Senior Research Analyst at JN Group, Fay Samuels, says that Palace Amusement needs to begin a transition if it intends to survive in the ever-evolving entertainment industry. 

The 100-year-old entertainment company is Jamaica’s sole theatre operator.

Speaking on Taking Stock with Kalilah Reynolds, Samuels noted that Palace was impacted by the COVID-19 pandemic and is facing fierce competition from streaming platforms. 

Palace was forced to close its cinemas’ curtains in 2020 following the first wave of COVID-19. Subsequently, the company had to contend with nightly curfews, weekend/holiday lockdowns and other measures put in place by the Government to limit the spread of the virus.

Samuels said those measures hit Palace’s bottom line directly. The company recorded a net loss of $383 million in 2021.

She noted that Palace’s financial performance has improved since the restrictions were lifted and the Government officially reopened the entertainment industry.

The company’s revenues soared by 500% to $694 million for their 2022 financial year compared to $105 million in 2021. Despite the increase, Palace still reported a net loss as its expenses climbed to over $706 million.

“That is expected because as they reopened, staff and operational costs increased… staff costs went up by 70%, film costs went up 530% and costs of inventories recognised as expense increased by 446%,” Samuels explained. 

Marketing Manager of Palace Amusement, Melanie Graham, who was on Taking Stock in July, said that the company had to replace expensive equipment that deteriorated during the shutdown before reopening.

Nevertheless, Samuels noted that the company’s net loss fell by 32%.

“Even though the performance was negative, it was still an improvement over 2021,” she said.

However, the Research Analyst noted that in the medium to long term, Palace must begin to transition to a full entertainment venture or a “multi-tainment” brand to survive and thrive in the modern entertainment industry. 

Samuels pointed to research that shows that 14-24 year olds are the smallest movie-going age group.

“This is particularly worrisome for the industry’s future because these are the future movie goers and the ones we are expecting to spend money,” she said.

According to Samuels, the emergence and increased availability of streaming platforms and online movie reviews have taken some of the thrill and excitement out of moviegoing. 

 “We need highented social experiences,” she said.

“Recently, we saw online that persons were petitioning for Palace to show the BTS concert. By the time Palace was made aware of it, it was too late to get the broadcasting rights,” she added.

She said that the Palace team needs to stay on top of entertainment trends and find a way to cater to niche markets. 

Despite its issues, Samuels said she is confident that Palace will find a way to pivot and adapt to the ever-changing landscape. Additionally, she said movie-going sentiments are returning as panic around the pandemic subsides. 

“Also, we expect that upcoming blockbusters such as Black Adam, Black Panther 2 and Avatar should be great at improving Palace’s bottom line,” she added. 

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