AMC Entertainment Holdings Inc. (NYSE: AMC) has 630 movie theaters with 8,048 screens in America. The company stated that it may not be able to operate as a “going concern” because of the effects of the COVID-19 pandemic. What happens if all these screens go dark?
AMC has taken a brutal beating and had a net loss of about $2.2 billion in the first quarter. This number is bound to get much worse in the current quarter.
The first victim of a shutdown of AMC theaters is the movie studios. Last year, the total box office revenue was $11.3 billion domestically. Most movies are released into 4,000 theaters. A sharp drop puts some of that revenue at risk.
Where do people who watch just-released movies go? One theory is that theaters will force a sort of social distancing. This will involve removing a large number of seats so people can sit far apart. Additionally, people will need to wear masks. Seats will need to be wiped down completely between movies. That, in and of itself, will cut the hours movies actually show films. Also, people may shun theaters altogether because of health concerns.
The other primary theory about where people will go to watch newly released movies is to their own homes. Home consumption of streaming media has soared over the course of the pandemic. The latest companies in the sector have benefitted tremendously, Amazon.com and Netflix in particular. The trend also has helped the release of the Disney+ service. Several other smaller competitors, which include HBO Max and the deeply troubled Quibi, have launched as well.
Hollywood worries whether people will want to see movies on the “big screen” when they first come out. For some movies, executives argue, the films lose their punch on smaller home screens. That may not matter. People can either watch these at home or not watch them at all.
Of course, if AMC goes under financially, some of its movie theaters may remain open. That is if a new owner believes that such a move is financially viable. If not, the movie experience for consumers will be altered for the foreseeable future.
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