Movie theaters aren’t going to make it

And neither will Las Vegas Jonathan V. Last persuasively argues in The Bulwark:

(1) If every theater in America opened tomorrow, what percentage of normal attendance would you see? 70 percent? 50 percent? 30 percent? What would that translate into as a percentage of total revenue decline, once you factor in concession sales?

(2) The theatrical exhibition business is such a low-margin industry that even a 30 percent decline in revenues would be enough to push just about every operator in America into bankruptcy.

(3) Even if some theaters managed to stay afloat in the short term, what movies would they show? The Marvel movie Black Widow was originally scheduled to open in theaters today. That debut has been postponed indefinitely. Let’s say you are Disney and you made Black Widow expecting it to open to $130 million dollars, pre-pandemic. Now you think that, at some point in the undetermined future, maybe it will open $70 million. Or possibly $30 million. Are you going to take that sort of chance with this asset? Or would you rather bootstrap the part of your business that looks like the future—meaning, your streaming service—and eschew the theatrical release altogether?

And what happens then? When the theater chains enter bankruptcy and become distressed assets, who is going to buy them? Because, again, movie exhibition is a low-margin business which has been in decline for several years. The theater chains themselves have functionally zero assets—they own seats, screens, projectors, and popcorn machines. That’s it.

The NYT has a marginally more sanguine take.