Movie theaters are expected to survive the plan by Warner Bros. to release films in the United States simultaneously in theaters and online next year, even though owners are not happy about the media company’s decision.
“There is no constituency that thinks that was a good idea … They just told [theaters] that they are not going to get as much money,” Michael Pachter, an entertainment analyst at Wedbush Securities, told the Washington Examiner.
Warner Bros. announced Thursday that, in 2021, people can watch first-run movies in theaters or stream them on HBO Max.
Warner Bros. has yet to confirm the films that will be released in 2021, but the potential list includes the following: Tom & Jerry, Godzilla vs. Kong, Mortal Kombat, Those Who Wish Me Dead, The Conjuring: The Devil Made Me Do It, Space Jam: A New Legacy, The Suicide Squad, Dune, The Many Saints of Newark, and Matrix 4.
The reaction from theater owners regarding Warner’s decision was swift.
Adam Aron, chief executive officer of AMC Entertainment Holdings, on Thursday questioned the wisdom of the decision because a coronavirus vaccine is nearing distribution.
“Warner now hopes to do this for all their 2021 theatrical movies, despite the likelihood that with vaccines right around the corner the theatre business is expected to recover,” he said in a statement.
Cinemark Theaters, in a statement Friday, suggested that they might not accept films from Warner Bros.
“In light of the current operating environment, we are making near-term booking decisions on a film-by-film basis,” the company stated.
Still, analysts expect theaters to survive the curveball thrown to them by Warner Bros. because people relish going to the movies.
“There will always be a place for movie theaters. Watching a film through a streaming service from your home is no replacement for the movie-going experience,” said Brent Turman, an attorney at the Bell Nunnally law firm in Dallas, Texas, who specializes in the entertainment sector.
Richard Greenfield, an analyst at LightShed Partners, a technology, media, and telecommunications research firm based in New York City, predicted that movie theaters will be around for decades, if not longer, because they provide an escape for people looking to dodge reality.
“Kids want to get away from their parents. Parents want to get away from their kids. A night out. There’s still going to be a movie business,” he told CNBC on Friday.
Pachter doesn’t see the Warner Bros. decision killing off the theater industry, but he does foresee the pandemic wreaking havoc on smaller outlets.
“Do I think any of them will go bankrupt because of it [Warner Bros.]? No. But they might go bankrupt anyway … The theater companies are having trouble because they have to pay rent. They all have debt, and it [capacity limits] is straining their balance sheets,” he said.
The stock price for some of the larger theaters took double-digit hits on Thursday after Warner Bros. made its announcement. AMC traded roughly 18% lower at closing while Cinemark shares dropped nearly 20%. Meanwhile, the stock price for AT&T, which owns Warner Bros., barely moved.
As an industry that relies heavily on packing large numbers of people into a confined space, the movie industry has been one of the hardest hit by the pandemic because they either have had to shut down their theaters or limit the number of people who enter them to help slow the spread of the disease.
In October, Regal Cinemas announced that it was halting operations at all 536 theaters in the country. AMC Theaters announced in November that it suffered a 90.9% drop in revenues in the third quarter.
“If they’re in trouble, imagine the Mom and Pop [theaters],” Pachter said.
Seating limitations for movie theaters vary by state, but any restraint can be detrimental to owners that offer just a few screens.
“If they’re paying rent, there is no way a single screen can possibly make money working at a 20% [seating] capacity,” Pachter said.
He expects that some of the smaller theaters will close during the pandemic because of the capacity limitations, not because of what Warner Bros. has announced.
