Ars Technica’s Deathwatch 2021 – 2020 was just the beginning | GeekComparison

Ars Technica's Deathwatch 2021 - 2020 was just the beginning

Aurich Lawson

Here at Ars Technica, we would like to formally congratulate you on surviving the year 2020. COVID-19 may have changed everything about normal life in the past 12 months, but things are looking good for 2021. A vaccine is currently being rolled out, a more science-friendly US administration will take office in January, and we may even be able to look forward to a return to normal public gatherings sometime this year. We’re going to be fine. [Editor’s note: We’re trying to be optimistic here.]

Unfortunately, you probably can’t say the same of some of the companies we’re writing about as we head into 2021. The pandemic year has also taken its toll on the tech industry, pushing some of the things we thought would happen in 2020 (such as a conclusion to Oracle vs Google) and speeding up other changes we all saw coming (like record streaming numbers). So to take you through the companies staring into a rough new year, welcome back to the annual Ars Technica Deathwatch, 2021 edition.

If you haven’t visited the Deathwatch before during Ars Editor Emeritus Sean Gallagher’s tenure, please know: As usual, we’re being a little dramatic with the name ‘Deathwatch’. This list does not predict that the following companies will collapse exactly within the next calendar year. Bankruptcy laws, takeovers and other accounting jokes make the exact death dates of companies either very unpredictable or painfully slow, but we can at least make some educated guesses about the companies, products and services that will face a terrible 2021.

We’ve all helped make online streaming services a big winner going into 2021, but since this is the Deathwatch, we’re here to talk about the losers. That means our curated panel of experts will start lighting a garbage can fire in honor of “the entire cinema industry”, which is certainly doomed to fail. (Everyone looked Wonder Woman 1984 already, right?) Take it away, Ars policy guru, Kate Cox!

-Ron Amadeo

All cinema companies

The Times Square Regal Cinema is begging to open in October 2020, but what movies would it even play?
enlarge / The Times Square Regal Cinema is begging to open in October 2020, but what movies would it even play?

Roy Rochlin/Getty Images

This one hurts me to write because I love going to the cinema. I like art houses, I like second-rate theatres, I like big stupid smashing IMAX screens, I like everything. (The best thing about getting my master’s degree in film studies was that I had free or heavily discounted passes to half of the movie theaters in Boston for the entire two-year program. I went to something at least twice a week.)

And so I am deeply saddened to have to write that cinema distribution is fully sewnbut here we are.

U.S. box office receipts totaled about $11.4 billion in 2019, but moviegoers — the biggest metric — have been declining for more than a decade. Theater audiences peaked at 1.6 billion in 2002 before entering a period of steep decline, to 1.24 billion in 2017 – the lowest since 1992. The number of visitors crept up slightly again in 2018, to around 1.3 billion, but fell again in 2019, back to 1.24 billion.

That was before the pandemic, which has closed cinemas altogether for months. While many locations are now open at about half capacity, AMC, the largest U.S. movie theater chain, reported a 10 percent rise in its third-quarter results. (Read that again — no 10 percent drop in attendance; 10 percent of possible butts in chairs.)

AMC’s sales are down more than 90 percent in 2020 and there are no signs of a near-term recovery. Only thanks to a debt restructuring in July, the company can survive at all. At the time of reporting its third quarter results, AMC also revealed a plan to raise some money by selling more shares, but the company warned it might very well be looking at a Chapter 11 bankruptcy filing. It didn’t go bankrupt yet, but by mid-December, financial analysts had reached the “maybe bankruptcy is great, actually” stage of analysis. Such a fate seems to be more, rather than less, likely with each passing day.

The second largest theater chain in the US, Regal, has been slaughtered just as much. Its parent company, Cineworld, also restructured its debt in November to avoid bankruptcy, but things aren’t going well. At least one Regal location is being sued for $1.3 million in unpaid rent dating from April.

To make matters worse, the content pipeline for theoretically restarting the exhibition business in 2021 is also fully rostered. Warner Brothers plans to release all of its 2021 films on HBO Max, for home viewing, simultaneously with the theatrical release. Disney (which now also owns Fox) is also pushing back several films or releasing them on Disney+ rather than in theaters. And film and TV production worldwide slowed or stopped in 2020 due to the pandemic, making it harder to kick content out the door in 2021 and ’22.

All things considered, theaters will need a major restructuring and cash injection to get through 2021… and thanks to a Justice Department ruling earlier this year, the rule that prevented a studio from buying up a major theater chain is, disappeared. On top of everything else, that opens up the possibility that your local movie theater could become a real Disneyplex and become a real Disneyplex before you know it.

-Kate Cox

Believe it or not, Zoom

OK, Zoom doesn’t really work die in 2021, or for a long time after. But as a business, it will likely face some challenges.

Everybody started using Zoom in 2020 as the pandemic robbed us of our ability to hold meetings and events in person. The platform may not have been quite ready for prime time when the pandemic kicked into high gear, but Zoom corrected the course pretty quickly with some privacy and functionality issues. It has become the go-to for basically everything.

Work became Zoom. School became Zoom. Happy hour turned into Zoom. Zoom was so successful this year that the company name became generic almost immediately. My older child attends ‘Zoom school’ even though our district uses Microsoft Teams for distance learning. The other Girl Scout troop leaders and I have “Zoom meetings” even when using Amazon Chime.

That means Zoom shareholders have had a good year: The company’s share value has quadrupled for each of the past two quarters. It has experienced an absolutely stratospheric, unbeatable growth – a growth that cannot and will not continue into the next year.

Zoom's stock.  This kind of growth is completely sustainable, right?

Zoom’s stock. This kind of growth is completely sustainable, right?

You’ve probably heard that there’s a COVID-19 vaccine now, with another on the near horizon. As terrible as this pandemic has been (and it has been very bad) and still is, we can see at least a faint glimpse of something called ‘normal life’ on the distant horizon. Remote working may be more widespread in the future, but many people will be back in the office in 12 months. Birthday parties, happy hours, weddings, funerals and holiday celebrations will absolutely go offline again as soon as it is safe to do so.

As it stands, the market is optimized for quarterly growth. Zoom isn’t going to have that next year. The stock value is already falling if there is good news about vaccines. But the platform, which is now popular and widespread, will still be a valuable asset. That combination makes it a perfect target for acquisition.

Enterprise companies have tried it before: Microsoft reportedly repeatedly tried to acquire Zoom ahead of its IPO in 2019, but Redmond was turned down. Microsoft has since developed its own Teams more in-house, and it seems less likely that Zoom is playing a role now. Also, Google and Amazon both have in-house video chat platforms that compete with Zoom, and those companies may not want additional antitrust checks.

If I were a gambler, I’d bet a few bucks on Salesforce to make the game next year, if it has the cash on hand to do so. Zoom would fit nicely into a new cloud-based enterprise suite tucked away on the shelf next to Slack.

-Kate Cox

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