The third quarter didn't end the way it started for multiplex operators. AMC Entertainment Holdings (AMC -5.67%) and its wobbly peers need a strong Q4 to turn things around. It won't be easy, but the fourth quarter could flip the script here.
It seems like it was a lifetime ago when July got off to a blazing start. Two weeks into Q3, U.S. box office receipts were at their highest level since 2016. By the end of September, domestic ticket sales for the third quarter were 32% below where they were in the last pre-pandemic year of 2019. You now have to go back 24 years to find the last pre-pandemic year that had a Q3 as soft as the one we just mercifully ended over the weekend. Oh, and we're not even baking inflation into that math.
It's not just the third quarter. Box office tallies are down 34% year to date when stacked against 2019. Multiplex operators are hoping for a strong finish to 2022, but the subplots and hardships keep mounting.
Trick or treat
We've had six consecutive weekends when the top 10 movies failed to top $60 million in stateside ticket sales. There was just one weekend for in all 2019 that we saw box office receipts fall short of $60 million.
The fourth quarter should be better, but it might not get there right away. The hot start to the industry's third quarter will probably be reversed with a couple of soft weeks before starting to heat up. Black Adam in late October, Black Panther: Wakanda Forever in mid-November, and Avatar: The Way of Water following five weeks later will draw big crowds, but everything else will have to prove itself.
Why throw in the towel for the next couple of weeks? We're technically off to an encouraging debut of Smile. The well-reviewed horror flick collected just $22 million in ticket sales over the weekend, but that's the strongest premiere in nearly two months. The problem is that the comps to 2019 will be terrible. Keep in mind that one of that year's biggest films -- Joker -- hit the silver screen in October 2019. The Addams Family and Maleficent: Mistress of Evil would roll out later that month, each one eventually topping $100 million in total gross ticket sales in the U.S. market.
The star-studded Amsterdam opens this weekend, but it's a genre that has historically had lackluster theatrical appeal outside of the success of Knives Out. Halloween Ends is the big name the following week, but it will also be available on Peacock Premium at the same time. Peacock just spent all of September hooking people up with a year of the premium service at just $1.99 a month. It went back to the regular monthly $4.99 price over the weekend, but that's still a lot of homes with access to the latest film in the Halloween franchise at no additional cost.
Things will get better for movie theater stocks after two horrendous months. The pipeline of content is promising. The narrative could change, and that would come at an ideal time, with some of AMC's rivals teetering. Normally one could applaud the financial demise of a competitor, but anything that shuts down a healthy amount of multiplex screens translates into more leverage for the streaming services to receive first-run releases. October may start as a trick, but it could end as a treat.