In the leadup to his appearance on stage at CinemaCon, Puck columnist Matthew Belloni published an article on the state of the exhibition, asking the question of why more multiplexes haven’t closed.
For an industry some have estimated to have lost one-third of its audience, Belloni asks how the exhibition has only shed 5% – 10% of its total screen count. After talking with many leaders at movie theatre chains, Belloni feels that the answer may lie in where their cinemas are located.
Multiplexes are often located in strip malls and shopping centers, and if landlords at these locations were to kick out their movie theatre tenants there would not be an obvious replacement to take over the space. As a result, it has become common for landlords to decrease the rent for an underperforming multiplex to keep them operating and avoid having a large vacancy. This phenomenon has particularly benefitted AMC, according to Belloni.
While this has helped some exhibitors continue through difficult market circumstances, it is not sustainable over the long term. Sooner or later, a fall in attendance is bound to force more locations to close their doors. The real question is whether the domestic box office can rebound to $10 billion+ or will settle in at the $8-9 billion range. The difference between those two levels cannot be overstated.
The optimists are predicting that 2024 will be an aberration for the industry, the victim of disruptions to release schedules brought on by last year’s Hollywood labor strikes. But the industry will continue to struggle until the domestic box office bounces back to higher levels.
