Streaming Giants Amazon and Apple Drive Film Industry's Theatrical Revival
2023-07-30
EPR Properties, a company involved in various sectors including the film industry, drive-to destinations, ski resorts, hotels, and education, recently held its Q1 2023 earnings call. The meeting brought together executives to discuss capital resolution, growth strategies, potential partnerships or acquisitions, financial performance, volume targets, and maintaining leverage. Led by CEO Greg Silvers, the call provided valuable insights into the company's current state and future plans.
One of the most significant topics discussed during the meeting was the company's capital and growth strategy. However, the most intriguing aspect of the call was the ongoing North American box office recovery and the increasing supply of films for theatrical release. This topic shed light on the changing dynamics between streaming services and traditional theatrical releases, and the potential impact on the film industry.
The call mentioned the successful theatrical debut of Amazon's film "Air," which grossed over $42 million and opened on more than 3,500 screens. This achievement is noteworthy as it marks the widest theatrical debut ever for a streaming service. It signifies the growing investment of streaming services like Amazon in theatrical releases, indicating a growing supply of films for the big screen.
Additionally, Apple's announcement of the upcoming theatrical releases of Martin Scorsese's "Killers Of The Flower Moon" and Ridley Scott's "Napoleon" before moving to Apple TV Plus was another significant development. As one of the largest streaming services, Apple committing to theatrical releases demonstrates their recognition of the importance of the big screen experience.
These commitments from Amazon and Apple highlight the increasing supply of films for theatrical release, which is expected to drive the ongoing North American box office recovery. This recovery is crucial for the film industry, which has been heavily impacted by the COVID-19 pandemic and the rise of streaming platforms.
The call also touched upon the competitive landscape in the film industry, with some consolidation within the theater industry and the entry of new players like Apple and Amazon. This evolving landscape could lead to increased competition for theaters and real estate, as studios and streamers value the industry more.
While the call did not explicitly mention the company's outlook for the quarter/year, some relevant details can be inferred. The company's balance sheet was described as being in great shape, with a strong liquidity position and sustained demand in its experiential portfolio. Rent coverage remained above 2019 levels, indicating a healthy financial position. The company had a committed pipeline of experiential properties for future growth opportunities.
The call participants included Greg Silvers, Chairman and CEO; Greg Zimmerman, Executive Vice President and CIO; and Mark Peterson, Executive Vice President and CFO. Silvers highlighted the company's strong performance in the first quarter, with significant revenue and FFOAA per share growth. He also expressed optimism about the substantial growth in box office and provided an update on negotiations with Cineworld.
Overall, the call showcased EPR Properties' resilience and positive outlook for the future. The company's involvement in various sectors, including the film industry, drive-to destinations, ski resorts, hotels, and education, positions it well for growth opportunities. The increasing supply of films for theatrical release, driven by streaming services like Amazon and Apple, presents both challenges and opportunities for the film industry. As the market continues to evolve, it will be interesting to see how traditional theaters and streaming platforms adapt to meet the changing demands of audiences.