A moment like this has been a long time coming for commercial real estate, including restaurants and retail.
What a difference a year makes. Courtesy of the coronavirus pandemic, movie theaters in 2020 saw their worst U.S. box office haul in nearly four decades, with $2.28 billion in ticket sales. That came on the heels of 2019’s record for second-best box office haul ever, at $11.4 billion. By the time 2020 ended, the bleak numbers were probably a surprise to no one. When they weren’t forced to close, theaters were dealing with capacity restrictions and consumer anxiety that made it hard to turn a profit. Toss in halted movie production and the increasing popularity of streaming releases, and the onslaught of closures and bankruptcies is easy to understand. Many real estate investors even questioned whether theaters as a whole could ever recover from such a devastating blow.
Now, Disney (NYSE: DIS) has announced its remaining films slated for 2021 will all debut exclusively in theaters before streaming on Disney+. Let’s look at why the company is making this decision now and why it’s such exciting news for real estate.
Welcome Back Audiences
Disney’s move from streaming to theater-focused releases is not based on a whim or a hunch. It comes right after Marvel’s Shang-Chi set a new Labor Day weekend record, with $90 million in North American gross receipts — the perfect ending to what shaped up to be a strong summer for theaters. And in a sign of confidence, Disney’s Friday announcement brought, theater stocks AMC (NYSE: AMC), IMAX (NYSE: IMAX), and Cinemark (NYSE: CNK) all rose significantly Monday.
The big screen, dim lighting, buttery popcorn, and surround sound make watching a movie at the theater an immersive experience that can seem inexpensive compared to many entertainment options. A terrific film can even make for great lunch or dinner conversation at a restaurant afterward. It really is an outing that can’t quite be replicated at home. And as our Matt Frankel and Deidre Woollard recently discussed, demand for a higher-end theater experience, with amenities like cushier seats and a full bar, is on the rise.
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