Movie Theaters Lose Profit in Wake of COVID-19

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by Paris Belus, Helena Daniels, and Tadhg Holder

A temporarily closed Regal Cinema theater on Friday, Oct. 23, 2020. Regal cinema has recently closed all of its U.S. theaters due to a loss of $1.6 billion over the first six months in 2020 because of COVID-19.

On June 19, 1905, the first movie theater, known as the Nickelodeon, had officially opened for business in Pittsburgh. Movie theaters have been the ideal spot to grab a box of popcorn and watch the latest movies as they come right out of Hollywood. But now, in the wake of a global pandemic and rise of streaming services in the previous decade, movie theaters may take a serious hit from which they may never recover.

It is debatable as to whether the popularity of streaming services is temporary or permanent, but with streaming services such as Netflix, Hulu and Disney Plus, people no longer need to go to the movie theater to see a newly released movie. Also, as COVID-19 has spread across the world, most movie theaters have had to shut down in order to prevent further contamination. These changes in the movie industry have led to an increased amount of streaming from the public, simultaneously decreasing ticket sales in theaters.

“It’s nice to sit down and enjoy a nice movie in a movie theater, but to take your family out to see a movie that can cost up to a hundred bucks. Maybe even more. Nowadays we live in a society where people purposely avoid social interaction. Instead of going out and socializing we are staying cooped up in our homes. So, instead of going forward into the future we are heading backwards in the past,” said Sarah Sayas, a licentiate psychologist. She believes that society will eventually find its way back to socializing like back in the day when movie theaters were fun, cheaper, and for the whole family.

The entertainment industry is using streaming services to appeal to the audience of people who are not comfortable leaving their houses. By releasing new movies on streaming services instead of in theaters, they provide more convenience to consumers because they are less costly. During COVID-19, some movies have even gone up on streaming services immediately upon release.

“Streaming is a big part of a lot of consumers’ lives right now,” said Scott N. Brown, head of TV product at Nielsen Media, to the Hollywood Times. “We have seen a tremendous growth in just how much streaming is going on over the last few weeks as COVID- 19 becomes more prevalent across many parts of the country. The amount of time viewers are spending streaming more than doubled in the past year alone, and it’s nearly a quarter of the total time spent on TV among homes that have the ability to stream.”

Two people wearing masks are walking past the AMC movie theater in New York City, New York state on Sept. 22, 2020. AMC struggles to stay in business as theaters continue into Phase 4 of re- opening, while taking safety precautions. *Photo by Noam Galai*

Conversely, COVID-19 has had a negative impact on theaters, unlike it has had on streaming. Due to COVID-19, most movie theaters have had too shut down until they know it’s safe to open up again, but some theaters could end up closing permanently. The biggest movie theater chain in the world, AMC Theatres, recently expressed to the public that they could go bankrupt.

According to Time Magazine, in March, the box office hit a 20 year low as it dropped 60 percent from 2019. “Over the next 12 to 24 months there is going to be a lot of bankruptcies,” said Brent Turman, president of the Texas Association of Motion Media Professionals and an attorney at Bell Nunnally.

As COVID- 19 has continued to spread, similar types of entertainment, such as drive-in movie theaters and online watch parties are also taking over. Recently, AMC Theaters has introduced the option of renting out a private theater for up to 20 people. According to the Security and Exchange Commission, AMC’s revenues fell to $941.5 million, down roughly 22% compared with $1.2 billion in the same quarter last year.

It is not known for sure, but with the new popularity of streaming services and rapid spreading of the Coronavirus, there is a possibility that people will stop going to movie theaters completely.