RISING TIDES
Observations from the IMC Research Process

Popcorn and Pricing Power – A Cinematic Revival

A stronger film slate, premium formats, and renewed pricing power are driving movie theater earnings higher.

• The Theatrical Inflection. The movie exhibition industry is experiencing an atypical, highly profitable recovery. Traditional box office upturns have often relied heavily on a steady stream of massive, established-IP tentpole releases. This current inflection, however, is being driven by a convergence of resilient leisure demand and a shift to original content that is drawing a younger demographic back to the physical theater.
• The Inflection Point. Three forces are creating the new paradigm:

1. The Resurgence of the Original Blockbuster: The box office is diversifying beyond reliable franchises. The breakout success of new, original films like Obsession and Back Rooms is successfully connecting with Gen-Z and young adult audiences. This has resulted in a deeper, more balanced slate; in the second quarter alone, 9 films grossed over $100 million, up from 7 the previous year and 5 the year before.
2. The Return of the Margin: Premium Large Format (PLF) screens are acting as massive revenue multipliers. For IMAX, Christopher Nolan’s The Odyssey delivered a record-breaking opening weekend, with IMAX theaters capturing an extraordinary 20% of the film’s global box office – a powerful demonstration of consumers’ willingness to pay for premium formats.
3. The Window Extension: Studios are recognizing the value and are beginning to extend theatrical and transactional windows. This strategic shift moves away from the pandemic-era compressed windows, retraining the consumer to prioritize the theatrical release and ensuring exhibitors capture maximum initial demand before films move to streaming platforms.

• The Beneficiaries. This content-driven cycle rewards scaled networks with premium assets and pricing agility. Regional powerhouses like Marcus Corporation (MCS) are perfectly positioned to swallow market share, leveraging strong Midwestern market footprints to drive significant adjusted EBITDA growth – up 43% consolidated in the second quarter. Concurrently, dominant premium format leaders like IMAX Corporation (IMAX) stand to benefit as consumers increasingly seek immersive, big-screen experiences. Kinepolis Group (KIN.BE) is another example having recently expanded its US footprint and whose luxury formats and enhanced moviegoing experience reflect the industry’s continued shift toward higher-value cinema experiences.