Netflix Won't Save AMC Because AMC Can Save Itself
You can apparently teach a new media company some old media tricks. Netflix (NASDAQ: NFLX) will be releasing Glass Onion: A Knives Out Mystery -- a sequel to 2019's sleeper hit Knives Out -- in movie theaters a month ahead of its debut on the streaming platform.
That's a head-turning headline along the lines of "Man Bites Dog," but this isn't really a surprise. Bloomberg reported five months ago that Netflix was in discussions with exhibitors to get its higher-profile films some quality multiplex time. With subscriber growth stalling for Netflix, exploring incremental revenue streams is a sensible approach.
What will this mean for AMC Entertainment Holdings (NYSE: AMC) and the broader cinema industry? For now, it's unlikely to move the needle. Thankfully for AMC and its ticket-taking peers, it won't have to move the needle.
Image source: Getty Images.
Spoons out
AMC CEO Adam Aron is a colorful fellow to follow on social media. He relishes the cult stardom he has built at the helm of one of the most popular meme stocks, but sometimes he goes a bit too far. Check out his tweet discussing the Netflix news.
I have been working for 4 years to be able to say this! Today, we announced our first ever showing of a Netflix movie at AMC in the U.S. and Odeon in Europe. The Knives Out sequel, stars Daniel Craig. Success here could lead to more Netflix movies at AMC. https://t.co/vPIpcUpvpp pic.twitter.com/hkGMAC1HJJ
-- Adam Aron (@CEOAdam) October 7, 2022
At first glance, that might seem to imply that AMC struck an exclusive distribution arrangement with Netflix. It didn't. Glass Onion will debut across all three of the country's leading theatrical chains. Cinemark (NYSE: CNK) and even Regal -- the parent company of which filed for Chapter 11 bankruptcy reorganization last month -- will also be screening the film.
The film will run in 600 U.S. theaters across those operators. It will also play at select international locations.
The deal is a notable achievement. Back in May, the sticking point, according to a Bloomberg article, was that theater chains reportedly wanted 30, 45, or 60 days of exclusivity. They didn't want to promote a film that could be streamed at no additional cost by Netflix subscribers at the same time it was in the multiplex. Netflix caved, but with the smallest possible exclusivity window. The film will hit theaters on Nov. 23, then pop up on Netflix on Dec. 23.
This won't be a goldmine for theater chains. The film will only be on the big screen for a week. Some of your Thanksgiving leftovers will last longer than its multiplex run. You also have to consider that while Knives Out was a sleeper hit with $115.7 million in domestic ticket sales back in 2019, there were still 20 movies that fared better at the box office that year. Playing for just seven days -- and with everyone knowing that they'll be able to stream it just a few weeks later -- Glass Onion may be lucky to break $10 million in ticket sales. This is better news for Netflix, as the company will not only paddle a new revenue stream but also get help drumming up interest in an upcoming release on its service.
The good news for AMC and its peers is that they won't need Glass Onion to be a major draw. The last two months have been dreadful at the box office, but there will be a couple of likely blockbusters playing at theaters by late November. Black Adam and Black Panther: Wakanda Forever should still be wooing big audiences over the Thanksgiving holiday weekend, weeks after their premieres. Notable debutantes sharing Glass Onion's Nov. 23 release date include Disney's (NYSE: DIS) Strange World and Timothee Chalamet's Bones and All. So, movie theater stocks won't be counting on this Netflix release to save their holiday season. Now, let's see Netflix bail the exhibitors out during a real theatrical lull.
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Rick Munarriz has positions in Netflix and Walt Disney. The Motley Fool has positions in and recommends Netflix and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney and short January 2024 $155 calls on Walt Disney. The Motley Fool has a disclosure policy.
