1. Business
June 5, 2020

Amazon AMC axis could boost the cinema industry

By GlobalData Consumer

Rumors are that AMC cinemas are to be the latest in decades-long acquisition rampage by Amazon. The commercial superpower’s takeover of AMC, were it to happen, would be the company’s 102nd acquisition since 1998.

The fact is that due to long-term declines in demand, most cinemas generate the majority of their income from their foodservice outlets. You would be hard-pressed to find a cinema that wasn’t trying to sell you nachos at a 500% mark-up.

However, for this business model to make sense, there has to be a certain level of footfall. Though the tension between streaming and cinemas has been largely portrayed as an omen that cinemas are dying, Amazon realizes that movie-theatres are still relevant to society. They maintain a place in people’s hearts and still have a part to play moving forward. Were Amazon to incorporate AMC’s 10,000 screens worldwide, they would have the opportunity to lead the way in that sector, to chart the course for what the future of TV and film, and the ways we consume it, looks like.

Amazon saving cinemas makes business sense

If Amazon can save cinemas, the company can save the lucrative food sales that come with it. After all, whether enjoying film and TV at home or in a theater, movies are best enjoyed with popcorn, hot dogs, nachos, and soda.

GlobalData’s consumer survey results show that since the Covid-19 pandemic, and the subsequent lockdown, 66% of US respondents reported buying either more or the same amount of fizzy drinks than before. Some 68% of this same group reported buying the same or more of chocolate and confectionary too.

This demonstrates clear demand for such products that the leisure industry is currently missing out on. In fact, Coca-Cola noted a clear correlation between the shutdown of cinemas and other such venues, and the losses in sales it has seen globally in April.

AMC offers Amazon opportunity for expansion

As the world’s largest movie-chain, AMC being bought out by the company behind Prime Video would surely be a symbolic, and prophetic, moment in the drawn-out saga of the ‘dying’ movie-theatre. Were Amazon to acquire AMC (which owns Odeon in the UK), it would prove that it was never an issue of cinema versus streaming, but about who could leverage the other side into submission.

Why wouldn’t a streaming service want the opportunity to charge their subscribers, and the wider public, for tickets; to stake a physical presence in the towns and cities of the world? Should Amazon succeed in leading film-lovers away from their couch, down the street, and onto their new premises, they could have a massively expanded captive audience for anything else they want to put there, including foodservice.

The quality, genre, budget, and reach of cinemas and streaming platforms merged years ago; it is to be expected that the means by which it is shown merge now as well. Perhaps this final manifestation of the synthesis of film and TV to include the physical, will enable Amazon to redefine what it means to ‘go to the movies’. If this merge is successful, they will have the opportunity to decide what a cinema is, and what people might buy to complement their viewing experience.

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