The CEO of the nation’s fourth-largest exhibitor warned studios not to “leave a good party in pursuit of a bad one” but called the debate over PVOD overblown.
Greg Marcus, chief of Marcus, said consumers are likely to drift away from watching video-on-demand relesaes when things normalize post-pandemic. “The market for PVOD may not be particularly deep when the consumer has all options available,” he said on a conference call to discuss quarterly results. “I would suggest this period tells us very little of the depth of a $20 dollar a film VOD market.”
The company owns Marcus Theatres, Movie Tavern by Marcus and BistroPlex for 1,110 screens at 91 locations in 17 states. “We believe human beings have an innate desire to get out of the house… just look at new, you can’t keep them apart,” he said.
AMC Entertainment recently inked a highly controversial pact with Universal Pictures that whittled mandated theatrical window down to 17 days. Marcus declined to comment specifically on his chain’s “private” negotiations with studios but still had plenty to say, including stressing the importance of “appropriate” theatrical windows.
“Our relations with the film studios are very important to us. We are partners in an $11-$12 billion U.S. business and a $40 billion worldwide [business] … Our position has always been that, like in any negotiation, it needs to be a win-win-win for the studios, exhibitors and customers. Our common goal is to grow the size of the pie… You have to be careful you don’t shrink the pie because that hurts everyone.”
The fact that studios held back most releases during CVID-19 closures is proof that the economics of theatrical releasing are just not replaceable, he said.
PVOD is mostly about studios trying to make midmarket movies more financially viable, he added. “They always say the cost of releasing a movie is so high, that it’s never going to change.” But he noted the cost of prints has been falling fast. Advertising costs could too, he suggested, if studios with affiliated streamers focused on marketing the streaming platforms across films, giving some of those films … national attention on movie theater screens. As [streaming] gets more competitive, they can say, ‘See it here, and then it will be on our streamer.”
Marcus, which also owns hotels, said second quarter revenue plunged to $7.9 million from $232 million as its locations were largely shuttered for the three months.
Some sales trickled in from six movie theaters it opened June 19 to experiment with new reopening protocols, showing classic films and some that had been released just before shutdown.
The company swung to a net loss of $27 million from a profit of $18.1 million. Its net loss per share of $0.89 compared with per share net income of $0.59 the year before.
“The impact of the COVID-19 pandemic on our business, the industries in which we compete, and the global economy is truly unprecedented,” Marcus said. Its theatres are opening widely this month wherever they can and he was upbeat on the slate for the rest of the year and into 2021.
He said Marcus’ balance sheet — including liquidity as of June 25 of $170 million in cash and revolving credit availability – is sufficient to sustain operations well into 2021 even in the unlikely scenario that properties continue to be closed.