With 5,700 Movie Screens Shut Down and the Box Office in a Slump, Theaters Are Still Waiting for a Post-Pandemic Comeback

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Over the past hundred years, B&B Theatres has been sharing films – ranging from “Casablanca” and “Psycho” to “The Dark Knight” and “Barbie” – with audiences in the South and Midwest regions. This family-run cinema chain is more than a commercial venture; it’s deeply ingrained in the lifestyle of the Bagbys, offering an escape for their patrons during wars, economic downturns, and tragic events like terrorist attacks.

However, unlike past crises, the coronavirus significantly altered the Bagbys’ company in a manner that other disasters hadn’t. Today, weekends at B&B Theatres aren’t just about watching the latest movie; they also offer activities like bowling, pickleball, arcade games, and even a bar serving cocktails. These modifications to traditional movie-going have been striking, yet they’ve been crucial in keeping the business afloat during the pandemic, when film studios were producing fewer movies and audiences were less inclined to visit cinemas.

Bob Bagby, CEO of the company, stated that the pandemic taught us a valuable lesson: we must expand our sources,” he said. “Relying solely on studios for our business needs isn’t sufficient.

To date, B&B Theatres – a cinema chain that caters to audiences across states like Missouri, Mississippi, Kansas, Iowa, Oklahoma, Texas, and Florida – has already established four of these cinemas and aims to build an additional four this year. Their objective is to encourage patrons to spend more time at the theater, thereby increasing their overall spending, regardless of whether they watch a movie or not, as expressed by Bagby.

According to Brock Bagby, who is Bob’s son and the company’s president, managing this operation feels less like running a movie theater and more like overseeing a cruise ship. It’s also important to note that it involves greater risk because these projects tend to be significantly costlier to construct. However, we need to design something exceptional to attract customers.

To date, B&B Theatres has managed to draw in audiences, while many of its rivals struggle. Five years post-COVID, the movie theater industry finds itself shrinking in terms of audience numbers and earnings. It’s also becoming less significant and more vulnerable as it faces stiff competition from a plethora of streaming platforms. There’s a growing feeling that a few unfavorable events could spell the end for an art form that has been cultivated over decades.

According to Eric Handler, an analyst from Roth Capital Partners who specializes in the exhibition industry, the recovery has been significantly more sluggish than many anticipated. He describes it as a tough battle, with numerous businesses shutting down and most large chains reducing their presence.

Due to a decrease in foot traffic at the box office, cinema chains such as Regal Cinemas, Pacific Theatres, Alamo Drafthouse, among others, have sought bankruptcy protection under Chapter 11. Some of these companies have bounced back post-bankruptcy, while others have permanently shut down their operations. This development has led to a reduction of 5,691 screens in North America since the pre-COVID era, as reported by media consultancy Omdia.

2024 didn’t see the box office recover as anticipated, with ticket sales plummeting to $8.7 billion – a staggering 23.5% decrease from pre-pandemic earnings. That figure is a stark contrast to the nearly $11 billion the industry was raking in prior to the global health crisis. Movie theater owners are optimistic that their business will soon regain its momentum, but this year has started on a disappointing note. Blockbuster franchises like “Captain America: Brave New World” didn’t live up to expectations, and high-risk ventures such as “Mickey 17” didn’t yield the hoped-for returns.

However, it seems that the situation might be turning around soon. Throughout the summer and into the holiday season, anticipated titles like “Jurassic World,” “Avatar,” “Superman,” and “Mission: Impossible” will hit theaters. In total, studios are planning to release approximately 110 films this year, which is at least 15 more than they did in 2024. This increase in movie releases alone provides a cause for optimism for cinemas, who have been eagerly seeking additional content to showcase on their screens.

According to AMC’s CEO Adam Aron, who heads the world’s largest cinema chain, recovery may not be immediate, but it’s very close. It’s almost within our reach, he suggests. Moreover, the second half of this year is shaping up well, and the outlook for 2026 appears even more promising.

Movie theaters require more than just hit sequels and a steady stream of studio releases to turn their fortunes around. After the end of the lockdown, about 15%-20% of moviegoers have stopped visiting cinemas, and it remains unclear what, if anything, might persuade them to return.

John Fithian, co-founder of The Fithian Group, emphasizes the importance of encouraging people to return to movie theaters. He suggests that traditional methods of operation may no longer be effective and change is necessary.

Theater proprietors are exploring innovative approaches to attract moviegoers. They’re expanding their snack offerings, freshening up outdated auditoriums, and improving loyalty rewards for faithful customers. Some cinema chains are even testing flexible pricing strategies, charging premium prices for box-office hits compared to less popular genres like dramas or comedies. Certain productions, such as the 2023 octogenarian comedy “80 for Brady,” have extended discounted ticket offers to budget-conscious viewers. Yet, a number of theaters remain cautious about fully adopting these changes due to their narrow profit margins.

According to a seasoned film studio executive, the main obstacle for new movie productions is their high cost. There’s no reason why blockbusters like ‘Avengers,’ ‘Jurassic World,’ or ‘Star Wars’ shouldn’t be expensive, but cinema exhibitors should provide motivation for audiences to watch various types of films as well.

The studio has indicated it’s increasing its output, however, it’s important to note that they can’t produce blockbusters every single week of the year. To attract more theater-goers, there should be a more effective strategy for encouraging people to watch films beyond those with dinosaur attacks and high-octane stunts featuring Tom Cruise.

Movie theater managers, on the other hand, prefer a variety of films with varying sizes to screen each week as opposed to waiting for the rare big hit movie.

According to Chris Johnson, CEO of Classic Cinemas (with 16 venues in Illinois and Wisconsin), while tentpoles are significant, the quantity of films is even more crucial. He prefers having six films that are performing moderately well over one blockbuster that leaves empty spaces.

Exhibitors have additional concerns regarding the current situation with movie studios and theatrical release windows. During the pandemic, exhibitors agreed to allow studios to significantly reduce the time between a film’s initial big-screen debut and its availability for home entertainment. Originally, films had to wait 90 days before being released for home viewing. However, this period has now been shortened to as little as 17 days. Cinema operators are seeking to extend this interval again, with Aron (who was one of the first exhibitors to agree to shorter windows) now aiming to renegotiate the length so that movies can’t be rented or purchased until at least 60 days after their theatrical premiere.

Aron emphasizes that this issue will be a primary focus in our discussions with studios. He believes we’ve waited far too long for our business to recover, and shorter release windows are the culprits. It seems clear that all these attempts at innovation have fallen short. Hollywood appears to be missing out on substantial earnings.

Personally, I find myself growing weary when theater owners persistently bring up an issue they think is settled. Yet, I acknowledge the pivotal role theaters play in our financial health. During the pandemic, traditional studios have been proactive, launching streaming platforms to challenge Netflix’s dominance. We believed this was the most effective way to stay relevant and maximize our content’s monetization potential.

It turned out that streaming-exclusive films didn’t capture cultural significance like some theatrical movies do. In fact, there’s no streaming platform equivalent to blockbusters like “Top Gun: Maverick.” Consequently, some production studios are investing more funds in creating cinema movies, or, as Disney is doing, they’re adjusting plans for films such as “Moana 2,” initially intended for Disney+, and releasing them in theaters instead.

Michael O’Leary, leader of Cinema United – a representative body within the exhibition sector, opines that the objectives of movie studios and cinemas are now more harmonious compared to what they were in 2020, when they reached a tentative agreement regarding release windows (the time between a film’s premiere in theaters and its availability on streaming platforms).

He explains that extending the duration of movies in theaters is now recognized as crucial. Shortening this timeframe and offering content on-demand can lead to customer bewilderment, hurt studios and cinemas, and ultimately undermine box office revenue by eating into ticket sales.

One exciting aspect that captivates both movie studios and theater owners is the increasing trend of high-end screens such as Imax, Dolby, and 4DX gaining popularity. For instance, the film “Twister” was a massive success in the 4DX format, offering an immersive sensory experience with moving seats, flashing lights, and even simulated rain effects. These screenings often sell out quickly, with moviegoers sometimes traveling across state borders to secure tickets for the largest and most vivid shows. This demand has been amplified by enthusiasts like Christopher Nolan and Denis Villeneuve, who praise the impact of watching films like “Oppenheimer” and “Dune: Part Two” in these state-of-the-art auditoriums.

As more studios promote ‘Watch it on Imax,'” remarks CEO Richard Gelfond, “Imax has inspired numerous imitators, including Regal and Cinemark who have developed similar products like RPX and XD. However, according to Gelfond, these spin-offs are not providing the authentic premium experience because Imax invests significantly in enhancing a film’s resolution, rather than simply enlarging the image. He argues that while more high-quality screens are needed, they should truly be top-tier, not just regular screens with an extra letter in their name.

I’ve noticed that tickets for IMAX and premium screenings tend to be pricier compared to standard cinemas, but this seems to have a silver lining. The higher prices have helped boost revenues, counterbalancing the decline in attendance that was once a trend. As Cinépolis CEO Alejandro Ramírez Magaña put it, ‘Since COVID, premium formats have gained even more significance. Their contribution to the box office has significantly grown.’

Absolutely, enhancing 4DX and Imax theaters or modernizing outdated cinemas requires substantial investments. However, recent discussions about the movie industry often revolve around decreasing box office numbers or the financial struggles of large theater chains, which makes it difficult for lenders to offer financing for theater upgrades. At Cinema United, O’Leary has been actively engaging with Wall Street analysts and financial institutions in an effort to shift the focus of these discussions.

He acknowledges that the increasing costs of operating theaters and the tightened access to funding make it a tough situation. However, the determination to continue expanding our theaters remains strong. It’s crucial now more than ever to project optimism. We find ourselves in a position where we can concentrate on planning for the future. This means not only peering into the next couple of years, but also contemplating what theater-going might be like over the next 20 to 30 years.

It’s challenging to engage in wide-ranging conversations about significant matters, exhibitors note. The past few years have been more about scrabbling to survive than anything else. However, for families such as the Bagbys, who have movie theater lineage, operating a cinema seems like an instinctual necessity that’s deeply ingrained in their DNA.

As a teenager, I, along with my father, embarked on our journey at B&B Theatres, where we began by cleaning floors and selling tickets. Over time, our dedication and hard work paid off, propelling us into leadership roles within the company. Despite the long hours and constant effort to ensure full houses, it’s a profession that we both deeply cherish.

Bob Bagby explains, ‘Unlike managing a Target or hardware store, our inventory changes every week, offering us something fresh to sell.’ This constantly changing merchandise, he adds, gives our workplace a captivating, enchanting quality.

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2025-03-26 17:50