Title: AMC Entertainment’s Strategic Shifts Amidst Challenges: Diversification, Concert Films, and Premium Experiences
Last summer, the cinematic sensation of “Barbie” and “Oppenheimer” revived the movie theater business from the brink of extinction due to the pandemic. However, concerns persist regarding the industry’s health with increasing competition from streaming services, an uneven recovery, and delays resulting from the Hollywood actors’ and writers’ strikes (Hollywood labor disputes). AMC Entertainment, as the world’s largest movie theater chain, isn’t exempt from these challenges.
To bolster its recovery, AMC is diversifying its in-theater offerings and forging deals with musicians for concert films. The company aims to enhance the ticket price by introducing higher-end viewing experiences, closing, renovating, or relocating theaters, and launching its branded concession-stand snacks and merchandise.
Founded in 1920, AMC has been at the epicenter of cultural moments over the past few years. The pandemic caused significant financial strain with mounting debt, followed by the unpredictable involvement of “meme stock” traders, and then an unprecedented box office success fueled by “Barbenheimer.” In late 2021, AMC secured an exclusive deal to screen Taylor Swift’s ultra-popular concert movie, “Era’s Tour,” shortly after the Hollywood strikes disrupted film productions and releases.
AMC’s CEO, Adam Aron, alluded to future collaborations with more musicians during the November earnings call, stating that “concert film products” would be a significant focus for AMC in 2024 and 2025.
The movie business faces a challenging landscape, particularly the disappointing box office revenue in the first two months of 2023. Domestic box office revenue is down by approximately 18% compared to the same period last year, according to Comscore. Although revenues have not yet recovered to pre-pandemic levels, they had been on an upward trajectory until 2023. Eric Wold, an AMC analyst at B. Riley, projected a potential backslide in the domestic box office to $8.6 billion for 2024, down from the $8.9 billion earned in 2023.
Changing audience preferences might be one reason for this slowdown. Superhero movies, which have historically been reliable draws, have had inconsistent performances lately. For instance, Sony’s “Madame Web,” with a reported production budget of $80 million, according to The Hollywood Reporter, has only made $35 million at the domestic box office so far.
Paul Dergarabedian, a senior media analyst at Comscore, believes that studios may be behind in recognizing the evolving public taste. However, he remains hopeful about upcoming movies like “Dune: Part Two,” which is set to release on March 1, and the highly anticipated “Sonic the Hedgehog 3” and “Deadpool & Wolverine” movies due later in 2023.
Despite the box office slowdown, AMC was once again at the center of viral attention earlier this month with its “Dune: Part Two”-themed popcorn bucket, featuring a sandworm’s gaping mouth. Internet users and even “Saturday Night Live” expressed their reactions to the unique design. Prior to this, AMC offered pink “Barbie” Corvette-shaped and “Fast X” buckets shaped like a 1970 Dodge Charger.
AMC reported that domestic theater attendance in Q3 2022 was down 16% compared to Q3 2019, but profits are up. Alicia Reese, an AMC analyst at Wedbush, attributes this to moviegoers increasingly seeking premium large format screens and purchasing larger concession baskets with higher ticket prices. AMC possesses the largest footprint of premium format screens in the industry, including IMAX and Dolby Cinema, which offer superior sound and picture quality.
Michael O’Leary, the president and CEO of the National Association of Theatre Owners trade group, emphasizes that theater operators are continually asked to enhance their showmanship to cater to audiences’ growing appreciation for unique and memorable experiences.
