditoriums into gigantic videogame parlors, with multiplayer games on the screen, but that, too, would eventually fade.

The future is online. The future is streaming. The future is Netflix, Amazon, Hulu and similar companies. The future is people sitting in their living room watching web series, or feature films, on their 50″ plasma, streaming from the web, or cable – if they still live in the dark ages – but the future is not in movie theaters. It costs too much to go out, the prices at the concession stand are out of control (it’s really the only way the multiplexes can make any money), and furthermore, in today’s violent society, theaters are simply not safe. And with Amazon and Netflix making their own features, distributed through their own online network, who needs movie theaters?

The outlook for theatrical exhibition is grim indeed – what can turn it around?

How Are Indie Films Doing These Days? Not So Well . . .

Monday, July 17th, 2017


If you don’t care about the latest Apes movie, how are more thoughtful films doing?

As Tom Brueggemann of Indiewire notes in this perceptive overview of the current field, not all that well. Sofia Coppola’s new rendition of The Beguiled is racking up respectable but not incredible numbers, while as of July 16th the much-heralded film A Ghost Story has grossed just $288,751 in limited release. On the other hand, Eleanor Coppola’s subdued Paris Can Wait has made $5,304,000 in 177 theaters in 10 weeks. But it’s a tough world out there for independent art house films, and most viewers are simply flocking to the franchise films – they’re a sure bet.

The upcoming Blade Runner 2049, which dropped a trailer today, is sure to make money, and War for the Planet of the Apes (is this trip realllllly necessary?) has garnered $102.5 million in the first days of release. Meanwhile, the films that Brueggemann writes about are dying on the vine – they get no publicity and push at all, and so they wind up on streaming – no more DVDs. Try to find these films in a theater near you; unless you’re very lucky, you won’t be able to. I’ve said it before, and I’ll say it again; every one of the films that Brueggemann mentions deserves a real shot at theatrical distribution, with a solid ad budget, rather than vanishing into the mists of the digital domain.

Read Brueggemann’s entire article here; a stark look at the art film today.

About the Author

Headshot of Wheeler Winston Dixon Wheeler Winston Dixon, Ryan Professor of Film Studies at the University of Nebraska-Lincoln, is an internationally recognized scholar and writer of film history, theory and criticism. He is the author of thirty books and more than 100 articles on film, and appears regularly in national media outlets discussing film and culture trends. Frame by Frame is a collection of his thoughts on a number of those topics. All comments by Dixon on this blog are his own opinions.

In The National News

Wheeler Winston Dixon has been quoted by Fast Company, The New Yorker, The New York Times, the BBC, CNN, The Christian Science Monitor, US News and World Report, The Boston Globe, Entertainment Weekly, The Los Angeles Times, NPR, The PBS Newshour, USA Today and other national media outlets on digital cinema, film and related topics - see the UNL newsroom at http://news.unl.edu/news-releases/1/ for more details.

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