Box Office Records Beckon, But Challenges Loom for Theater Chains

Theater owners in the U.S. have plenty to feel good about. Moviegoing is up, and by the close of 2018, theater chains should set records for domestic ticket revenue. A busy 2019 slate with a Star Wars sequel, Toy Story 4, and Joker, about Batman’s nemesis, could put even more fans in seats—delivering the first back-to-back years of attendance growth since 2002.

Turn the house lights up, though, and challenges loom. The money-losing, all-you-can-watch MoviePass service has upended ticket pricing, forcing theater chains to offer their own subscriptions, sometimes with steep discounts. Also, Walt Disney Co.’s purchase of most of 21st Century Fox Inc.’s assets including its film studio will give Disney leverage to demand better terms from the theaters. “Theatrical has been under assault since television was invented, and each successive window for watching movies has been perceived as a huge threat,” says Michael Pachter, a Wedbush Securities Inc. analyst. On the rise of subscription use, he said: “That is a problem, and that is going to be eaten by the exhibitor.”