Your favorite franchise premieres its newest movie this Friday — you have been anticipating the release for months — but it's 2020, and now you have to make a choice. Do you choose to get out of the house and go to AMC Theatres to gaze up at your favorite characters on a premium 45-foot screen, enjoy a large bucket of all-too-buttery popcorn, and an extra-large Coke Icee? Or, do you decide to stream a different movie on Netflix from the comfort of your home, with your feet up, and a pint of Ben and Jerry’s Half Baked from your freezer, and wait to watch the new movie until it is out of theaters? Would your choice change if the movie premiered on Netflix? Going to a cinema or streaming a movie both have their pros and cons. This article looks at cinema versus streaming as an industry by comparing two of the industry’s most powerful companies: AMC Theatres and Netflix. Diving into what each company offers, their recent financial records, and the projected futures of the companies allow us to better understand who is winning this digital battle.

Before diving into the financial history of AMC and Netflix, one must first understand what is unique about both firms. When going to a cinema, moviegoers pay for the entire experience. For decades, AMC Theatres have provided their customers with an activity that serves a multitude of different occasions. Whether that is to take the children out of the house and give them a chance to laugh at animation, or to take a special someone on a date to watch a romantic movie, a cinema experience is one that everyone can enjoy. As a consumer, you can see premieres of the most anticipated entertainment on a prime, high definition screen, with surround sound that vibrates your entire body and luxury comforts. All while doing so with scrumptious refreshments and snacks that can burn a hole in your pocket. On the contrary, when enjoying Netflix, people tend to have a completely different experience. With a streaming service, the person watching has much more control. You get to choose what to watch, when to watch, where to watch, and how to watch your program. The variation of options seems endless: you can be in the comfort of your own bed or about to board a plane, on your home entertainment center or on your mobile device. In addition, the choices are more plentiful on a streaming service: the viewer can choose between various TV shows, movies, and documentaries from a variety of genres. What may be the most appealing is the price. For just a fixed monthly rate, there is no limit on the amount of content you watch. As we can see, the offerings of these two companies are drastically different, leading into these companies financial histories and how they may compare.

Taking a look back almost a half-century into the digital revolution, AMC Theatres have been the largest distributor of theatre movies in the entertainment industry with the most screens of any cinema chain. At the beginning of 2019, AMC Theatres began the year with impressive statistics. The early months included a single-day increase in the stock price of 14%  due to the release of impressive 2018 fourth-quarter earnings (Bylund, 2020). In addition, Avengers: Endgame, which is the highest-grossing film of all time, released April 26th, 2019, brought an increase of customers and business to AMC. From the first two quarters of 2019, AMC stock came to a 39% YTD increase (Whitten, 2019). Within the last year, AMC Theatres’ 52-week high stock value was $10.35, but in Q2 alone, the largest cinema operator lost $561 million in revenue with a 52 week low of $1.95 (Faughnder, 2020). AMC saw over an 80% price decrease in its stock value. 

This can be solely attributed to the presence of COVID- 19. Being next to people in an enclosed area without masks does not really comply with COVID-19 protocols. If anything, it violates all of them. Needless to say, this negatively affected AMC’s stock value and market presence greatly. Not only did people migrate towards streaming, but many have also shifted their preference.

Since the launch of Netflix's streaming service in 2007, the company has drawn in attention from movie producers, millions of consumers, and emerging competitors. Netflix created a market for streaming and is regarded as one of the better streaming services, if not the best. Netflix offers its customers original content, thousands of choices, and high-quality pictures. Netflix had worries of a plateau and a possible decline of subscribers during the early months of 2019. During the month of July 2019, Netflix lost 100,000 subscribers when they expected to gain 300,000 (Atkinson, 2019). Much of Netflix’s mediocre success compared to previous years can be attributed to the emergence of competitors with appealing prices and the decrease of consumer hype. But, more recently, Netflix has seen a steady increase in its stock price with a 52-week high of $575.37 and a 52-week low of $265.80, about a 116% increase within the last year. While many companies had to shut down due to COVID-19, Netflix got a new wave of subscribers. Since the beginning of 2020, in quarter 1, Netflix gained 15.8 million subscribers (Epstein, 2020) and another 10 million in quarter 2. Netflix has never been doing better.

While much of the future is still uncertain in regard to COVID-19 and the various guidelines in place to prevent its spread, it is difficult to project how the industry will advance. While there are places beginning to open more and more, it comes down to consumer preferences. A study shows that since the virus, people have shifted their preferences of where they favor getting cinematographic entertainment from (fig. 1). More people have weighed the option of enjoying the entertainment from their home over a theatre for safety and comfortability reasons. This puts AMC Theatres in an interesting position. Since closing shop is the least favorable option, AMC theatres have developed strategies to stay competitive during what could be the most challenging time since the creation of the company. One of the solutions recently announced between AMC and Universal Studios is to release movies out to rental services, like iTunes, just 17 days after they are released in theatres. This is more appealing to consumers since movies traditionally are only available for a few months at a time in theaters, then a short time out of the market completely, then released to the public for ownership. Although studios want to sell movies to theatres for a large release and box office puffery, they also want to be able to target those who choose to enjoy movies from home. This is a good example of one foot in the cinema industry and one foot in the streaming industry for AMC. Additionally, AMC has entertained the idea of shutting the doors. With the uncontrollable and unpredictable circumstances that come with the pandemic, there has been “substantial doubt for AMC Theatres ability to continue” (Alexander, 2020). Oppositely, Netflix has prospered with the COVID-19 outbreak, bringing in plenty of new subscribers, lots of cash flow, and new investors. The company continues to keep this upward trend into late 2020 with its eyes set on increasing content and building its subscriber base.

So, will other entertainment services follow similar trends to AMC and Netflix? Is the era of theatres over and the rise of streaming just beginning? I ask again: where will you watch your next movie — from the comfort of your home, or from the luxury of a theater?

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