AMC vs Regal: Who Is Leading the Cinema Business?
AMC Entertainment (AMC) has a unique history. On August 2012, Chinese conglomerate Dalian Wanda Group purchased AMC Entertainment Holdings from a consortium of investors at a cost of over $2.6 billion.
Some of the consortium members included J.P. Morgan Partners LLC, The Carlyle Group and affiliates of Bain Capital Partners. On December 2013, Dalian Wanda Group took AMC Entertainment Holdings public by way of an initial public offering (IPO), while retaining 80% ownership of AMC.
AMC Entertainment Holdings has a market capitalization of $727 million, putting it near the lower end of the mid-cap spectrum. As of the end of 2018, AMC owned or operated over 600 theaters with more than 8,000 screens. In 2016, AMC acquired Carmike Cinemas.
Regal Entertainment Group is one of the largest movie theater chain in the U.S., but it's now owned by the U.K.-based company Cineworld, which purchased Regal in 2017, it is no longer a public company. This $2.5 billion market cap company owns 790 theatres across 11 countries.
Accordingly, it is AMC Entertainment Holdings’ primary competitor. Regal had previously concentrated on the markets of mid-sized metropolitan areas and suburban growth regions of larger metropolitan centers throughout the U.S.
Who Is Leading the Cinema Business and On What Ground?
First let’s check out what do the two theaters have that drag people everywhere to come over just to watch movie in their houses?
A Single Advance That Make AMC The King
Among the innovations that AMC introduced are stadium-style seats, in which seats are placed on subsequently higher risers, allowing each person an unobstructed view of the screen. AMC also introduced the armrests that can be raised to create a larger, "loveseat" style seat. Both features have since become standard for almost all theaters today.
Regal Movies for its part launched an all-digital giant screen on April 8, 2010. Known as the Regal Premium Experience or RPX, the screen provides viewers with an immense 60-foot screen illuminated with high-quality digital projectors and fitted with a state-of-the-art sound system, in addition to luxury seats.
However, watching experience is not enough to satisfy moviegoers. On a recent article, Business Insider has ranked AMC as the number 1 theater chain, following is Regal at the second place. Customers claim AMC has won them over. The theater’s ace customer service, especially its snacks has made them feel like it worth the fair, not to mention the movie itself. Besides, there are more AMC in the area than Regal, as a result it would be AMC that customer prefers.
Why AMC’s A-List Is a Game Changer?
All in all, though, it's still a pretty sweet deal. Not quite as good a deal as what MoviePass was offering initially - potentially twice as many movies, for half the price - but MoviePass's quick spiral toward bankruptcy forced it to curtail its benefits after only a few months of operation, negating those advantages.
So far, that hasn't happened to AMC.
Indeed, the 900,000 subscribers AMC has amassed through Stubs A-List by 2019 have successfully seen some 20 million films over the past year. One imagines they may also have generated sales of potentially 20 million tubs of popcorn, sold 20 million Cokes, and moved 20 million boxes of Raisinets through AMC concession stands. (While we don't have specific data on the Raisinets, we do know the company's fiscal 2018 "food and beverage" revenue grew 8% in comparison to 2017 according to SEC filings.)
Granted, AMC stock hasn't fared particularly well over the past year -it's down 32%. But it appears Stubs A-List at least helped to stabilize AMC's ticket revenue, and it's clearly given a boost to AMC's concession stand sales.
To sum up, AMC's stock price may be down, but according to data from S&P Global Market Intelligence revenue is up 2% over the past year, and AMC has dramatically pared its losses.
Regal Follows Its Rival to Seek Outdoing Performance
How long can that last, though, in the face of heightened competition? For, much like MoviePass's creation spurred AMC to launch Stubs A-List to compete, AMC's success in signing up members to Stubs A-List has finally prompted No. 2 cinema chain Regal Entertainment, owned by London's Cineworld, to announce its own competing subscription plan -and amazingly, it looks like Regal's plan could be an even better deal for movie fans.
Priced at $18 for its entry-level tier, "Regal Unlimited" undercuts AMC's prices by 10% from the get-go, with higher prices for higher tiers offering access to more theaters nationwide, just like AMC's plan. And true to its name, Regal's plan is truly "unlimited", allowing members to see as many movies as they want, whenever they want. It's a true all-you-can-eat deal, as opposed to AMC's 3-a-week subscription plan.
Like Stubs A-List, Regal requires subscribers to be 16 years of age or older, and to show ID when they buy a ticket. Like AMC's plan, it requires a minimum subscription length -though a whole year, as opposed to AMC's three-month requirement. And like AMC, Regal reserves the right to raise its prices, though not during that initial one-year subscription period.
On the surface, Regal's new plan thus appears to mimic AMC's, but with several significant tweaks that may combine to give Regal an advantage. For example, instead of bundling IMAX, 3D, and other premium movie-viewing formats within its base price, Regal's plan opts for a low base price on traditional 2D movies, supplemented by surcharges for customers who want to buy the extras.
If it turns out that folks signing up for movie subscriptions are bargain hunters -a reasonable assumption, in my view -this could play to Regal's advantage. Cost-conscious consumers might well view AMC's IMAX privileges, for example, as an "extra" they don't need or want to pay for. They may prefer to pocket the $2 price difference instead.
Similarly, whereas AMC bundles free ticket reservations with its Stubs A-List offering, Regal separates that out. It charges $0.50 extra for folks who want to reserve seats online rather than just pick a seat at the theater.
On the plus side, it appears that contrary to rumors that have been floating around, Regal will not be requiring Regal Unlimited members to pay for a full year in advance. Rather, monthly payment will be standard. Prepayment for the year, however, rolls sales tax on the plan into the base plan price. In states with high sales taxes, such as Louisiana, Washington, or Tennessee, where combined state-and-local sales taxes approach 10%, this could mean even more significant savings for Regal subscribers over AMC. But could this only feature enough to pump Regal up and surpass AMC?
AMC Story: A Deal to Fresh Up the Doomed Situation
It was hard for cinema business to survive since it has been months and there are no solutions for the pandemic. AMC is not an exception, announced that it might run out of cash by the year-end.
The feud between AMC Theaters and Universal Pictures, which started over the video on-demand release of “Trolls: World Tour” in March, is over.
Around the end of July, the two companies announced an agreement that would see AMC show Universal films on the big screen once more and grant Universal a smaller theatrical window so it could make its titles available on-demand sooner.
As part of the deal, Universal and Focus Features must play movies in cinemas for at least three weekends, or 17 days, before releasing those films on premium video on-demand platforms. Previously, theaters would have the exclusive rights to films for 90 days.
“AMC will also share in these new revenue streams that will come to the movie ecosystem from premium video on demand,” Adam Aron, CEO of AMC, said in a statement.
Neither company disclosed the full terms of the deal, stating that it was confidential.
“The theatrical experience continues to be the cornerstone of our business,” Donna Langley, chairman of Universal Filmed Entertainment Group, in a statement Tuesday. “The partnership we’ve forged with AMC is driven by our collective desire to ensure a thriving future for the film distribution ecosystem and to meet consumer demand with flexibility and optionality.
The deal with Universal could help AMC recover lost revenue. The movie chain has been shuttered for months and its likely future revenue will be limited as attendance will be capped to prevent the spread of coronavirus at theaters when they reopen.
The company’s stock was recently down 3% in extended trading. Shares of the company have fallen nearly 43% since January as AMC has battled to stave off bankruptcy. The company most recently was able to close a debt deal to make itself solvent through 2021.
AMC’s Efforts to Secure the Thorn: Keep the Theater Open Amid the Pandemic
AMC Entertainment CEO Adam Aron on Thursday defended the company’s decision to continue operating its movie theaters during the coronavirus pandemic, even as one of its top rivals chose to temporarily take its screens dark.
“We think it’s the right decision to stay open,” Aron said on CNBC “We’ve had millions of people … come to our theaters in the United States and certainly in Europe”.
Aron pointed to the historic deal AMC reached with Universal Pictures in July as a reason the company is in a position to keep its theaters open. The agreement shortened the time that Universal’s films had to be shown in AMC theaters before moving to on-demand streaming from 90 days to 17 days.
“We get a cut both of the theatrical revenue and the home revenue. That’s an agreement that AMC has struck,” Aron said. “Our competitors have not yet struck that agreement.”
The lack of blockbuster movies was a chief reason for Regal Cinemas’ parent company, Cineworld, halting operations at its U.S. and U.K. theaters. Its CEO, Mooky Greidinger, told CNBC on Monday it had become “kind of a grocery shop that have no food to sell.”
Aron acknowledged the lack of new blockbusters is a challenge in motivating people to come to the theater, comparing AMC to a car dealership without new vehicles to sell.
By mid-October, the company had more than 80% of its roughly 600 theaters open — although the key market of New York remained closed.
The Bottom Lines
Born decades before Regal, AMC was and still now hold the first place in the Americans’ choice. Regal might be catching up but to completely replace AMC, there are still a lot of ground it has to make up. Besides, since cinema theater now is not the only one option for movie fans, we can never tell If there will be doomed day for both giants. Especially after the pandemic, time spent at home has brought new watching habits.
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