The Box Office Performance in 2023 Means the Cinema is Back!
The traditional cinema has faced tremendous challenges over the past decade. This may have come as a surprise as the industry appeared to be on the brink of greater things after the success of Avatar at the end of the 2000s, raking in the largest box office haul of all time. Big blockbusters continued to deliver the numbers that studios were hungry for, particularly Disney properties like Star Wars and the Marvel Cinematic Universe. However, cinema operators became increasingly reliant on these releases, which largely eliminated the appeal of more niche movies in favour of those geared towards primarily young audiences.
In 2020, the COVID-19 pandemic presented an existential threat to the traditional cinema. Indeed, movie theatres had already seen foot traffic decline as more and more consumers were opting to get their entertainment at home through streaming platforms like Netflix. AMC Entertainment (NYSE:AMC), the largest movie theatre operator on the planet, saw its total revenues fall from US$5.47 billion in 2019 to US$1.24 billion in 2020.
While 2021 provided more of the same with lockdowns coming and going, 2022 turned out to be a year of transition for the cinema. Then, in 2023, audience goers appeared to vote with their wallets for a change. The highest grossing movie of the year coming into the fall of 2023 was Barbie, which dominated both the domestic box office with $633 million and etched out a big cultural moment with its release alongside Oppenheimer. After that, The Super Mario Bros. Movie pulled in $574 million. It was the first time that an MCU movie failed to crack the top two highest domestic box office since 2020, the year of the pandemic.
AMC Entertainment has delivered hugely improved earnings in the first two quarters of fiscal 2023. However, a recent stock sale and an APE lawsuit ruling both weighed on its share price. Still, the momentum built by the cinema in 2023 should not be ignored. AMC Entertainment stock could be trading at a nice discount if movie theatres can build on their results in 2024 and beyond.
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