The social disruptions that new, injectable, weight-loss drugs like Ozempic will create go far beyond health and health care.
We humans organize our mental worlds with categories and consideration sets, so it can be hard to see when trends from different categories collide. Back in the day when I worked at EarthLink, a dial-up ISP, we were so focused on AOL and Microsoft that we didn’t realize broadband would wipe out most of the dial-up category. (There are still people on dial-up, believe it or not.) Likewise, Kodak was focused on FujiFilm and ignored its own treasure chest of digital photography patents, etc.
At the Center for the Digital Future at USC Annenberg, we’re thinking hard about the second-order disruptions coming from the new, weekly injectable, GLP-1 weight-loss drugs like Ozempic and Wegovy from Novo Nordisk, Mounjaro and Zepbound from Eli Lilly, and others. Far beyond dieting and weight loss, we predict that weight-loss drugs will change how customers behave across a broad swath of industries. These drugs constitute another disruption, as profound as what’s happening because of AI.
My friend Jeffrey Cole has written a three-part series about the non-obvious winners and losers coming from these new drugs (start here), and we’re going into the field soon with a mini-survey to learn how Americans feel about taking them. After that, we’ll start preparing a major survey. Stay tuned.
As we’ve been exploring different scenarios, I keep coming back to movie theaters. Will weight-loss drugs be the final nail in the coffin for American theatergoing?
Are movie theaters really in trouble?
Absolutely, although on the other hand it seems like movie theaters have continually been in trouble since the widespread adoption of television in the late 1940s. I don’t need to rehearse the reality of the decline of movie theaters, nor do I need to go over all the different (mostly wrong) hypotheses about why movie theaters have declined, because Matthew Ball has already done this work in his thoughtful (and very detailed) essay: What A Century (Plus a Pandemic) Does to Moviegoing and Why It Matters. (Ball’s follow-up essay premieres this month.)
The short version about the perils of the multiplex is that broadcast, cable, and streaming video—plus personal computers, smartphones, and videogames—all combined to break Americans of the regular habit of going to a dark room with a bunch of strangers to watch a story projected on a big screen with wheelbarrows of greasy popcorn and sodas the size of trashcans. COVID accelerated the slow decline of movie theatergoing, Ball estimates by 15 years, but it was already well underway before the pandemic.
Note, please, the important difference between movie theatergoing and movie watching. Even with the studios tightening their belts and looking for profit after a spendthrift few years chasing streaming audiences, we still have more great stuff to watch on the screens we own than at any point in the history of our species.
At this point, it’s only a mild exaggeration to say that movie theaters primarily exist as marketing tools for streaming services. Nothing builds salience—”huh, I guess I should think about watching that” awareness—better than a theatrical release with all the attendant ads, chat show appearances, press junkets, and social media.
We’re watching more video than ever, but the container has changed.
What does this have to do with Ozempic, Mounjaro, and the rest?
Let’s do the numbers.
According to the MPAA, right now the average movie ticket price in the US is $10.78. Taking a family of four to the movies (not IMAX or another, more expensive screening) costs $43.12 just to walk in the door.
Last fall, before the explosion of public and political attention to the new weight-loss drugs, Bank of America Global Research estimated that 48 million Americans would be taking these drugs by 2030, which is about 14% of the population. Goldman Sachs had a similar number (13%, not including diabetics). J.P. Morgan Chase was a bit lower at 9%. By 2030, the market for weight-loss drugs will be over $100 billion.
Let’s take 10% as a conservative number of Americans on weight-loss drugs in six years.
Movie theaters are relatively low margin businesses, particularly when it comes to how much they make from ticket sales. The deals change movie to movie, but generally when a movie comes out for the first two weeks the studio that creates the movie takes the lion’s share of the box office receipts, after which the studio’s percentage gradually goes down until it reaches 50/50 with the theaters. (This gets more complicated if the studio doesn’t do its own distribution.)
A huge chunk of movie theater revenue (up to 46%) comes from concessions (popcorn, candy, soda). Concessions are also the most profitable source of revenue for theaters, which will charge several dollars for a bucket of popcorn that costs less than a dollar to make. (Do some Googling and you’ll see 1,275% as a frequent markup for popcorn, but I can’t substantiate it.)
If 10% of weight-loss-drug-taking moviegoers also stop buying the most profitable concessions (popcorn, candy, soda, as well as newer, less-profitable, items like beer and higher-quality food), can the theaters withstand those losses? I doubt it.
Theater chains with loyalty programs—where they can track what movies and concessions members buy—should pay particular attention to the data on what IMAX viewers buy.
IMAX tickets are more expensive than typical tickets, so these tickets are a rough proxy for higher income families, which are also the families who can currently afford expensive weight-loss drugs that can cost more than $1,000 per month. Tracking how the concession-buying behavior of IMAX moviegoers changes over the next 12 to 24 months should be predictive for how most moviegoer behavior will change over the next 24 to 48 months, as weight-loss drugs come down in price and become more accessible to more Americans.
The social disruptions coming from weight-loss drugs will be profound and pervasive, which is why it’s important to watch closely in these early days.
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* Initial image prompt, tuned several times: “A mostly empty, mostly dark movie theater with rows of empty seats and dim lighting. On the large movie screen at the front, an image of an Ozempic applicator.”
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