A little less than a month ago, AMC Entertainment (AMC) CEO Adam Aron was touting the fact that the movie theater chain had just enjoyed its best Labor Day weekend ever. Aron largely credited the unusual summertime release of Walt Disney's (DIS -1.01%) Shang-Chi and the Legend of the Ten Rings. He also suggested, however, the box office surge was a sign that consumers are ready to return to pre-pandemic movie-going.
They're not. Theaters do about three-fourths of their business on the weekend. Although Shang-Chi is still the big draw, this past weekend's domestic box office ticket sales were the lowest they've been since A Quiet Place Part II unofficially rebooted the film-projection business with a strong showing during May's Memorial Day weekend.
Image source: Getty Images.
One bad weekend isn't necessarily a fatal blow. But one bad weekend right now should be a major concern to shareholders of AMC Entertainment as well as owners of its rivals like Cinemark Holdings (CNK -1.30%) and Regal-owner Cineworld (CNNW.F).
Domestic ticket sales plunge
It could have been worse. Box Office Mojo's reported domestic ticket sales tally of $38.7 million for the three-day span ending on Sunday, Sept. 26, was clearly better than any revenue figure produced during the midst of the pandemic shutdown.
But that's also the weakest number since COVID-19 vaccines became widely available to all who wanted the jab by May. For perspective, Shang-Chi and the Legend of the Ten Rings' opening weekend three weeks ago led U.S. box office sales of nearly $140 million, although that opening weekend figure was at the low end of the industry's usual weekend revenue range before COVID-19 up-ended the world. Disney's Black Widow was the heavy hitter for mid-July's big $119.2 million opening weekend. The chart below tells the tale.
Data source: Box Office Mojo. Chart by author.
For the record, it's not an entirely fair criticism for a couple of reasons.
One reason is that while film studios are more willing to release their new flicks in theaters now than they were a year ago, they're still a bit stingy with their productions. Shang-Chi is exclusively in theaters, but Disney's Black Widow and Jungle Cruise were also offered as a premium purchase for Disney+ subscribers. Comcast's (CMCSA -5.82%) film arm Universal is also planning to offer its upcoming Halloween reboot Halloween Kills as an on-demand streaming option at the same time it's available in theaters next month. Paramount, a division of ViacomCBS (PARA -3.94%) (PARA.A -2.57%), recently decided to postpone -- again -- the theatrical release of Top Gun sequel Maverick, betting that it will be best monetized by being seen on a fully immersive big screen.
Image source: Getty Images.
The other big impasse? The delta variant of COVID-19 has boosted the nation's rate of infections. Sure, it's a factor out of the theater chain's control, but it doesn't alter the ultimate impact it has on investors.
Keep expectations in check
Again, one bad weekend doesn't spell doom for the theater industry. A string of bad weekends doesn't even mean Cineworld, AMC, and Cinemark are going to be forced to fold. There are still films that need to be seen on a silver screen to be fully appreciated. Some theater chains are also repurposing their theaters for other revenue-bearing purposes.
But you shouldn't ignore the potential investing implications of this news. Adam Aron's comment that the "surge in attendance at AMC signals that as Hollywood releases movies, Americans eagerly want to return to movie theaters again" made three weeks ago is encouraging. But things have dramatically changed for the worse in the meantime. Expectations for the quarter currently underway may be unduly high.
