Investors who had hoped for an announcement about strong movie attendance over Thanksgiving weekend were deeply disappointed on Monday. AMC Entertainment Holdings (NYSE: AMC) was quick to tout the best weekend in the industry since the pandemic took hold following the mid-October dual launch of no time to die and Venom: let there be carnage, but no such news has surfaced after what has been a four-day weekend for many.
That’s because ticket sales have essentially stagnated during what’s usually a boon for the business.
The environment must be taken into account, to be fair. Although the COVID-19 pandemic is slowly waning in large parts of the country, would-be moviegoers still seem wary. Mask mandates are still in effect in some places, and while the omicron strain of the coronavirus has yet to be found in the United States, many people continue to exercise a high degree of caution. It’s also worth noting that there were no must-see movies premiering last week. The big winner of the weekend was a waltz disney (NYSE: DIS) movie called Encanto, but it opened without the usual kind of buzz that Disney is capable of creating.
Yet despite all the insinuations that movie theaters are nearly back to their pre-pandemic traffic, the second-worst Thanksgiving weekend since 1997 indicates the movie industry is still in deepest trouble.
By the numbers
Between Wednesday and Sunday, Box Office Mojo reports that theaters sold $141.6 million worth of tickets. In itself, this is not disastrous. In fact, it’s above average and miles ahead of the comparison from a year ago of just $20.3 million when The Croods: A New Era was the draw of theaters. This is only a fraction of 2019’s pre-COVID comparison of $262.3 million, however, and 2019 was no fluke. The prior year’s support in the five days surrounding Thanksgiving was $314.9 million, thanks to Ralph breaks the internet. Box office sales remain around half of what they were before the coronavirus rocked the world in early 2020.
We may be getting back to normal, but we are still far from that normal at the moment.
Studios don’t exactly help. Walt Disney was willing to risk his debut Shang-Chi and the Legend of the Ten Rings exclusively in theaters over Labor Day weekend, a gamble that paid off even if it plugged into pure pandemic fatigue. Disney also did well at the box office with Black Widow, even though it was simultaneously broadcast via the Disney+ streaming platform. Ghostbusters in the afterlife fared quite well with its debut a week earlier, and Dunes generated respectable figures in the second half of October. None of these titles were a proverbial “hot ticket,” however, with the ability to order a crowd into a movie theater. None had the power cinemas need either, with no film since Shang Chi topped box office sales for over two weeks. Meanwhile, rented titles like Top Gun: Maverick, the Batman, and Avatar 2 have had their theatrical releases postponed – yet again – due to coronavirus concerns. There’s no particular reason why they shouldn’t be put off once again.
In other words, studios aren’t delivering all of their best stuff to theaters yet, and it’s noticeable to moviegoers.
Then again, who can blame the studios? Although reportedly a box office hit in terms of worldwide ticket sales of $756 million, no time to die It’s been rumored to be on the verge of losing money once its theatrical release ends. In the meantime, several less flashy but still expensive titles like The last duel starring Matt Damon definitely lost money premiering in a tough environment.
Time is money
The question is tantamount to a chicken-or-egg argument. If theaters can’t draw a crowd, then studios don’t want to waste a movie on them. If the studios don’t offer their best material, the theaters can’t draw the crowds. COVID-19 remains an unpredictable factor that could easily wipe out any cooperation parties on both sides of the table can muster. It will take time to become familiar with such relationships given the context.
Time, however, is a luxury that theater operators like AMC, as well as Cinemark Holdings (NYSE: CNK) and Regal parent cineworld (OTC:CNNW.F), just do not. All three continue to bleed cash, and with what should have been a great weekend that doesn’t even match the box office of over 20 years ago, that doesn’t seem to be changing soon enough. Shareholders would be wise to keep these shares on a leash.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.