Recently, Regal Cinemas, the second-largest theater chain in the country, chose to close all their theaters in the US indefinitely due to rising COVID-19 cases. This closure will affect 45,000 jobs, with 40,000 of them in the US. Movie theaters run off of foot traffic, and with the rise in online streaming services, they are already struggling.
Even if theaters open, movies expected to come out this month are being postponed until early 2021. According to Forbes, this year’s domestic box office sales will drop 81% due to the pandemic. Not only will these big theater chains be affected and need to produce different sources of income, whether that means partnering with streaming services such as Netflix or restructuring their debt and issuing more stock (such as large theater chains AMC did last year).
Small or independent movie theaters will be hit the hardest without a doubt, and about 69% of these small businesses will need to file for bankruptcy or close entirely, with 66% of theater jobs lost. Most of these local theaters are depending on donations from devoted theatergoers to stay afloat during this time. Although some have tried to diversify and show virtual screenings, people are not flocking to them like regular screening. These small businesses have been able to open their doors for partial capacity, but due to release dates of movies being pushed until next year, they have needed to improvise in what they show.
These movie theaters are relying on Congress to help them survive this pandemic by expanding the Paycheck Protection Program (PPP). The PPP would provide $10 million in loans, which includes loan forgiveness for retaining employees. The PPP directly helps the movie theater industry, and with part-time employees leaving to find new employment, full-time employees are suffering a massive loss in their paychecks.
This level of uncertainty in the movie theater business’s future will also affect the stocks these big box cinema companies are currently in. As of October 6th, 2020, Cineworld, the owner of Regal Cinema, is down 36%, AMC is down 11.5%, and Cinemark is down 17%. Many avenues are hurting the movie theater business and could easily go bankrupt if the country is in this pandemic any longer. Even though a group of people will always want to see movies in person, the substitutes for the in-person theater experience have become increasingly more popular and more accessible to all.
Not only are movie theaters hurting, but the movie business as a whole is too. Christopher Nolan’s new movie, Tenet, grossed only about $303 million worldwide. This was disastrous compared to his other films like Dunkirk, bringing in a modest $523 million worldwide. But, as movies are being sold and released only on streaming services and as physical movie theaters close, the streaming services continue to outperform and beat the movie theater industry by leaps and bounds.
Many people rely on going to these theaters in person; some people thinking of it as a “lifeline” into the world in the state it is in at the moment. While big-box movie theaters like AMC are projected to make it through 2021, small and independently owned movie theaters will go bankrupt or completely close their doors in the coming months.
The application of government funding on these businesses will be imperative to keeping a small business afloat at this time. This might be a time for streaming services to grow, and movie theaters might see a new facet of their place in the market. Going to the movies might turn into a relic of the new-age entertainment technologies of today.
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