US box office sees worst Memorial Day weekend since 1995

The US box office experienced its worst Memorial Day weekend since 1995, raising concerns about the factors impacting the industry. Chad Beynon, Macquarie’s Senior Analyst of Gaming, Lodging, and Leisure, joins Asking for a Trend to shed light on this significant downturn.

Beynon highlights that Memorial Day is often seen as a gateway into the summer season, typically drawing around 20 million individuals to the box office. However, this year’s attendance was only half of that, raising crucial questions: “Is it the consumer? Is it the overall experience? Or was it a lack of content?” Beynon asks.

According to Beynon, current box office performance is 25% lower than pre-pandemic admission revenue. He attributes this decline to the impact of higher prices and inflation, stating that “the industry has shrunk.” Admissions and revenues have been affected, reflecting the broader economic challenges faced by consumers.

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

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

This post was written by Angel Smith

Video Transcript

Us 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% drop just from 2023.

Joining us now to discuss the outlook for theaters is Chad Bynon mcquary, senior analyst, gaming, lodging and leisure chat.

It is good to see you.

So, uh it sounds like the summer box office.

Chad not off to a great start here.

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

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

Look, generally this is kind of the start of the summer.

You see about 20 million people who go out over the three or four day uh period in, in this year we saw, you know, somewhere between 10 and 12 million.

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

Um There were two big wide releases and the scores that we’ve seen particularly on Furioso were pretty strong in terms of um, you know, just the reception of the movie.

So we are scratching our heads.

We’re searching for another Bar um, uh Barben Heimer.

Uh but we’re gonna have to wait until later this year to kind of kick start the industry.

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

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Is there anything like that chad coming down the pipeline?

Not to that degree?

I think the slate does look strong um in the back half of the year and in particular, in 25 actually, over the past week we saw more movies that were announced to be delivered in 25.

Um So there’s nothing that’s kind of a huge following.

You know, as a reminder, sometimes it’s the, it’s the original content that kind of come out of left field and do 234 $500 million domestically, um wicked.

You know, there’s a few surprises that we like in the fourth quarter.

I could go through the list, but a lot of Sequels and then you have a couple of original uh films uh particularly in Q four.

I’m just curious, you know, I know you don’t cover the names, but even just generally speaking, Chad does, uh does this kind of performance, does it put that much more pressure on Disney’s and universals in terms of what they have coming?

Absolutely.

You know, the past couple of years we’ve been excited to see more diversification from the studios, right?

Some of the independent films, The Apples, the Amazons, the A 20 fours elevating their presence and contributing more because I think PRE COVID um Disney Studio accounted for almost 40% of admission revenues in North America.

We will, I want some more diversification here.

So, yes, absolutely.

We think there’s a lot of pressure on Disney’s um uh production, making sure that lands well with that younger audience.

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

Um in terms of number of films, pre panem, we were around 130 across all the studios from a widely released standpoint, we inching up to 100.

So in 25 hopefully we get closer to that 130.

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

I’m interested chad when you just think about kind of overall box office as an industry, how much smaller is it chad now than pre pre pandemic?

And how do you see kind of evolving from here?

Yeah, we’re, we’re right around 25% lower than pre pandemic.

And that’s on admission revenues.

And remember, pickup prices has have continued to go higher with inflation over the past couple of years.

So admissions are actually down more than 30%.

Um Admission revenue is prepa we’re in that $11 billion range this year, we’re going to be a little shy of 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 about 10%.

So they’ve taken out a lot of the lower performing screens across the country.

The big winner, relative winner is IMAX this weekend, for instance, they did 20% of furioso admission revenues and they have about 2% of the screens uh in the United States.

So clearly the consumers who are going to the movies are choosing the premium experience.

So you would say chad, just for viewers, for investors who are lets right out.

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 um profits in North America, a third in China and then a third in the rest of the world.

So they’re diversified.

The second reason is they have a backlog uh similar to what we see with the hotel companies.

IMAC should grow their units anywhere between eight and 10% per year for the next three years.

And those are orders that just need to be fulfilled and they’re also a ticket taker.

They don’t run the um exhibition arena.

They just take a fee on uh the the number of uh admission revenues that come in the door.

So it should be a hire multiple company.

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

Right now.

We have a trading at 7.5 times.

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

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

It’s just been masked by everything that we’re talking about today with a general uh lower backdrop.

Chad.

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

Thanks so much for coming on the show.

Appreciate it.

Thanks Josh.