Cinema Advertisements Expansion: AMC Theaters to Increase Advertisement Placements Across U.S. Cinemas Commencing Immediately
The summer movie season is shaping up to be a hit, with Disney's "Lilo & Stitch" remake contributing significantly to the 2025 box office nearing $4 billion. Amidst this promising backdrop, AMC Entertainment has announced a strategic move to increase the number of pre-movie commercials, a decision driven by financial necessity.
The partnership with ad giant National CineMedia, effective from Tuesday, places ads in the "platinum spot" - the period immediately preceding a movie's start. This move is expected to provide a much-needed lifeline to AMC, which recently saw its worst first-quarter earnings since 1996 outside the pandemic.
AMC's financial struggles are partly due to the impacts of the COVID-19 pandemic and a slow recovery in the film industry. By partnering with National CineMedia, AMC aims to generate additional revenue from these advertisements to offset financial challenges. The increased advertisements are expected to boost AMC's income by providing a new revenue stream, without the need to raise ticket prices, which could deter customers.
The dominance of streaming platforms and a sluggish industry rebound have put pressure on traditional theater-going. AMC has shuttered 169 theaters since 2019 to trim costs. However, the company has been cautious about increasing ticket prices due to consumer sensitivity to rising costs of living and inflation. Instead, AMC has focused on making movie-going more affordable through initiatives like the new A-List Classic tier subscription and adjustments to its AMC Stubs A-List program.
The decision to increase ads rather than ticket prices is part of this approach to maintain customer affordability while generating additional revenue. While the move may lead to customer dissatisfaction due to longer pre-show times, AMC's goal is to balance revenue needs with customer satisfaction, aiming to maintain its position in the market despite these challenges.
Industry analysts believe the revenue from the National CineMedia deal will enable AMC to keep ticket prices stable, enhance the customer experience, and ensure the long-term success of the company. Paul Dergarabedian, a senior media analyst with Comscore, expressed this sentiment, stating, "The revenue from the National CineMedia deal will provide AMC with the necessary funds to invest in its theaters, improve the customer experience, and secure its future in the face of increasing competition from streaming platforms."
AMC's stance on this ad expansion is a departure from its prior stance in 2019 when the company refused to participate in similar deals. At the time, AMC expressed concerns that "US moviegoers would react quite negatively to the concept." However, AMC told Bloomberg last month that while they were initially reluctant to bring this to their theaters, they are doing so now.
As the summer movie season continues to promise hits, AMC's strategic move to increase ads could be a crucial step towards financial recovery and ensuring the longevity of the company in the face of a changing industry landscape.
Sports enthusiasts may be impacted by a recent decision made by AMC Entertainment, as the company plans to increase pre-movie commercials to generate additional revenue and counteract financial challenges. This move, expected to boost AMC's income without raising ticket prices, could potentially affect the viewing experience for moviegoers.
