Page 117 - Bloomberg Businessweek - November 19, 2018

Bloomberg Businessweek The Year Ahead 2019 Consumer

Movies

▷ Theaters could see box office records in 2019, but Disney
and subscription deals could pinch their profits

Theater owners in the U.S. have plenty Pachter, a Wedbush Securities Inc. ana- as many as 25 movies annually in
to feel good about. Moviegoing is lyst. On the rise of subscription use, he recent years, vs. 13 or less from Disney—
up, and by the close of 2018, theater said: “That is a problem, and that is sparking worries that the new parent
chains should set records for domestic going to be eaten by the exhibitor.” company’s focus on big- budget mega-
ticket revenue. A busy 2019 slate with Disney, whose properties include hits will ultimately lead to the com-
a Star Wars sequel, Toy Story 4, and the Star Wars, Marvel, and Pixar fran- bined studios making fewer releases.
Joker, about Batman’s nemesis, could chises, has sometimes demanded more The popularity of subscription plans
put even more fans in seats—deliver- than 60 percent of ticket revenue for has been a mixed blessing. MoviePass
ing the first back-to-back years of atten- its biggest releases, compared with the Inc., which once let fans see a picture
dance growth since 2002. industry’s typical 50-50 split. Adding a day for $9.95 a month, may have con-
Turn the house lights up, though, Fox’s film franchises including X-Men, tributed $138 million in additional rev-
and challenges loom. The money- Planet of the Apes, and Avatar will only enue over the summer, accounting for
losing, all-you-can-watch MoviePass increase Disney’s bargaining power. half of the industry’s seasonal increase,
service has upended ticket pricing, That isn’t necessarily a bad thing, says Greg Durkin, a former Warner
40
forcing theater chains to offer their argues Eric Wold, an analyst at Bros. Entertainment Inc. executive
own subscriptions, sometimes with B. Riley Financial Inc. Despite getting who now runs the research firm Guts
steep discounts. Also, Walt Disney Co.’s a smaller share of revenue from those + Data, which uses Screen Engine/ASI
purchase of most of 21st Century Fox often-blockbuster films, “you would data to decipher industry trends.
Inc.’s assets including its film studio will rather have 35 percent of a $1 billion Theater chain Cinemark Holdings
give Disney leverage to demand better film than 50 percent of a $50 mil- Inc.’s year-old Movie Club, which
terms from the theaters. “Theatrical lion film,” Wold says. Disney didn’t costs $8.99 for one ticket a month
has been under assault since television respond to requests for comment. plus various discounts on concessions
was invented, and each successive win- Investors in theater chains also won- and additional tickets, had drawn
dow for watching movies has been per- der about Fox’s post-buyout film pro- 445,000 members as of November.
ceived as a huge threat,” says Michael duction levels. The studio has released Rival AMC Entertainment Holdings
Inc. says its $19.95 AMC Stubs A-List
Announced Movie Releases in 2019 service, which lets fans see three mov-
◼ Action/adventure/sci-fi ◼ Animation ◼ Comedy ◼ Drama ◼ Horror/thriller ◼ Other ies a week, will exceed 500,000 sub-
scribers in November. “This business
is healthy by increasing attendance,”
The Lego Movie 2: Spider-Man:
The Second Part Far From Home raising the potential number of cus-
Star Wars:
Dumbo Dark Phoenix Downton Abbey Episode IX tomers for high-margin food and bev-
erages, says Cinemark Chief Executive
Officer Mark Zoradi.
Still, subscription plans can affect
theaters’ sales. AMC said attendance FROM LEFT: COURTESY FIAT CHRYSLER; COURTESY ADIDAS; COLIN UNDERFILL/ALAMY
revenue was unchanged in the third

Untitled Toy Story 4 Joker Frozen 2 quarter, even with a 9 percent surge
Avengers film Lion King in attendance at U.S. theaters, in part
because of the A-List program. So
1/4/19 7/1/19 12/25/19 AMC in January will raise prices in
15 states where the program is most
popular. <BW> �Anousha Sakoui
DATA: BOX OFFICE MOJO