Negative Impact of COVID-19
It is almost impossible to fully encapsulate how incredibly harmful COVID-19 has been to the movie theater business when not yet considering the next possible time there will be zero restrictions on the capacity of theaters as they do begin to reopen slowly. Still, the numbers over the past few months have been soberingly low. AMC Entertainment, the largest movie theater chain in the world, reported a staggering $561.2 million loss in their most recent quarter. This loss can be directly compared to the $49 million of profit AMC took in this quarter in 2019. During this same period, nearly all of their staff were either laid off or indefinitely furloughed. In this quarter, their company revenues peaked at a dismal $18.9 million. In comparison to the same quarter in 2019, that is a remarkable 98% drop in total overall revenue. This has led to tremendous amounts of debt accrued by the company, forcing AMC Entertainment to sell off $77 million worth of international theaters that they previously owned. Large amounts of debt is another major issue facing movie theaters right now as well.
The parent company of Regal, Cineworld, currently has around $3.49 billion in debt. This is compounded with the current legal issues the company is facing due to backing out of a $2.1 billion deal to acquire Cineplex, a Canadian movie theater chain. Other companies, such as Cinemark, closed out 2019 with $1.78 billion of long-term debt, which is far before closures due to COVID-19 even began. While in considerably less debt than many of the other major movie industries, Imax still has raked in about $256 million of it. These companies are heavily in the negative as it is, and now without any sustainable means of creating large scale income, their current state remains rather dire. The possibility of any of these companies digging themselves completely out of debt within the next few years, especially when considering how much money is being lost every day, feels increasingly unlikely.
When taking into consideration the movie theater market as a whole, the numbers are equally as bad. The long term closures of theaters have resulted in a major loss of potential revenue during this summer, where around 40% of annual ticket sales are usually sold due to the influx of major blockbuster movies being released. This clearly has led to a significant drop in box office revenue, leading to annual estimates for North American theater revenue to be around $4.4 billion in 2020. This is approximately a 61% drop in comparison to 2019, which saw around $11.4 billion coming in. By March 2020, the Chinese film industry had already lost around $2 billion due to closures over the concern of spreading the virus. All these incredible losses in profits and potential revenue add up to an estimated $5 billion total loss by the global market.
As it currently stands, movie theaters worldwide are slowly reopening, though almost universally at a much lower capacity. In the US, all 50 states have enforced some level of social distancing, with five of them not yet allowing movie theaters to reopen at all. Nearly half of the states have social distancing capacities of 70% or less, with most of those being at half capacity or less. In China, movie theaters are operating at 30% capacity with mandatory masks and no food, which is another major revenue source for a lot of movie theaters. In Europe, around 75% of all movie theaters are currently open, but all with some sort of social distancing measures in place.
Unfortunately, the outlook for movie theaters continues to look bleak in the near future, until they can operate at higher capacities across the globe. This only becomes a genuine possibility when there is a widely spread vaccine to COVID-19, or the majority of countries have controlled the virus’s spread to such a degree that it is virtually eradicated from the general population. Considering current conditions, at least in the upcoming few months, full-scale operations from most movie theaters are extremely unlikely.
About the Author
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.