AMC Entertainment Group (AMC 11.84%) is struggling to bounce back from the pandemic. As if that wasn't bad enough, the company is part of an industry experiencing a long-running decline of customers. Both AMC and the industry need some innovative thinking to get out of this funk.
AMC's CEO, Adam Aron, provided just such thinking when he announced a partnership to bring National Football League games to AMC movie screens. Sports are among the most-watched programming, and football is the most popular sport in the U.S.
AMC is bringing the NFL to the big screen
At 40 theaters across 25 markets, AMC will show one NFL game in each market that isn't available on local TV. The games will be free for fans to watch, but there's a catch -- you must join AMC Stubs, its membership service, and buy a $10 food and beverage gift card. The company is starting small with the initial rollout and could potentially expand it to more theaters if it likes the results.
Showing sports on the big screen has the potential to turn around the long-running decline in movie theater attendance. From 2002 through 2019, movie tickets sold in the U.S. and Canada decreased from 1.575 billion to 1.239 billion, according to Statista, and that was before the pandemic's onset. There is no telling if the pandemic will cause a further decline over the long run.
Fortunately for AMC, as the world is making progress against COVID-19, movie theater attendance keeps hitting post-pandemic records. The challenge will be for AMC to get attendance to return to pre-pandemic levels and grow from there.
Interestingly, most NFL games are played on Sundays, with the occasional Monday night and Thursday night games. Moviegoing is usually most prevalent on the weekends -- Friday night, Saturday, and Sunday. Therefore, while an excellent start, showing NFL games arguably does not have as great a potential as other major sports that have more games during the week when moviegoing is not as plentiful.
Consider Major League Baseball (MLB), where each team plays over 160 games, and those games are spread throughout the week. If AMC can get access to show MLB games from Monday through Thursday, it could be a game changer.
Targeting the competition's weak spot
Shareholders should be pleased with this move by management. The company is increasingly at a competitive disadvantage vs. substitute services like streaming content that can cost less than $1 per day and provide entertainment for the family all month. It isn't easy to compete against that by selling tickets to box-office movies that cost over $10 per person per movie.
However, the one form of content that is scarce across streaming services is sports. Offering content that is not easy to find on streaming services and then lowering prices for the tickets could be what's needed to get people back into theaters. No doubt, there's a long way to go, but this is certainly a step in the right direction.