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Topic: Are movie theaters doomed?

Jack Theakston
Master Film Handler

Posts: 411
From: New York, USA
Registered: Sep 2007

posted 11-15-2007 03:40 PM

I think I would be safely in agreement with most that we wouldn't even need to worry about this sort of thing if there were better quality pictures being made and if the movie theater as an icon was shifted away from adolescents to all ages.

The trend for film making is far too predictable, I'm afraid. I'd clear house if I was a bigwig at a studio.

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Marc Hansen
Film Handler

Posts: 93
From: Seattle, WA, USA
Registered: Dec 2000

posted 11-15-2007 10:04 PM

Mark-
What was unique about the theater?

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Martin Brooks
Jedi Master Film Handler

Posts: 900
From: Forest Hills, NY, USA
Registered: May 2002

posted 12-02-2007 11:35 AM

While theaters are still an amazingly big business, they are becoming more and more simply a marketing exercise for other forms of distribution.

That trend is going to increase greatly after Feb of 2009 when analog TV broadcasting ends in the U.S., which will force holdout consumers to bite the bullet and buy a digital TV (yes I know the Government is offering coupons for converters, but that's not going to work). And that's in addition to the ongoing improvements in digital download speeds, etc.

My prediction is that we'll always have movie theaters, but they'll be fewer of them, just as most cities have just a few legitimate theaters today. This is especially in true in cities, where high-real estate values make movie theater operations impossible. (Do you know that there is not a single movie theater left on Broadway in New York City between 20th street and 66th street?) I think eventually the movie studios are going to have to buy back the theater chains so they can guarantee theatrical distribution for their product and we'll return somewhat to the days before the consent decree.

There will always be people who will want to see movies on a big screen in a nice environment and have a communal experience and there will always be young people who want to get out of the house no matter what, but there will also be more and more people who will be perfectly satisfied to watch movies on their flat-screen or computer while consuming chain crap-food because most of our movies have become as disposable as that food.

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Sam D. Chavez
Film God

Posts: 2153
From: Martinez, CA USA
Registered: Aug 2003

posted 12-02-2007 12:15 PM

I agree with Mr. Brooks. The instrument that will close a large number of screens is D-Cinema. Those not able to convert from film are inevitably doomed.

Further, an all digital release with no film will allow the studios to release day and date everywhere and it will prove to be an irresistible temptation. My opinion only of course.

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Mark Gulbrandsen
Resident Trollmaster

Posts: 16657
From: Music City
Registered: Jun 99

posted 12-02-2007 01:04 PM

I only partially agree with what Mr. Brooks has said. So far there is no shortage of customers at any all digital multiplex's. So far in fact they have done even better... at least in this area in terms of ticket sales. I don't think the consumer cares enough what form the show is presented in as long as the performance is done well. And as long as it is done well there will be theaters. Poor quality is whats going to eventually kill them off not lack of 70mm or not being able to buy/lease a D-Cinema system. And we can't blame D-Cinema as an excuse for those theaters not "strong enouugh" to buy/lease one system... we can only blame the owners of those theaters for not having enough forsight to become financially strong enough. Too many theater operators STILL bilk every last penny out of the buisness for themselves! Those are the operators that will fail!

There will always be a small group screaming for 70mm or some sort of larger format thing even 3000 years from now. I don't disagree with them at all but you have to face what is practical today... 70mm just isn't nor will it ever be seen again in the quantity we saw back in the 80's.

Mark

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Bobby Henderson
"Ask me about Trajan."

Posts: 10973
From: Lawton, OK, USA
Registered: Apr 2001

posted 12-02-2007 01:37 PM

quote: Martin Brooks
I think eventually the movie studios are going to have to buy back the theater chains so they can guarantee theatrical distribution for their product and we'll return somewhat to the days before the consent decree.

Considering AT&T is now quite a bit larger than it was in the old "Ma Bell" days before the government broke up the company, I don't think it is far fetched for studios to gain controlling ownership in movie theaters. It could even come to pass if the country elects another Republican President.

I also agree we're going to eventually see a good number of theaters disappear -starting with most discount houses and, sadly, lots of independent operations. Movie theaters are trying hard to justify their existence to customers, with some adopting a luxury minded attitude. Not everyone is going to be able to afford to do what chains like Warren Theaters in Wichita, KS is doing. I feel they have to move in that direction because "home theater" is just continuing to improve in its sophistication. The movie theater viewing environment will be the draw for customers instead of the sound and picture (which will also have to be very good).

quote: Sam D. Chavez
Further, an all digital release with no film will allow the studios to release day and date everywhere and it will prove to be an irresistible temptation. My opinion only of course.

Such a move will kill off the movie theater business. The only way I can see the movie theater business managing to survive in a day and date situation is if the movie distributors gain ownership of the theaters (and don't move to close them). Movie theater chains separated from movie studio income would not make it for all the lost customers. Too many people would just save money and stay home to watch the show. The studios would have to absorb the financial losses as a fee for making a movie legitimate by having it play in actual movie theaters.

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Jonathan M. Crist
Jedi Master Film Handler

Posts: 531
From: Hershey, PA, USA
Registered: Apr 2000

posted 12-02-2007 02:10 PM

The October 2007 issue of Conde Nast Portfolio echoes many of the ideas in the article posted by Jeffry L. Johnston:

http://www.portfolio.com/culture-lifestyle/culture-inc/arts/2007/09/17/Movie-Theaters

The text of this article appears below:

Precisely what caused the rift between Sumner Redstone and his daughter, Shari, may never be known, despite vague suggestions of disagreements over “corporate governance.” But one major source of friction between the 84-year-old chairman of National Amusements, the company that controls Viacom and CBS, and his 53-year-old daughter is clear: She’s sanguine about the movie-theater business, while he thinks it’s on its last reel.

Amid the glamour of assets like Paramount and MTV, it’s easy to forget that privately held National Amusements, started back in 1936 by Sumner’s father, remains an important player in the theater business, with about 1,500 screens around the world. Shari, who owns 20 percent of the company (her father controls the remaining 80 percent), has run the theater unit since 1999 and is relentlessly upbeat about it, even as insiders speculate that Sumner would rather sell the whole thing off. Does Shari know something about the popcorn economy that her father doesn’t?

By most measures, the long view looks dreary. Except for the occasional bump after a season of blockbusters (receipts are up 7 percent so far this year, for example), annual sales have stalled at around 1.4 billion tickets a year since the late 1990s. The major theater companies have scratched out profits over the years by raising ticket prices and selling onscreen ads. In pursuit of more eyeballs to satisfy those advertisers, they also added several hundred thousand seats, which resulted in about half the major chains filing for Chapter 11 by 2001. (National Amusements was not one of them.)

Meanwhile, the industry has allowed the theater experience to deteriorate. Nowhere is the clash of generations more evident these days than at the multiplex, where teenagers yak on their phones as middle-aged couples fork over $8 for a bag of Twizzlers and a Coke and snarl at the endless advertising. “Theater owners definitely shoot themselves in the foot by putting 40 minutes of commercials in there,” says Bob Shaye, co-chairman of New Line Cinema, the studio behind the Lord of the Rings and Rush Hour franchises. “If it’s no longer a pleasant environment and you add that on, at some point audiences revolt.”

But for the most part, the leading theater chains aren’t worried—at least not enough to change things. Headquartered in places such as Plano, Texas (Cinemark), Kansas City, Missouri (AMC), and Knoxville, Tennessee (Regal, half owned by Philip Anschutz), they push for blockbuster “event” movies and lobby to maintain the traditional window between theatrical and home-video release dates. Studios, which split box-office receipts evenly with the theaters, have advocated collapsing that window, as they’d rather sell higher-margin DVDs or downloads. Some studio heads have even fantasized about charging a premium above theater prices for a movie piped directly to the home on the same day it opens at the multiplex. The theater chains, which earn about 75 percent of their profits from concession sales, see this as Armageddon. When Disney C.E.O. Robert Iger came out in favor of collapsing the window two years ago, the president of the National Association of Theater Owners called it a “death threat to our industry.”

Shari Redstone was among those who protested loudest. Then again, she has also been the most experimental major operator. Since 2001, she has opened dozens of Cinema de Lux megaplexes in places like Los Angeles and Westchester County, New York, that offer amenities such as guest lounges, reserved seating, and a casual restaurant called Chatters. Today, half of National Amusements’ theaters are branded as Cinema de Lux, up from 10 percent only seven years ago, and the company says that 95 percent of its recent expansion has been in the upscale category. Such theaters have thinner margins than pure popcorn venues, but despite the fact that tickets cost a dollar or two more than the local average, they appear to foster loyalty. Cinema de Lux patrons make as many as eight visits a year, the company says, versus the industry average of five, and spend more on concessions when they’re there.

Redstone has also bet heavily on developing markets, especially in Russia, where she and local partners have opened high-end multiplexes in Moscow and St. Petersburg suburbs. In 2000, there were only 105 modern movie screens in the whole country; last year, the number hit 1,100. At Redstone’s upscale Russian venues, martini-sipping patrons don the kind of finery that most American moviegoers haven’t favored since the 1940s.

Back in the U.S., the smaller chains are doing most of the innovating. Muvico, for example, has 259 screens at 14 locations in Florida, Maryland, and Tennessee. Most of its venues are themed (Egyptian, ’50s drive-in, Xanadu), and many are subdivided into areas designed to appeal to different age groups. “Premier” adult levels offer a full restaurant and bar, and babysitting is available at all locations. (Parents are given a vibrating pager at no extra charge.) The company declined to disclose revenue or profitability figures but claims per-customer spending on food concessions at its theaters is 25 percent higher than the national average of about $3.50. At Alamo Drafthouse, an 11-year-old Austin-based chain with seven locations, every other row of seats has been replaced with café tables, and customers can write orders for pizza and microbrews on slips that are silently picked up by black-clad waiters. The company is in negotiations to open theaters in large markets like New York and Los Angeles by late next year, with the goal of having 200 screens by 2012. C.E.O. John Martin says the average concession tab is nearly $14.

But don’t expect your multiplex to get the religion anytime soon. Offering a more layered experience may sound obvious, considering the writing on the screen about competing technologies, but the low-maintenance, popcorn-and-candy ethos will continue to reign, at least for now. With box-office receipts strong (for the moment), studios are under less pressure to collapse the distribution window, which prolongs the status quo for theater owners. “Our members say that what most people want is candy, popcorn, and soda,” says Patrick Corcoran of N.A.T.O. “Banana-nut muffins sound nice, but they don’t move.” A bag of popcorn nets a 95 percent profit, he points out, which would be tough for any other snack to match.

“It’s hard for the big chains to change their mind-set,” says Chuck DeWitt, Muvico’s vice president of operations, who spent 20 years at AMC. “They don’t think about how to create a new generation of moviegoers, how to make the theaters somewhere the whole family can have an evening. They think only about cutting costs. National Amusements is really the only major one who is willing to go for it.”

So even if it means forever losing the loyalty of her own King Lear, Shari Redstone is hanging tough. Maybe, like many of us, she just wants to see how the picture turns out.

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Floyd Justin Newton
Jedi Master Film Handler

Posts: 559
From: Phoenix, Arizona, USA
Registered: Jun 2002

posted 12-02-2007 07:33 PM

Sorry guys....I have to agree with Louis on page one of this
thread. If the insane greed doesn't slow down, or stop, we may
as well kiss this biz goodbye. There's going to be a lot of
used equipment on the market in the near future! [uhoh]

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Lyle Romer
Phenomenal Film Handler

Posts: 1400
From: Davie, FL, USA
Registered: May 2002

posted 12-02-2007 11:34 PM

quote:
And we can't blame D-Cinema as an excuse for those theaters not "strong enouugh" to buy/lease one system... we can only blame the owners of those theaters for not having enough forsight to become financially strong enough. Too many theater operators STILL bilk every last penny out of the buisness for themselves! Those are the operators that will fail!

This is a bunch of crap. Do you understand how small the profit margin is on a theater (especially an independent)? Besides the 50%+ film cost how about all the rent that is being paid while screens are empty mon-fri afternoon. An owner is supposed to have the foresight that they will be forced to spend over $60,000 per screen for no reason other than to save the distributors money? You make these type of comments often about D-cinema and frankly you don't know what you are talking about.

You have an expertise in installing, maintaining and repairing equipment not in owning a theater. There is no business case that can be made on the exhibitor side that makes the cost worthwhile. Maybe for 3D but even then it'll take a lot of $2 surcharges to pay for the projector and the 3D system.

On a new build it isn't too bad as it should only be $30,000 or so extra per screen. Not chump change but not a huge deal. But on an existing location where the equipment has been paid for already it is a HUGE deal.

D-cinema was rolled out probably 5 years too soon. If they would have waited until a viable 4K system could be sold for under $50,000 it would have been much better. At least then the cost of upgrading would give the exhibitor a significantly better presentation than what is available at home. Don't say 3D here either because I guarantee that in less than 5 years 3d will be readily available at home.

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Steve Guttag
We forgot the crackers Gromit!!!

Posts: 12814
From: Annapolis, MD
Registered: Dec 1999

posted 12-03-2007 12:12 AM

Actually, TI is promoting DLP and 3D in the home now! They'll do anything to forstall the death of DLP in the home.

http://www.dlp.com/hdtv/3-d_dlp_hdtv.aspx

quote: Mark Gulbrandsen
And we can't blame D-Cinema as an excuse for those theaters not "strong enouugh" to buy/lease one system

It has nothing to do with strength...more like stupidity. It offers little to nothing that the film systems already in place don't or can't already have. It makes no business sense for the exhibitor. And no matter how you cut it, 2K is really a consumer format being trumped up as a commercial format. It is half of the worst 35mm format. It is a format that makes CinemaScope, the format based on more image area, bigger picutre a less resolution/smaller picture.

2K is a nice first step and there have been great strides in it but it is not a worthy successor to 35mm film as it exists in 2007.

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Daryl C. W. O'Shea
Film God

Posts: 3977
From: Midland Ontario Canada (where Panavision & IMAX lenses come from)
Registered: Jun 2002

posted 12-03-2007 12:15 AM

quote: Lyle Romer
Besides the 50%+ film cost how about all the rent that is being paid while screens are empty mon-fri afternoon.

You wouldn't believe how much money I spend on office (and manufacturing) space for my employees that goes unused Mon-Fri evenings/nights and *all day* Sat-Sun (and holidays). If only I had it as good as movie theatres when it comes to maximizing time utilization of rented space! [Smile]

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Frank Angel
Film God

Posts: 5305
From: Brooklyn NY USA
Registered: Dec 1999

posted 12-03-2007 04:14 AM

quote: Lyle Romer
Besides the 50%+ film cost how about all the rent that is being paid while screens are empty mon-fri afternoon

Oh come on guys, everyone knows that DCinema is going to change all that and eliminated all those wasted, non-income generating schedule holes. DCinema, we are told (many times over), will fill those empty seats on weekday afternoons with its unique ability to show ALTERNATIVE programming! You know, during that lonely, one-in-the-afternoon hour when not even the biggest blockbusters can draw patrons, DCinema will fill those seats by showing the same stuff that hardly anyone one watches on PBS during prime time. People evidently are just waiting to flock to see that PBS fare....in a movie theatre....on video....on a Monday afternoon. [Roll Eyes]

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Cameron Glendinning
Jedi Master Film Handler

Posts: 845
From: West Ryde, Sydney, NSW Australia
Registered: Dec 2005

posted 12-03-2007 04:48 AM

quote: Frank Angel
Oh come on guys, everyone knows that DCinema is going to change all that and eliminated all those wasted, non-income generating schedule holes.

I wonder what titles will be avaliable for the potentually lucrative "midnight to dawn" marketplace that perhaps Phil Hill productions could potentially exploit? [Wink]

I too have to agree with Louis, but somehow I can not ever picture the distributors agreeing to lower the rates, even if it was in their best long term interests! [Eek!]

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Mike Blakesley
Film God

Posts: 12767
From: Forsyth, Montana
Registered: Jun 99

posted 12-03-2007 09:17 AM

quote: Lyle Romer
An owner is supposed to have the foresight that they will be forced to spend over $60,000 per screen for no reason other than to save the distributors money?

Actually the CBG plan is shooting for the exhibitor investment to be $10,000 per screen.

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Frank Dubrois
Jedi Master Film Handler

Posts: 896
From: Cleveland, OH
Registered: Mar 2005

posted 12-03-2007 09:37 AM

quote: Monte L Fullmer
"White Chicks" came out. DIED in the first run houses. Yet, we held on to that crazy movie for a record 17 weeks.

This is the MOST amazing fact that I got from this thread so far.

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