There are business model disruptors that come in the form of digital-first, scrappy, small companies that challenge incumbents, and do things cheaper and faster.
Then there are disruptors that make the term “going viral” a bit literal – in this case, the Delta variant stands out.
AMC is due to report its earnings after the bell. Whether the revenues beat, whether the operating line beats, whether Wall Street cheers or jeers – and whether the “meme stock” retains “meme status” – the key question remains as to the future of the box office, even as subscription services continue to take root, to bring movies to the living room rather than the screening room.
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The physical world, it seems, is a bit less alluring (and right now, seems less safe) than the digital world. The initial surge back into movie-going over the spring, as lockdowns and restrictions eased and vaccinations gained ground, may be in at least some danger. In at least some locales, indoor mask mandates have taken shape. We’re perhaps more comfortable doing all manner of things at home – and that of course includes streaming media.
It’s well-known that studios have been embracing a hybrid model for debuting content – in theaters and on-demand. Black Widow is only one of a cast of thousands, and has a highly visible profile (now that star Scarlett Johansson has lodged a suit against Disney for alleged breach of contract tied to releasing the film in theater and via streaming). Paramount and Universal are other studios that are embracing the practice.
Earnings will point to the impact of theater visits on AMC, right into the teeth of a new wave of infections. May, when Memorial Day weekend saw theaters rake in more than $100 million, seems long ago and far away.
For AMC, the problems may be two-fold for a model that gets more than 80 percent of its revenues from admissions and food and beverage (as measured by the company’s first-quarter results).
First, the studios that see any headwinds in the movie-going experience may pull back from brick and mortar, and may embrace streaming more fully (even if actors clamor for more a piece of the movie-streaming profits). Monetization is key, and it stands to reason that the studios will skate to where the puck is, so to speak. They may wait until the Delta variant recedes a bit before moving back to full-scale releases.
Streaming Platforms Won’t Let Up
At the same time, the streaming platforms are getting more granular in what they offer, and to whom.
In a recent interview with Karen Webster, sticky.io CEO Brian Bogosian said that advanced tech-driven models – including platforms – offer simple flexibility that allows consumers to fit service offerings to their needs. The a-la-carte nature of media being consumed in a sitting or in a binge can make a huge difference to the studios that are targeting certain audiences.
In another interview, Vindicia Chief Operating Officer Roy Barak said that streaming services are branching ever outward into adjacencies such as merchandise and even gaming. That indicates that even as bundling becomes more prevalent, the jockeying for eyeballs – from Disney, Netflix, Amazon and Apple (among others) – will become ever more intense, even after the pandemic.
For the theater operators, AMC among them, the earnings reports may bring sighs of relief, and claims that the worst is over in the age of the pandemic – but looking over one’s shoulder may be prudent advice.