Theaters struggling to keep up with glut of streaming options

Yahoo Finance’s Dani Romero breaks down the challenges movie theaters are facing and outlook on the recovery for the industry.

Video transcript

- The much delayed James Bond film "No Time to Die" opened in the US over the weekend but it wasn't the record setter many had hoped for. This leads to a bigger question, will movie theaters like smaller chain operators rebound after long pandemic closures?

Joining us to discuss is Yahoo Finance's Dani Romero. And Dani, even the big guys like "AMC" have had a lot of issues, at least they have access to the capital market. What are the challenges that some of the smaller operators are facing right now?

DANI ROMERO: Well, that's a really good question. Besides that more people are streaming movies at home, another challenge is the inflation, which we've seen across the board. Ticket prices have gone up. The average ticket price right now in the US jumped from 539 in 2000 to $9.16 in 2020. So consumers have said that that's a really big negative to them, and so that's the big debate. Are people willing to pay a little bit more to watch a movie? I don't know.

I've seen some reports that say ticket prices could go up to $25, which, I mean, for me, I don't think I would be inclined to doing that, but cinemas are showing signs of recovery within the last year. So there's also that big discussion of whether or not people are going to be sitting at the movie theaters for two hours with their masks on or showing proof of vaccination status.

And another thing that business owners have told me is that content is key. And obviously, during the pandemic, we saw a lot of those studios do that hybrid strategy where they would release on the streaming service as well as also release it in the movie theaters. And so positive note, I think Disney has said that they're going to give exclusivity to movie theaters, which these business owners say is a positive note for their survival as they recover from this long pandemic closure. A lot of them were closed for over a year.

- And I know you like to talk with a lot of small business owners. And have you had a chance to talk to any of these smaller independent movie theater owners and what are they saying?

DANI ROMERO: Yeah, well, they're very optimistic and bullish about their recovery, especially after the pushback of a lot of these Hollywood movies, especially like the James Bond movie, which was supposed to be released earlier this year. Expectations kind of fell a little bit short. The James Bond movie brought in about $56 million in the domestic box office while analysts had expected about $60 million.

So like I said, are people flocking back to the movie theaters? That's a big debate. But there's also some observers that are a little bit doubtful of the recovery. According to a survey in June, 14% of adults say that they prefer seeing a movie for the first time at a movie theater and compare that to 36% that say they would much rather stream it at home. So there's definitely consumer habits have really changed, and we could blame it on the pandemic. But I think a lot of them, from the people that I've spoke with, those changes that were prior to the pandemic.

- Thank you for that report. Yahoo Finance's Dani Romero.