Despite that box office dip, however, the number of U.S. screens is down only about 12 percent when compared to the same period since 2019, per the research firm Omdia. And ticket prices are up to an average of more than $10.50. So for theaters, if you add in increased concessions sales and other merch, the number of tickets sold—i.e., the butts in all these seats—is down way more than even the financials suggest. It’s as much as one-third lower last year than in 2019, according to The Numbers, which tracks such data. Yikes.

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The New Normal

Consumer habits have pretty clearly changed since Covid, and one genre after another is becoming less “theatrical,” with large-format screens taking a bigger and bigger chunk of the receipts. The latest: Horror titles are struggling, a truly… horrific development for the business. But the theaters mostly just chug along—raising prices, declaring bankruptcy (Regal owner Cineworld closed about 75 of its 505 U.S. locations as it emerged from Chapter 11 last summer), complaining about lower margins, and, in some instances, actually trying to diversify. 

Still, when I posed the contraction question to a few exhibition experts in the week leading up to CinemaCon, they all leaned on the specific quirks of the theater business. Yes, closing venues would likely render the remaining locations fuller and more profitable. But as the Journal recently noted, movie theaters are unique in the real estate world. Many landlords, especially at shopping malls, are willing to reduce rents rather than let an anchor tenant close. AMC, the largest chain, run by my buddy Adam Aron, has about 8,200 screens in the U.S., and about half of those are in malls, where tenants often have covenants that reduce their rents if an anchor leaves. About 10 percent of AMC leases come up each year, I’m told, and about a quarter of those are with landlords that, when push comes to shove, will lower the rent. (AMC declined to comment.)  

So they persist, rather than consolidate, even though the theater chains know they’re in a bad spot. AMC, for instance, closed 150 theaters in 2020, while opening 60 new theaters with more PLF screens and other amenities that make them higher grossing. They’re getting more money out of each patron, thus rendering each seat less necessary. Others are following the lead of a new Cinemark location in El Paso that features kiddie play areas, a bowling alley, games, a climbing wall, dining, and, oh yeah, a seven-screen movie theater. Cineworld’s new C.E.O., Eduardo Acuna, has announced big post-bankruptcy upgrade plans as well.   

But repurposing existing theaters is expensive and risky for these chains, which are already overleveraged. So they mostly keep their heads in the sand, praying for more big-budget studio product, as Aron was doing in L.A. meetings last week. Michael O’Leary, head of the National Association of Theatre Owners, puts the onus on the studios, as usual. “The number will go up and down over time, but if we have the product to get into the theatres then the number of theatres in this country are sustainable,” he told Screen International today. 

But there’s no guarantee that’s going to happen. The streaming-first era is over for the traditional movie studios, but that doesn’t mean the volume will necessarily ramp up. They’re all cutting costs. And the theatrical plans seem tenuous at Amazon and Apple, two rich tech companies that have dabbled in theaters. Amazon pledged last year to release “five to ten” movies a year theatrically, yet it’s not really doing that, and its most commercial play in a while, the Road House remake with Jake Gyllenhaal, went directly to Prime Video. Neither company is presenting its slate here at CinemaCon.

One expert I polled said he believes the new normal for box office is closer to 2024 than 2023—or around $8 billion a year, which would be disastrous for the theatrical business. Could AMC finally go bankrupt? Aron has managed to escape that fate via his meme stock shenanigans and several cash raises, diluting all those Ape investors in the process. He may or may not be delaying the inevitable, while also, somehow, taking home a pay package that rose to an unbelievable $25 million last year. (Adam quickly pointed out on Twitter that his actual take-home was much less than that, and he begged his board to pay him less this year. What a guy!)

AMC may be able to tread water and divest assets, especially overseas, though it’s doubtful anyone would pay a decent price. Alamo Drafthouse has been trying to interest bidders for months now, even approaching the traditional studios, I’m told. No takers at Apple, nor Amazon, and certainly not Netflix. None of these chains has sold for a reason.

So business as usual continues, with this as a likely scenario: Theaters get just enough business this year, and in 2025, to convince lenders to renegotiate their financials and survive. But that won’t solve their long-term problems, nor bring new players into the business, nor encourage the necessary contraction of theaters. And it is necessary. You’d think private equity firms like Apollo would smell blood and pounce, but currently there’s not as much cash being generated as at, say, a Paramount Global, and the valuation of an AMC or Cineworld might not drop enough to make it worth the time and resources as a total turnaround.

The result could be a sort of zombie business, not dead enough to be reinvented but not robust enough to enable the owners to transform the multiplexes into entertainment centers with fewer screens and more to do. Meanwhile, the studios will continue to stand by and watch the destruction happen, collecting their 65 percent rental fees on big opening weekends and hoping the entire exhibition business doesn’t implode beneath them. Good times.