AMC Theatres is emerging from the pandemic with renewed confidence, after raising more than $2B from investors with its recent issue of new shares and soaring stock price. The world’s largest exhibitor is considering using at least some of its resources to expand through the acquisition of new theatre locations, particularly in large urban and suburban markets. However, some industry experts caution that any further expansion by exhibition will fly in the face of strong headwinds. The North American exhibition market operated 40,000 theatre screens before the pandemic, with many returning little or no profit at that time.
The shock that exhibitors faced as a result of pandemic-induced theatre closures and capacity restrictions is being compounded by long-term changes in how studios release movies. Exhibitors worry that the growth in streaming and shortening of the exclusive theatrical window will result in fewer in-theatre ticket sales. Last week, the investment advisory Jefferies published a research note quoting Regal’s former CFO David Ownby saying that a healthy Domestic market screen count after the pandemic would fall somewhere between 32,000 – 35,000 screens. The era of the Cineplex with a very large screen count and stadium seating is fading away, replaced by venues offering luxury seating and other high-end amenities such as dine-in service.