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The movie theater industry has seen plenty of upheaval over the last two years as Covid kept doors closed and productions paused. Now, as theaters face a lack of blockbuster releases after a promising summer, a new crisis is taking shape.
It's got industry watchers wondering: Are there just too many movie screens across the US?
Regal owner Cineworld, the world's second-largest exhibitor, recently filed for bankruptcy and said it would implement a "a real estate optimization strategy in the US," likely meaning theater closures.
Already, the market is saturated with 40,700 screens in the US — a number that hasn't changed much since 2019, the last pre-pandemic year.
Analysts at the Wall Street firm Moffet Nathanson contend the industry is in "dire need" of trimming back. "We expect to see a drop in US screens as the business looks to normalize," the analysts said in a note to clients.
But some in the theater industry argue that number of screens isn't the issue. They say a better metric is the number of seats — and that's something that could change as theater owners face the current environment.
"If we have too many screens, you have to specify — is it a screen with 350 seats or one with 45 seats?," Patrick Corcoran, spokesman for the National Association of Theatre Owners, told Insider. "We sell seats, not screens."
He added that over the "last almost decade of conversions to recliners, the seat count has been vastly reduced."
Data paints a more detailed picture of the seating situation. According to Steve Buck, strategy chief at EntTelligence — a data company that tracks theater attendance — 17.4% of all available seats were sold from Memorial Day through the end of July in the US.
That's a lot of empty seats. Still, Buck stressed that the figure encompasses "everything," from sold-out shows to a Tuesday afternoon for a movie in its fourth week.
The theater owners' group estimated that there are roughly 150 seats-per-screen on average in the US. That might be too high, especially with so few blockbusters being released these days. "Black Panther: Wakanda Forever" and "Avatar: The Way of Water" are the remaining surefire hits this year.
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The lack of big-tent movies had an impact on the box office. The theatrical industry has said demand is at pre-pandemic levels, but supply is not. So even if people want to head to the movies, there aren't enough new ones to see.
In response, instead of closing up shop altogether, theater chains might take the time to reconfigure their auditoriums — perhaps by cutting the number of seats by putting in recliners, for instance.
"Going leaner and meaner is an advantageous business strategy for theaters in this marketplace given the recalibration of the industry," said Paul Dergarabedian, the Comscore senior media analyst. "Too many seats chasing fewer patrons is not a model for success. Filling theaters closer to capacity is good for business, particularly if those seats are high-end recliners that elevate the moviegoing experience."
Chris Johnson, CEO of Illinois-based Classic Cinemas, said that reclining seats has a positive impact on attendance and called it a "game changer." More than 100 of the chain's 137 auditoriums have recliners, he said.
Meanwhile, John Fithian, the head of National Association of Theatre Owners, recently told Insider that he doesn't expect movie supply to get back to pre-pandemic levels for another 12 to 18 months as movie studios continue to get production schedules back on track.
Theater owners are optimistic about that, at least: Warner Bros., with its new parent company, has recommitted to exclusive theatrical releases as opposed to dripping things out on streaming services. And Paramount said this week that it aims to increase its theatrical output by 2024.
But the bottom line is that the theater industry still has a long road to recovery. So, what's next?
With Cineworld filing for bankruptcy, it will surely close some theaters in the US. But the theater industry has a tendency to find treasure from trash. One example is the Tennessee-based Phoenix Theatres, which has made a business out of taking over shuttered cinemas (hence the name).
It's also possible that smaller exhibitors might enter some of these closed theaters and refurbish them — which likely means reclining seats, which means fewer seats.
As far as getting consumers to attend movie theaters during such a movie drought: The industry saw 8 million moviegoers come out for the first National Cinema Day on Sept. 3. Thousands of theaters across the US offered tickets at no more than $3 for all movies and showings, which resulted in around $24 million in box-office sales that day, or 9% increase from the previous Saturday's take.
It shows that audiences can be enticed to come out for special promotions, even for movies they may not have spent money on before.
But efforts like National Cinema Day aren't money makers — for theaters nor studios. If the theater industry doesn't believe cutting screens is the answer, then filling seats will have to be a priority.