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Movie theater stocks popped on the news of the largest financial commitment to cinemas by an internet company Amazon.
While struggling to return to pre-pandemic levels due to a lack of film content, cinemas stocks spiked on Wednesday in reaction to a report that Amazon (NASDAQ: AMZN) plans to infuse $1 billion a year into theatrical film releases. Citing people familiar with the matter, Bloomberg revealed that Amazon is planning to spend over $1 billion a year on movies that will roll out solely in theaters. The sources added that the technology company intends to produce between 12 to 15 films yearly, and they will launch in theaters. The project, which is still in a strategic phase, will pick up with fewer movies next year and will increase over time.
Cinema Stocks Spike as Amazon Reveals Plans Plans for a Billion Investment in Theatre Films
Movie theater stocks popped on the news of the largest financial commitment to cinemas by an internet company Amazon. The shares of American moving theater Cinemark (NYSE: CNK) gained 11%, movie theater chain AMC Entertainment (NYSE: AMC) jumped 5%, and IMAX (NYSE: IMAX) increased by 7%. At the time of writing, the cinemas are trading high as investors respond to the incoming Amazon investment in theatrical film releases. The movie theater industry has suffered to go back to its pre-pandemic levels even though people have resumed going to the cinemas. So far this year, just a few movies have been released due to the 2020 and 2021 delays. Wide releases have plunged significantly, taking a toll on the overall box office. Amazon’s commitment boosts the movie theater industry, which is just reviving from low levels.
“We certainly applaud content makers when they decide to spend on quality movies. But to date, no streaming company has committed to a robust theatrical distribution model, including Amazon. We would if any streamer would support the theatrical space with wide quality releases.”
Amazon is known for its investment in original content through its Prime Video streaming service. Also, its movie and television studio are some of the units it has deepened its investments over the years. The company’s expenditure on content for its video and music streaming services increased by $2 billion YoY in 2021. While Amazon spent $11 billion in 2020, the company invested $13 billion last year. Another significant milestone for the technology company was its acquisition of movie maker MGM Studios earlier this year. In March, Amazon closed the deal to buy the movie studio for $8.5 billion. CEO Jeff Bezos continually makes efforts to expand media operations.
Before now, Amazon has rolled out movies in theaters, including the first two episodes of its “Lord of the Rings: The Ring of Power.” In addition is “The Big Sick,” its 2017 comedy shown in the theaters. However, the tech giant has primarily unveiled its original content on Prime Video.