Written by Fatima Idrees
Here in the heart of Ann Arbor, Michigan rest two historical theaters that provide entertainment and art to students and other moviegoers. In addition to showings, the Michigan Theater and the State Theater host numerous events throughout the year including the annual Ann Arbor Film Festival. While these theaters are doing relatively well, the economic state of movie theaters in the US currently is somewhat uncertain due to the ongoing COVID-19 pandemic. The events of the last few years have had a significant impact on the movie theater industry, as many theaters were forced to close for extended periods to comply with health and safety regulations. While many theaters have since reopened, attendance remains lower than pre-pandemic levels. This has led to financial struggles for some theater chains, with some filing for bankruptcy or closing locations. Additionally, the rise of streaming services has presented a new challenge for theaters as more and more people opt to watch movies at home. Despite these challenges, some theaters have adapted by offering alternative programming, such as classic films or live events, to attract audiences. Overall, the future of the movie theater industry in the US remains uncertain, but there is hope that it will recover as the pandemic subsides and marketing and quality improves.
Movie theaters have been shutting down more frequently since the start of the 2020 lockdown, however the pandemic was the final straw for many struggling theaters as ticket sales had already been on the decline due to the rise of streaming services. The decline of movie theaters in the US can be seen in various statistics. In 2019, the US box office grossed $11.4 billion. In 2020, due to the pandemic, the box office gross plummeted to $2.2 billion, an 81% decline from the previous year. Furthermore, the number of movie theaters in the US has been declining steadily for years. In 2019, there were approximately 5,500 movie theater locations in the US, down from nearly 7,000 in 2005. This steady decline has recently accelerated; CNBC reported that as of February 2023, “since 2019, the number of total screens in the U.S. have decreased by around 3,000” (Whitten).
However, in the midst of the downturn, a notable event for a well known theater chain did result in unexpected media exposure. Internet users may remember AMC’s “memestock” in the fall of 2021 when hordes of redditors induced a spike in AMC shares along with GameStop. Reddit users triggered a short squeeze for AMC stock in order to play a “prank” on institutional investors who borrowed shares of AMC and sold them with the intent to buy them back at lower prices. As a result, the sudden rise in the price of AMC stock caused institutional investors to suffer significant losses. Though this event was briefly promising, shares for AMC at the end of last year were down about 50% than at the start. Other chains are not finding better luck as AMC’s rival, Cinemark, filed for bankruptcy last fall. Following this pattern, Cinemark, IMAX and Marcus shares were all lower last year by about 10% to 15% (Monica 6). Little to no theater chains are finding the success they used to, even after the US economy has somewhat recovered from the barriers that the global health crisis brought upon it.
This dilemma has become apparent to theater owners as profits are still suffering even in absence of external factors. While the demographic and location of the Michigan and State theaters in Ann Arbor certainly contribute to their economic stability, typical theaters that are not located in bustling college towns must get creative. The industry is revamping to appeal to modern consumers in terms of quality. This includes upgrading concession stands, seating and picture and sound quality. Some theaters are offering a wider variety of food and beverages while others are hosting concession-related promotions. Many theaters are replacing their old standard seating with recliners and for some chains, alternative programming includes “live events, with cinemas setting up streams for concerts, sports and even Dungeons & Dragons campaigns” (Whitten 32). Additionally, many chains are decreasing the number of screens and using extra space to expand the services they have to offer in larger movie theaters. Chairman of the National Association of Theater Owners, Rolando Rodriguez, says that “most newly built locations will range between 12 and 16 screens and those with larger, preexisting footprints will look to repurpose some space for supplementary activities for moviegoers, like arcades, bowling alleys or bars” (Whitten 5). This redesign of the style and feel of movie theaters is an attempt to attract the now increasingly selective market. For example, there has been a recent change in the demographic of moviegoers as younger audiences have returned faster than older ones, most likely due to health concerns (LaSalle, 02).
Fortunately, these changes have already been yielding significant results; the industry is seeing improvements in ticket sales. CNBC reports that “the 2023 box office has tallied $958.5 million in ticket sales, up nearly 50% compared to last year and down just 25% from 2019, according to data from Comscore” (Whitten 9). For context, during the same period two years ago in 2021, the box office tally was $98.7 million. Furthermore, this indicates a possibly brighter future for theaters in the long run, as such numbers have not been observed in quite some time. However it is important to consider that this spike may also be due to increased film production as compared to the past few years leading out of the pandemic. Regardless, the movie theater industry is seeing major improvements in 2023 so far and is foreseeing further success in the near future.
Works Cited
Mintz, Rachel. “The History of the Michigan and State Theaters.” The Michigan Daily, 20 Mar. 2023, https://www.michigandaily.com/news/ann-arbor/this-is-ann-arbor-the-michigan-theater-and-state-theatre-from-friendly-rivals-to-twin-landmarks/.
Monica, Paul R. La. “AMC’s Hype Machine Can’t Fix the Broken Economics of Movie Theaters | CNN Business.” CNN, Cable News Network, 8 Sept. 2022, https://www.cnn.com/2022/09/08/investing/amc-ape-stock-adam-aron/index.html.
LaSalle, Mick. “Does the Success of ‘Downton Abbey’ and ‘Top Gun’ Mean Older Audiences Are Returning to Movie Theaters?” Datebook, Datebook | San Francisco Arts & Entertainment Guide, 27 June 2022, https://datebook.sfchronicle.com/movies-tv/does-the-success-of-downton-abbey-and-top-gun-mean-older-audiences-are-returning-to-movie-theaters. Whitten, Sarah. “Movie Theaters Aren’t Dying – They’re Evolving.” CNBC, CNBC, 25 Feb. 2023, https://www.cnbc.com/2023/02/25/movie-theaters-evolving-not-dying.html.