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 steaming releases, and the onslaught of closures and bankruptcies is easy to understand. Many 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 the 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.
The Millionacres bottom line
Like in-person holiday shopping, the idea of watching a movie at the theater has begun to feel almost nostalgic the longer consumers have been away. And now, Disney's announcement that they're bumping up their plans to put theatrical releases first is a big deal. It means the market has proven that audiences are ready and willing to return to theaters right now -- so why wait?
And this isn't just good news for movie theaters. A moment like this has been a long time coming for the commercial real estate surrounding them, too, including restaurants and retail.
Of course, the pandemic remains the ever-present wild card that could change things quickly. But for now at least, Disney's announcement demonstrates that movie theaters are back in a big way. Enjoy the show, real estate investors.