The battle of the movie theatre companies has really taken a brutal turn in recent years amid profound disruption from the video streamers, the impact of the COVID-19 pandemic lockdowns, and, now, the rise of virtual reality (VR) or augmented reality (AR) headsets touted by various big-tech firms.
Undoubtedly, the realm of mixed reality (MR) may very well hold the future for enjoying hit films on the big screen. Why go out to the local Canadian Cineplex (TSX: CGX) or American AMC Entertainment (NYSE: AMC) if you can just strap on a headset (or spatial computer) to enjoy a hit flick from the comfort and convenience of your own home?
Tech could be disruptive, but movie theatre firms aren’t going anywhere
Further, you can adjust the size of your screen and maybe even make it far larger than that offered by the cinemas today! And, of course, you’ve always got the best seat in the house, so no having to worry about being too close, too far, or off to a strange angle, as you fight to grab your seats before the show starts.
Of course, enjoying content on the silver screen is a shared experience. Watching a film all alone may not be worthwhile for some, right?
With the advent of things like SharePlay, watching content from your headset or spatial computing can, in fact, be a social experience. And the good news is you don’t need a handful of US$3,500 Apple Vision Pros to enjoy content together.
Indeed, the technology looks quite disruptive. And for the movie theatre companies, it’s yet another potential disruptive headwind to worry about, as if there weren’t far too many to begin with!
In a prior piece, I went into greater depth on the disruptive impact of headsets on the world of cinemas. The major takeaway was that I didn’t think they were an existential threat for firms like Cineplex, no matter how capable and comfortable they get from here.
Not so fast … Cinemas still have the edge over VR!
Indeed, the biggest drawback of today’s headsets has to be the comfort factor. There have been reports of discomfort after wearing various headsets for a prolonged period of time. If you’re looking to enjoy a particularly long film (films are getting longer these days!) such as Oppneheimer or Killers of the Flower Moon (3 hours or more), the whole experience may be less than comfortable!
Of course, comfort can be fixed. So can battery life and all the sort. That said, I believe it will take at least three to five years before headsets can really eat into the number of tickets that a Cineplex or AMC can sell. Further, I think the movie theatre business could be on the cusp of a comeback in an era where we’ve become so isolated by immersive technologies.
Indeed, lockdown showed us all that there are more than a handful of ways to keep ourselves entertained without as much in-person social interaction. Now that things are back to normal, I believe that any form of social connection in the real world is sought after.
The rise of AI could be a longer-term tailwind for theatres
With that, I think the cinema companies stand to benefit greatly as new blockbuster content hits the theatres. With the rise of generative artificial intelligence (think OpenAI Sora, which is a text-to-video model), I believe that it will take far fewer resources to create tons of high-quality content.
Who knows? Perhaps the pipeline of releases could soar in the future, paving the way for more ticket sales for the top movie giants.
Between CGX and AMC stock, I’d have to stick with the former. It’s a great Canadian firm that’s come a long way since the depths of the pandemic.
