5 days ago
AMC Theatres, once a refuge from ads, embraces commercials
AMC Theatres, facing years of stagnating attendance, took bet in July when it added commercials to its preview roll, eager to boost its bottom line.
Early numbers now show that the deal's working and is expected to bring in 'tens of millions of dollars a year,' CEO Aaron Aron said on a second-quarter earnings call Monday. He didn't specify how much of the stronger performance came specifically from ads.
He added that AMC will likely chop off a trailer or reduce the length of the standard public-service messages so that the ads don't extend the pre-roll, he added.
'We also know that some of our other consumers think the trailer packages going too long, and we're trying to find a happy medium,' Aron said.
One of the largest U.S. movie theater chains, AMC stood as the most notable exception among cinema chains in refusing to broadcast commercials during the preview roll, fearing it would deter moviegoers. Its rivals, including Regal Cinema, struck deals with National CineMedia to show commercials six years ago.
But that changed in early July, when AMC reversed course. Moviegoers are now informed in the AMC app that their film begins 25 to 30 minutes after the listed start time.
That doesn't mean everyone are watching the commercials since they hit the screens, though.
At an AMC in Northern Virginia, Omar Ali and his brother Arif saw the up-to-half-hour preview roll as a reason to show up late. After dropping $32 for two tickets to 'Jurassic World Rebirth' at an AMC in Arlington, they intentionally arrived after the listed start time and lingered in the lobby to avoid the preshow roll.
'It's just tedious,' said Omar Ali, 25, as he stood near vendors selling $10.79 popcorn. 'When you go to a movie theater, you pay a premium, but when you go there, you are bombarded with ads.'
Preshow ads at movie theaters hovered around 20 minutes 18 years ago, when AMC went public, according to its annual report. What has changed is a movie industry struggling with ticket sales and the growth of the 'attention economy,' where there's more information competing for eyeballs than people's capacity to absorb it, Davenport said.
'Industry is kidding itself if it thinks people are watching these ads,' said Tom Davenport, a professor of information, technology and management at Babson College, adding that moviegoers will probably show up late, scroll on their phones or talk. 'It is a last resort for people without anything else to do.'
Monthly AMC attendee Sam Goldfarb of Brooklyn said he increasingly feels that his attention is being mined for every dollar possible at the theaters.
'It has come to the point where it feels like that episode of 'Black Mirror,' when you are lying in your room, there will be ads,' said Goldfarb, 34, referencing the dystopian Netflix science-fiction show that satirizes the impact of technology.
For advertisers, the draw of theaters is that their movies 'are not competing with as many distractions,' said Mili Mormann, an associate professor of marketing at Southern Methodist University. But the strategy only works when the ads are entertaining, she said.
'If it is fun content, people can find stuff that will help them,' Mormann said.
Gabriel Rossman, a professor at UCLA who has researched the film industry, said it makes sense to show commercials in the previews because it's a way for AMC to raise revenue without increasing ticket and concession prices. Moviegoers are more sensitive to those hikes, he said.
As the quality of home televisions has gotten better, the magic of a theater's visuals is no longer enough of a draw, he added. One of the few remaining benefits of attending theaters is the communal experience, Rossman said.
'Part of what makes a comedy funny is being with other people laughing,' he said. 'You are seeing other people's reactions.'
In 2024, ads constituted less than 3 percent of AMC's revenue compared with just over 55 percent for admissions, according to Securities and Exchange Commission filings.
Pat Sholl, an equity researcher covering AMC for Barrington Research Associates, said attendance will continue to be a bigger driver of AMC's revenue than ads.
AMC and National CineMedia did not respond to multiple requests for comment.
After going to see the Celine Song-directed movie 'Materialists' at a Regal in Seattle in June, Gavin Reub, 37, said that watching the preshow commercials felt like 'a chore.'
'I hate it. I buy a movie ticket to go see a movie, not to see ads. I get ads on my streaming services,' said Reub, an artistic director at a nonprofit. 'It feels like we lost some of the magic.'
