AMC Entertainment’s IPO Suggests 3D Movies Are Here To Stay
Quartz (at qz.com) reports that 3D movies have been around since the 1950s, and for much of their existence, they’ve faced an uncertain future and been criticized as a waste of time and money. But movie-theater chain AMC Entertainment, which is preparing to launch its IPO in the next few weeks, is one company that thinks 3D is still a growth market.
The company (not to be confused with AMC Networks) plans to raise $368 million in an IPO that would value its operations at $1.9 billion. Capital markets might be buoyant again, but the deal comes at a tough time for the movie-theater industry: Americans are increasingly to happy to wait a while and watch their movies at home (a trend that could accelerate if Netflix and cable companies ever get the ability to sell films in living rooms on the same day they’re released in theaters) rather than go to a cinema.
As we’ve already discussed, AMC Entertainment’s strategy is to jazz up its movie theaters, with perks like reservations, in-theater dining, and alcohol. Yet, despite the push into ancillary services, the chain still makes most of its money out of ticket sales (they accounted for about two-thirds of its total revenue in the first nine months of the year). And, as something that, for the most part, still can’t be replicated in the living room, 3D movies are a major selling point. That’s why nearly half (48%) of its screens are enabled for 3D, and 98% of its locations include at least one 3D screen. The IPO prospectus (p. 107) reveals that on average, AMC can charge about $4 more per person for premium offerings like 3D and IMAX. (It proudly emphasizes that it has nearly twice as many IMAX screens as its largest competitor, too.)