Studios are overspending on streaming content

Sean Gamble

Greg Doherty/Getty Images

Hollywood may be seeing fewer tentpoles arriving in theaters following the dual actors-writers strike, but Cinemark CEO Sean Gamble said the big screen is back coming out of the pandemic during an appearance at an investor conference on Tuesday.

“When we talk about our traditional studio partners, for the most part, we constantly hear that they are aiming to get back to where they were before the pandemic, and in some cases they are going beyond that,” Gamble said at the Morgan Stanley Technology, Media and Telecommunications Conference during a live-streamed session. Online.

The head of Cinemark has insisted that major Hollywood studios have spent too much on streaming content to make up for the closure of cinemas during the coronavirus crisis. Now as Wall Street eyes the elusive profitability, major streaming companies are becoming more cautious and selective about their content spending budgets to adapt to a more crowded and competitive streaming space.

“In some pockets, (studios) are over-indexing their content. “They expanded dramatically when they launched these streaming platforms in terms of the number, the size, the cost, and the investment they were putting into some of these TV series,” Gamble recalls.

He added that there is a question about whether streaming content spending is sustainable. “Because there is an increasing focus on the profitability of both assets and those platforms, there are some justifications that focus more on quality rather than just overall volume,” he added.

That’s good news as Cinemark and other exhibitors see their fortunes tied to Hollywood movie supplies and a multiplex recovery after a box office rebound that began in 2022 began accelerating until last year.

Then movie chains like Cinemark were hit by screening interruptions due to Hollywood double-takes, which were followed by a sparse theatrical release calendar earlier this year. Gamble expects there to be about 95 wide theatrical releases in 2024, or a step back from 2023.

In 2025, expect Hollywood movie release to get back to the recovery path that we’ve been on where we’re up a little bit from (20) 23, maybe still a little bit behind pre-pandemic levels, which was about 130 or very wide releases per year.