This year’s third quarter earnings announcements for entertainment companies and exhibitors finally wrapped up last week and it was a mixed bag if ever there was one.
Consumer cord-cutting of pay-television subscriptions continued to grow. As well, with fewer viewers to reach via linear TV and continued discussion of economic uncertainty in the near future, advertisers throttled down their spending with media conglomerates leading to revenue shortfalls for companies like the Walt Disney Company and Warner Bros. Discovery which came in below analyst expectations.
The growth of streaming, on the other hand, continues at different paces for all of the major entertainment conglomerates, albeit none of the direct-to-consumer services is adding to their bottom lines. Over the last quarter losses from streaming amounted to:
- Paramount: USD -$343 million
- Comcast/NBCUniversal: USD -$614 million
- Warner Bros. Discovery: USD $-634 million
- The Walt Disney Company: USD -$1.47 billion
The valid question Wall Street is now asking is whether streaming revenue will ever make up for the earnings generated by historic distribution methods. This has led to senior management at more than a few of these media companies openly discussing the idea of balancing the distribution of feature films between theatrical and streaming using a more optimum strategy. Translation: Maybe it was a better idea to make audiences pay to watch movies in theatres first and then charge them again when those same movies are distributed via streaming.
David Zaslav, the CEO of Warner Bros. Discovery, said as much during the company’s earnings call:
“Let’s face it, the strategy to collapse all windows, starve linear and theatrical and spend money with abandon, while making a fraction in return, all in the service of growing sub numbers, has ultimately proven, in our view, to be deeply flawed…We learned what doesn’t work. And this is what doesn’t work for us based on everything that we’ve seen: direct-to-streaming movies. So spending a billion dollars or collapsing a motion picture window into a streaming service. The movies that we launch in theater do significantly better, and launching a 2-hour, 40-minute movie direct to streaming has done nothing for HBO Max in terms of viewership, retention or love of the service.”
We provided our thoughts and opinions on all this subject in our most recent CJ Analysis post which can be found below.
Meanwhile, some of the world’s biggest exhibitors appeared to be turning things around as they recover from the COVID-pandemic. Sure, AMC reported its twelfth consecutive quarterly loss – this time a loss of USD $226.9 million – however the company’s revenue increased 27% to USD 968.4 million. And they had previously predicted Q3 would be their worst quarter.
Cinemark also reported negative numbers, a loss of USD $24.5 million, during the last quarter but that is way better than the USD $77.8 million the chain lost during the third quarter in 2021. More importantly, the company’s revenue increased by 50% to USD $650 million with a lack of major releases in August and September.
Then there is Cineplex in Canada which posted a net income gain of USD $30.9 million last quarter, compared to the USD $33.6 million the exhibitor lost during the same period in 2021. This came on USD $339.8 million in revenue during Q3, a year-over-year increase of 35.7%.
Though these figures don’t represent a complete reversal of fortune the dark days of the pandemic a year prior, they are at least headed in the right direction. And unlike media companies exhibitors aren’t planning layoffs (Warner Bros. Discovery) or hiring freezes (Disney).
Finally, please be sure to join us on Thursday of this week for the CJ Cinema Summit. We’ll be announcing our inaugural Top Women in Global Distribution list and will be joined by some of the nominees.
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