Nonprofit Chelsea Theater’s revenue grows in post-pandemic, streaming world
This is an unpublished article I wrote for a class in the fall of 2024.
Tucked into the end of a strip mall off Martin Luther King Jr. Boulevard, the Chelsea Theater has been a staple of Chapel Hill’s film scene since the 1990s. While the movie theater industry suffered historic lows during the COVID-19 pandemic, and continues to struggle against the allure of streaming, the Chelsea still draws its local community’s patronage and support.
When its previous owners wanted to close it down in 2017, community members raised $150,000 to purchase the Chelsea and turn it into a nonprofit.
When the COVID-19 pandemic hit, its new leadership took the lack of attendance as an opportunity to renovate. After two years, the theater reopened with a new lobby, seats and screens. It also began focusing on a wider range of films. Previously reliant on first-run movies — brand new, mainstream flicks — the Chelsea pivoted to a curated approach, showing more niche releases and older classics.
“The whole pipeline of movies changed, and people’s habits changed also,” Emily Kass, the Chelsea’s executive director for the past seven years, said. “More people were staying home and subscribing to streaming services, so we needed to do something to really differentiate ourselves as a nonprofit movie theater from the first-run theaters.”
The Chelsea introduced film series and guest speakers and partnerships with UNC-Chapel Hill, the Marion Cheek Jackson Center, the Town of Carrboro and more. Kass credits programs like these with drawing college students to the theater, as the business’s demographic skewed older before the pandemic.
The Chelsea Theater is far from the only cinema in town — there’s the Varsity Theatre on Franklin Street, locally owned Lumina Theater, small franchise Silverspot Cinema and nearby global chain AMC — but its small scale and unique film lineups set it apart. Kass said that each theater has its own profile, and picking between them is like choosing which restaurant to patronize for dinner.
“You’re making a decision: Do you want to go to a chain restaurant or a boutique place?” she said.
Some people don’t choose the chain restaurant or the boutique. They choose the comfort and ease of their living room. The rise of streaming platforms like Netflix and Amazon Prime — compounded by a pandemic that forced people to stay home — discourages movie theater attendance. Why go out and pay for a movie when you could wait for its streaming premiere?
Rose Steptoe, the co-organizer for UNC graduate club and Chelsea-collaborator Kino Corner, said the increased accessibility of films through streaming can be a net positive.
“But,” Steptoe said, “There’s something about the film-going experience. I enjoy watching a film in a very, very crowded theater, for example, for the sense of reactions.”
Despite the challenges of the post-pandemic and streaming world, the Chelsea’s 2023 revenue was the highest it’s ever been, according to the nonprofit’s Form 990. Last year’s revenue was a 33% increase from its first year and a 67% increase from its worst year, 2020. 74% of the Chelsea’s 2023 revenue came from admissions and concessions sales, but during the pandemic, donations kept the Chelsea afloat. While expenses have steadily increased since 2018, its movement always nearly matching the Chelsea’s revenue, the theater has still had a positive net income every year except for 2022, when it was closed for renovations.
Standing in contrast to the Chelsea’s local nature, AMC is the largest movie theater chain in the world. A Dec. 2 press release from the company states it has approximately 900 theaters and 10,000 screens across the globe. According to AMC’s 2023 annual report, 19 of those theaters and 244 of those screens are in North Carolina; the nearest AMC to Chapel Hill is in Durham at the Southpoint Mall.
While the scale of AMC outsizes the Chelsea — its 2023 revenue and expenses both $4 billion more than the small theater’s — its net income has been negative since 2020, according to its 2022 annual report. Its expenses consistently overtake its revenue. However, AMC and fellow global chain Regal Cinemas both experienced record-breaking ticket and concessions sales this past Thanksgiving holiday, according to Dec. 2 press releases.
“I feel more positive about the state of theaters,” Steptoe said. “When I started graduate school, I remember in one of my film classes there was so much anxiety about movie-going with COVID and sort of like, ‘Oh, this is going to be the actual death of theaters.’”
But theaters from the titanic AMC to the Chelsea Theater, with its single location and three screens, survived the pandemic and continue to draw patrons in the streaming era.
“Going to films is a lifelong pursuit,” Kass said. “We want everyone to share the experience of watching a film in a theater, which is so different than watching it at home.”