It's not just fans of John Hughes films, New Wave music, and Members Only jackets who are living in the 80s. Multiplex operators are seeing a dramatic slowdown in audience counts as the summer season fades away, and they're not afraid to team up and whip out a pricing gun promotion. The nonprofit Cinema Foundation is launching National Cinema Day this weekend, offering movie tickets for just $3 apiece. The move takes exhibitors back to prices they last charged in the 1980s. All the major theater chains, including AMC Entertainment (AMC 3.74%), Cineworld 's (CNWGY) (CNNW.F) Regal, and Cinemark (CNK 2.26%), will be participating. Even a few of the highbrow indie film houses are playing along.
You would think that a one-day deal that discounts screenings by roughly 70% would be swept under a slow weekday rug, but that's not the case. National Cinema Day will take place on Sept. 3, a Saturday during a holiday weekend, no less. We're also not just talking about standard showings during historically discounted matinee hours. AMC and its peers are making all hours and all formats available. So yes, for just $3 you can grab a ticket for an Imax (IMAX 11.08%), Dolby (DLB 0.71%), or 3-D show that typically costs $15 to $20 on Saturday night.
It sounds great for the consumer. Three bucks for a first-run film on the silver screen in a premium format? That sounds great in this iffy economic climate. It could still backfire on the theater chains.
Bucking the trend
The logic behind National Cinema Day is easy to grasp. After a strong start to the summer, folks are no longer showing up to the local multiplex. The $52.1 million in box office receipts for all domestic theaters this past weekend is the softest showing since January. After a strong start to the summer season, audiences have been fading fast. You have to go back to 1998 -- 24 years -- to find the last time we had a weaker third-quarter-to-date tally before the pandemic.
Labor Day weekend was also going to be a dud before this promotion. As poor as the last three weekends have been, the spigot is dry in terms of new releases. The only major debut this weekend is in the comedy genre, which has been a weak draw to the silver screen in the post-pandemic era, and that movie is also streaming at no additional cost on a premium streaming service that you can watch from home. National Cinema Day will fill seats, even if the lower price points translate into another lackluster tally of revenue at the box office.
What if, instead of reintroducing consumers to the big-screen experience, it actually devalues the product? Will someone paying $3 for an Imax presentation on Saturday night come back the next week and pay $18 for the same type of experience?
Lower ticket prices aren't a death sentence for the industry, in theory. The real money for AMC and its peers rests behind the shiny glass concession booths. Food and beverage sales is where the high margins are made, and we are spending more on concessions than before the pandemic. The rub is that we are spending less than we were a year ago. The average food and beverage revenue per domestic patron declined 5% in AMC's latest quarter. With consumer spending on discretionary items taking a hit this summer on inflationary concerns, that figure could be worse for multiplex operators this quarter. It also doesn't help that AMC is promoting a low-priced combo meal for National Cinema Day, offering a small drink and popcorn for $5.
#NationalCinemaDay is Saturday, 9/3! All tickets, including IMAX and Dolby Cinema, are only $3+tax, and our fountain drink and popcorn cameo combo is just $5+tax. https://t.co/O6q3d38ats pic.twitter.com/e62sGqfmc7-- AMC Theatres (@AMCTheatres) August 28, 2022
You can see a movie while enjoying a soft drink and a small popcorn for just $8 on Saturday at your local AMC. Is that the value proposition that movie-theater stocks want to be presenting? Those customers won't be back again after the sticker shock for nonpromotional theater outings. A lot of this weekend's multiplex visitors may also just decide to stay away from multiplexes until the next $3 holiday rolls around.