US box office experiences worst Memorial Day weekend since 1995

The U.S. box office suffered its worst Memorial Day weekend since 1995, sparking concerns about factors impacting the industry. Chad Beynon, Macquarie’s senior gaming, hospitality and leisure analyst, joins Asking for a Trend to shed light on this significant downturn.

Beynon points out that Memorial Day is often seen as a gateway to the summer season, typically drawing about 20 million people to the box office. However, this year attendance was only half that figure, raising crucial questions: “Is it the consumer? Is this the overall experience? Or was it a lack of content? » asks Beynon.

According to Beynon, current box office performance is 25% below pre-pandemic gate revenues. He attributes the decline to the impact of rising prices and inflation, saying “the industry has shrunk”. Inflows and revenues have been affected, reflecting the broader economic challenges facing consumers.

Despite the industry’s struggles, Beynon notes that IMAX (IMAX) continues to be a powerhouse in the cinematic entertainment space, recommending the company’s stock to investors seeking exposure to this sector.

For more expert insights and the latest market action, click here to watch this full episode of Asking for a Trend.

This message was written by Angel Smith

Video transcription

We movie theaters had anything but a relaxing holiday weekend, with the box office seeing its worst Memorial Day weekend performance since 1995 and a 37% decline from 2023 alone .

Joining us now to discuss the outlook for movie theaters is Chad Bynon Mcquary, Senior Analyst, Gaming, Hosting and Entertainment Discussion.

Good to see you.

So, uh, this looks like the summer box office.

Chad didn’t get off to a good start here.

Which explains it now, thanks for having me, Josh.

Um, as you just illustrated, it was a tough weekend.

Look, usually it’s kind of the beginning of summer.

You see about 20 million people coming out over a three or four day period. This year we saw, you know, between 10 and 12 million.

So the questions are, is it the consumer, is it the overall experience or was it a lack of content, given the strikes that we had and the delay of the delay.

Um, there were two big releases and the scores that we saw particularly on Furioso were pretty strong in terms of, uh, you know, just the reception of the film.

So we scratch our heads.

We’re looking for another Bar uh, uh Barben Heimer.

Um, but we’re going to have to wait until later this year to get the industry going again.

You mentioned Chad, I mean, you know, last summer, like Barbie Oppenheimer, it was just this cultural phenomenon.

The story continues

Is there anything like this coming down the pipeline?

Not at this point ?

I think the slate looks strong, uh, in the second half of the year and in particular, in 25, in fact, over the last week we’ve seen more films that were announced to ship in 25.

Um, so there’s nothing that’s a huge hit.

You know, as a reminder, sometimes it’s original content that comes out of left field and makes $500 million domestically, uh, nasty.

You know, there are some surprises that we like in the fourth quarter.

I could go down the list, but there are a lot of sequels and then you have some original films, uh, especially in the fourth quarter.

I’m just curious, you know, I know you don’t cover names, but even generally speaking, Chad is, uh, this kind of performance, does that put a lot more pressure on Disney and the universal films in terms of what they come from?

Absolutely.

You know, in recent years we’ve been excited to see more diversification from studios, right?

Some independent films, Les Pommes, les Amazones, les A 20 fours, have increased their presence and contributed more because I think PRE COVID um Disney Studio represented almost 40% of the admission revenue in North America.

We will, I want a little more diversification here.

So yes, absolutely.

We think there’s a lot of pressure on Disney’s production to make sure it speaks to this younger audience.

And we just haven’t seen that in the last couple of years.

Um, in terms of number of films, first of all, there were about 130 of us across all studios from a wide-spread perspective, we’re gradually reaching 100.

So in 25, I hope we get closer to that 130.

But I think some of the, you know, lines in the space need to put out high quality content.

It’s interesting to me, when you think about the overall box office as an industry, how much smaller is Chad today than before the pandemic?

And how do you see it evolving from there?

Yes, we are, we are about 25% lower than before the pandemic.

And that concerns entry revenue.

And remember, pickup truck prices have continued to rise with inflation over the past couple of years.

Entries are therefore actually down by more than 30%.

Um, admission revenue is ready, we’re in that $11 billion range this year, we’re going to be a little bit under $9 billion.

And then, in 2025, we’re expecting something closer to 10 billion.

Um, the industry has shrunk.

Companies like A MC have reduced their screen size by around 10%.

So they removed a lot of the worst performing screens across the country.

The big winner, the relative winner, is IMAX this weekend, for example, they made 20% of the furioso admission revenue and they have about 2% of the screens in the United States.

It is therefore clear that consumers who go to the cinema choose the premium experience.

So you would say Chad, just for the viewers, for the investors who are immediately released.

IMAX is a, is a, is a buy here.

We like IMAX, IMAX, we have a $24 stock price.

They generate about a third of their profits in North America, a third in China and a third in the rest of the world.

They are therefore diverse.

The second reason is that they have a similar delay that we see with hotel companies.

IMAC is expected to grow its units between eight and 10% per year over the next three years.

And these are orders that simply need to be fulfilled and they are also ticket takers.

They don’t run the exhibition arena.

They simply take a fee on the number of admissions revenue that comes in the door.

So it should be a multiple rental business.

Um, you know, in the early teens, this is a company that was trading in 2015 at 20 times each.

Right away.

We are trading at 7.5 times.

I don’t think it will come back to that franchise multiple like a hotel stock or some of the fast casual chains.

But I think it’s a value stock with good growth.

It has simply been obscured by everything we are talking about today, in a lower general context.

Chad.

You were the perfect person to talk about this story today.

Thank you so much for coming on the show.

Enjoy it.

Thanks Josh.