Something big but familiar is coming to IMAX (IMAX 0.49%) this weekend, and AMC Entertainment Holdings (AMC 9.18%) is hoping for some "precious" rewards. The Lord of the Rings: The Fellowship of the Ring will make its debut on the larger-than-life cinematic platform on Friday. The other two entries in Peter Jackson's Lord of the Rings trilogy will follow later this month.
It's been 20 years since what is now AT&T's (T -0.60%) Warner Bros. released the first of the three wildly successful films, which would gross more than $2.9 billion in ticket sales worldwide. The trilogy never blew up on the IMAX format, but Jackson's recent 4K remasters of the films make it possible. The timing is lousy, of course. Most fans of the series are going to be hesitant to head out to what should be a socially distanced but still crowded movie theater. However, it's the lousy timing that makes this possible at all. With major movie studios pushing out the release dates of their new IMAX releases, there just isn't a healthy trickle of content for AMC and smaller rivals to play on their most lucrative screens. This is a smart move, but it probably won't be enough to save the industry.
You shall not pass
AMC is in trouble. Despite the recent flurry in trading activity in the shares, this is still a company running a profitless business that was reeling even before the pandemic. Revenue growth was flat in 2019 despite a murderers' row of releases including the final installments in the Star Wars and Avengers trilogies. Last year was going to be a letdown even before the COVID-19 crisis emerged.
It wasn't until late in the summer season that AMC finally reopened, but folks aren't coming back. Analysts see an 89% plunge in revenue for the fourth quarter that the multiplex operator will announce in a few weeks, and that's with the lion's share of its theaters open.
The appeal of a classic trilogy making its long overdue premiere on IMAX is obvious. The films were loved by critics and audiences alike, and they have all the action, fantasy, and high-tech effects that tend to do well on IMAX. Even with theaters offering the screenings at a slight discount to the typical new releases, it will still be a difference maker. The problem is that many of the smaller AMC locations don't have an IMAX screen. This will also be a very limited run. You have just a week to catch the first entry before the other two films in the trilogy follow.
AMC is doing what it can to stay afloat. It has raised money -- and then even more money -- to make sure that it can keep its projectors warm through the next chilly few months of cash burn. Unlike its closest rival Regal, which temporarily shuttered all of its theaters late last year, AMC is still popping the popcorn and scanning digital tickets to keep the art form alive. It has upped its game with new seat reservation technology and ramped up its mobile concessions ordering options beyond the initial pilot locations. The chain has also cleverly started offering private rentals for as little as $99 a screening to get folks comfortable with the experience again.
AMC did a lot of things wrong over the years, but now it seems to be doing everything right. The problem is that it's not the only one that gets to dictate its fate. The media stocks that it relies on for content seem perfectly fine embracing digital distribution concurrently with theatrical releases. AT&T is tossing the industry a bone with this IMAX-remastered trilogy, but it's also the same company putting out all of its new 2021 releases on HBO Max at the same time that those movies hit the corner multiplex.
Customers have also grown more comfortable with their home theaters, especially with high-def screen prices plummeting and enhanced sound systems easily accessible. Frodo Baggins and his crew did some amazing things that will play out on IMAX for the first time in the next couple of weeks, but too many people are comfortable revisiting the franchise from the comfort of home. AMC has to bear a heavier burden than Frodo if it wants to save its world.