What happened
Shares of AMC Entertainment (AMC +4.42%) plunged nearly 15% Tuesday after Walt Disney (DIS 0.29%) said it would make two of its most-awaited movies available for viewing on its streaming service the same day they begin showing in theaters.
So what
For a fee of $29.99, Disney+ subscribers will be able to watch Marvel's latest superhero blockbuster, Black Widow, starring Scarlett Johansson, on July 9 -- the same day it debuts in theaters. Disney will use a similar launch approach with Cruella, a live-action film based on the villain from its classic hit, 101 Dalmatians.
Blockbuster releases on streaming services could make it difficult for AMC Entertainment to fill its theaters. Image source: Getty Images.
The news came as a punch to the gut for AMC and its shareholders. The struggling theater chain recently announced that 99% of its U.S. locations would reopen by March 26. Yet with Disney making it easy for movie fans to watch its biggest films in the comfort and safety of their own homes during the COVID-19 pandemic, AMC might struggle to fill seats.
Now what
In addition to what will likely be significantly lower traffic levels, AMC will incur higher coronavirus-related costs. The theater chain has promised to strengthen its cleaning and safety protocols during the health crisis. These added expenses will further pressure AMC's profitability. That's not good for a company that was already struggling to generate consistent profits even before the pandemic began.
