The motion picture theater industry is in real trouble after nearly a year of closures and restrictions related to COVID-19. Some companies have already closed locations, and there have been reports of some theater companies closing their doors for good. And, even for larger national chains, the outlook remains dire.
According to recent media reports, AMC Theatres, the largest theater chain in the world, will be “out of money” by the end of the year if things don’t change dramatically in the final two months of 2020. This means that AMC’s cash reserves will be “largely depleted,” say market watchers, who blame both the pandemic shutdowns as well as the relatively meager slate of “holiday season” movies for the expected shortfall.
To make up this shortfall, unless the company is able to borrow a significant amount of cash, AMC needs to get people in the theaters, and that needs to happen now. But that isn’t happening, at least not yet. In early October, the company reported that five out of six of its US-based theaters were running at a seating capacity below 40% due to COVID restrictions and still not filling up those seats.
Overall, measured by attendance, the US theater industry has seen an 85% decline over this time last year. That’s a more than monumental deficit to make up, and, so far, it doesn’t look like many companies have found a way to even approach climbing that mountain.
The company already said trying to get cash or to somehow significantly reduce fiscal obligation is probably a no-go, telling the media, “There is a significant risk that these potential sources of liquidity will not be realized or that they will be insufficient to generate the material amounts of additional liquidity that would be required until the company is able to achieve more normalized levels of operating revenue…”
In other words, without significant borrowed cash or a massive influx of paying customers, there won’t be enough money to continue beyond the end of the year. And AMC is not alone. Cineworld Group, which owns Regal Cinemas, has suspended all operations in the United States and the United Kingdom, where the virus continues to spread.
Meanwhile, studios are delaying film releases, fearing lackluster or anemic viewership. This means both the movie studios and the theaters have a vested interest in finding a way to get people coming back to theaters. The question is, how will they attempt this, what will they offer, and how will they communicate that offer to wary theater-goers.
There are still a lot of Americans who love “going to the movies,” and that love could be leveraged and rekindled if theaters find a way to get creative and solve their ongoing attendance problem… but the clock is ticking.