Economists talk about the ‘Covid Shock’ in 2020 because it was a mostly unpredictable event that had big, measurable effects. People spent a lot less time being in close quarters. Especially hit hard were movie theaters, and other events spaces.

In the several years prior to Covid, “Recreational Service” industry sales had been chugging along, growing at healthy annual rate of 3.4% (inflation adjusted). This category of services includes clubs, sports centers, theaters, and museums. In the blink of an eye, the covid shock drastically reduced spending in that category by more than 60%. See the graph below.

Unfortunately, we don’t have disaggregated series for the components of “Recreational Services”. But we do know that movie theaters were already well past their hay-day. Theaters had been closing and consolidating for more than a decade and ticket sales were down. Many give credit to the popularity of streaming video services and other digital media alternatives. Covid added insult to injury.

Now, going to a movie theater is exceptional. As a teenager in the early naughts, I’d go to the theater easily half a dozen times per year. Now, I don’t think that I’ve gone six times in the last five years. Real growth in the entire recreational service category has grown annually by an anemic 1.8% since 2019. It’s not dead, but that’s also the total industry. I’ve heard the news stories of sports events making a big comeback. I’ve not heard anything like that for movie theaters.

I went to the movies recently and it is not what you remember.

Continue reading →