Yahoo Finance IMAX CEO: 'I am not at all surprised' by crashing streaming stocks
The rout in streaming media stocks this year may have surprised many on Wall Street, but IMAX (IMAX) CEO Rich Gelfond is not among them.
Asked on Yahoo Finance Live (video above) if he was surprised about the market questioning the economic models of streaming giants, the entertainment industry veteran replied: "I am not at all," later adding that "ultimately the streaming model [for new blockbuster movies] made no sense. The theatrical window, particularly IMAX, builds buzz around a property and it creates a cultural event on a global scale. And thinking you could do that and create that kind of excitement without a theatrical release was silly."
Box office pros like Gelfond say the impressive opening weekend for Disney's new "Doctor Strange" could be a sign of a robust summer for movie theaters as consumers get more comfortable living with the COVID-19 pandemic. The summer lineup is looking bankable with big budget drops such as "Top Gun," "Jurassic Park," and "Black Adam" upcoming.
"As a matter of fact," Gelfond added, "one of the major streamers just told me... that on streaming, things do better with an exclusive theatrical release. So forget about the money that you're making from the theatrical window, just on streaming, more subscriber, more attention, all things like that — because the theatrical experience really creates an event, particularly the IMAX experience."
The market sentiment for streaming media stocks, meanwhile, has shifted markedly this year.
Netflix (NFLX) saw a slight decline in subscribers in the first quarter as some consumers balked at recent price increases and others broke free from their homes as the pandemic turned the corner.
For the current quarter, Netflix said it expected an even steeper decline in new users.
The streaming service is modeling for subscribers to decline by 2 million in the fiscal second quarter, whereas consensus analysts were looking for a gain of 2.4 million.
Netflix shares are now down a jaw-dropping 70% year to date.
"Netflix is a growth company, but no longer a premium growth company," veteran tech analyst Mark Mahaney at Evercore ISI recently said on Yahoo Finance Live.
The wrecking ball has found its way to streaming platform Roku as well.
Roku (ROKU) saw first quarter adjusted operating profits tank 54% year over year while the number of active accounts held relatively steady quarter over quarter at 61.3 million.
Shares of Roku have crashed 60.5% year to date.
Even Paramount Global (PARA) hasn't been immune to the selling pressure, despite putting up one of the best quarters in the streaming space to kick off the year.
Paramount's stock is down 9% on the year so far.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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