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3 Reasons the Multiplex Is Dying Again

By Rick Munarriz – Updated Apr 11, 2019 at 11:16AM

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Weak content, the fade-out of MoviePass, and Netflix on the rise are eating into ticket sales at your local movie theater.

It's been a rough 2019 for movie theater chains. Ticket sales revenue has fallen 15.8% when pitted against the same first 34 days of last year, according to industry tracker Box Office Mojo. Super Bowl weekend was also a doozy. The roughly $70 million collected in domestic ticket sales makes it the worst Super Bowl weekend showing in 19 years. 

There are good reasons you're finding more armrest room at your local multiplex. Let's go over a few of the reasons exhibitors are struggling to draw audiences these days. Some of them are more ominous than others. 

Reclining seat at AMC's Lake in the Hills multiplex.

Image source: AMC Entertainment.

1. The content isn't up to snuff

Let's start by blaming Hollywood. It's probably a bad sign that the top draw in each of the past three weekends has been Glass. M. Night Shyamalan's latest film is a disappointment in the eyes of critics, as just 36% of the ones tracked by Rotten Tomatoes are recommending the film. The audience approval rating is markedly higher -- clocking in at 76% of the patrons enjoying the movie -- but that's still not enough. It's rare to see a film on top for three weekends in a row not crack through the nine-figure Glass ceiling, but here we are with Shyamalan's film below $89 million in domestic ticket sales. 

It also doesn't help that the batch of recently announced Oscar nominations for Best Picture were mostly theatrical duds. Just three of the eight films up for the top award cracked nine figures, with none of the other five nominees generating more than $60 million in stateside box office receipts. We're once again seeing a disconnect between what critics like and what audiences crave.   

2. MoviePass stopped subsidizing moviegoers

Multiplex operators hated Helios and Matheson Analytics(HMNY) MoviePass, claiming that the dirt-cheap subscription service that offered up a screening a day for just $9.95 a month was devaluing the product. The MoviePass model never made financial sense for Helios and Matheson, which has to pay retail price for most of the movie tickets purchased, but it was a mother lode for film buffs that topped 3 million members over the summer. 

Once the financing well dried up for Helios and Matheson, it started to curb its service. Subscribers went from watching as many as 31 movies a month to just three -- and even catching those flicks became a challenge. Other operators have stepped up to fill the void left behind by the rapidly fading MoviePass, but it's not the same. Sinemia's pricing tiers don't offer the same value proposition. Leading exhibitor AMC Entertainment Holdings (AMC -1.83%) has now topped 500,000 members for its AMC Stubs A-List program, but it caps usage at three films a week at more than double the price point of the original MoviePass plan. 

MoviePass did a great job of filling seats at movie theaters a year ago on Helios and Matheson's dime. That once-gushing spigot is down to a mere trickle now. 

3. It's a field of streams

Netflix (NFLX -1.78%) is only getting bigger and smarter. It's probably not a surprise that one of the eight Best Picture nominees at the Oscars later this month was released exclusively on Netflix. Roma has turned heads without hitting your local multiplex, and now even more filmmakers will consider a streaming service instead of a conventional theatrical run. 

Check out the latest Netflix and AMC earnings call transcripts.

It also doesn't help movie theaters that the highest-grossing film of 2018 -- Black Panther -- is freely available to stream on Netflix now. AMC and its smaller rivals tend to screen Oscar nominees this month to cash in on critical faves, but with Black Panther and Roma available to stream at home for Netflix's nearly 58.5 million U.S. subscribers, it's not going to be much of a draw this season. 

With the product and access not what it was a year ago and with streaming services booming in popularity, it's not a surprise to see a rough start for exhibitors in 2019. It's going to be hard to drum up enough ticket sales in the next 11 months for a Hollywood ending. 

Rick Munarriz owns shares of AMC Entertainment Holdings and Netflix. The Motley Fool owns shares of and recommends Netflix. The Motley Fool has a disclosure policy.

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