AMC Entertainment is scouring ways to diversify its income streams while staying afloat in an entertainment industry disrupted by the emergence of digital streamers and artificial intelligence.
In The Beginning, There Was Popcorn
The leading film exhibition franchise is moving forward with establishing its own brand of concessions after a successful run with AMC Theatres Perfectly Popcorn. The bagged and microwavable popcorn product line was made available at Walmart stores earlier this year, retailing between $3.98 and $4.98. AMC’s new asset is a big hit among consumers with a rating of 4.5/5. Pop In and Grab a MegaBag To-Go, a version of the unpopped popcorn, is sold for $14.99 at theaters.
AMC’s Branded Candy
An AMC branded candy line is the next endeavor on the horizon. The aftermath of the pandemic has caused prices to surge, eventually increasing the cost of candy for AMC, which offers Nestle brands Kit Kat and Crunch, for instance. Adam Aron, chief executive of AMC, announced that the chain will roll out chocolates and gummy candies to cut costs.
“We noticed, as a result of the pandemic and supply chain shortages, that candy manufacturers had increased their prices to us by a huge amount,” Aron said on a conference call in May. “That got us thinking very hard about our candy, and we realized that we could manufacture a private label brand of candy to very high quality standards, price it less expensively than our current candy is priced, and have a higher profit margin.”
The rollout is expected to take place in Fall 2023 or early 2024, perfectly aligning with the delectable Wonka film, based on the book Willy Wonka and the Chocolate Factory, releasing during the holidays.
AMC Tests Variable Priced Seating
While AMC is clearly looking for ways to increase its profit margins, the chain has always been on the path of innovation when it comes to customer experience.
Back in February, the theater chain revealed a new experimental tiered pricing system referred to as Preferred Sightline seating. The plan enabled customers to select theater seats most often preferred by moviegoers for a premium price. Less desirable seats, such as the front row area, are priced lower as part of the Value Sightline seating plan.
AMC tested the pilot program at select theaters across the nation and found that the variable seating plan did not sway customers’ willingness to select certain seats. The plan will discontinue as summer comes to an end.
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AMC’s Premium Customer Experience
Despite the variable pricing plan for seats not working out, the chain offers impressive Premium Large Format screens, such as Prime, Prime 3D, IMAX with Laser, Dolby Cinema, and 70mm, which all charge a ticket premium.
AMC has also created more efficiencies in its rewards program, AMC Stubs and A-Lister, including adding online options to pay for tickets and order concessions for express pick-up. The AMC Entertainment Visa shares a similar reward point system, while early screenings are provided for AMC shareholders.
Bundling Before The Storm
AMC is thinking ahead as the company seeks approval from the Delaware Chancery Court to sell equity in an effort to raise capital just in case the coming months prove to be more volatile than forecasted. The extra capital would support AMC’s expansion plans, including brand new developments, mergers and acquisitions, and a possible streaming platform, along with updates to the brick-and-mortar layout.
Will all of this mitigate the inevitable impact of back-to-back challenges arising from a pandemic aftermath, double union strike, and emerging technologies? Only time can tell.
