Film-Tech Forum ARCHIVE: Is second run still viable?

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Posted by Sean McKinnon (Member # 612) on 03-25-2013, 03:26 PM:

I have been wondering if second run or "dollar" theaters are still a viable business model these days?

I heard of someone being interested in trying to lease a closed 8 screen in a "dead" mall and try to go sub run with dlp. I was thinking that this is a crazy idea and am curious if I am wrong?

In addition to that is there even any "used" digital machines on the market? I think this person's plan was to save money by buying used digital projectors but I don't think there is such a thing.

Thoughts, comments?

Posted by Aaron Garman (Member # 1653) on 03-25-2013, 03:38 PM:

Our local discount house still seems to have business. In fact, they're still showing Wreck it Ralph despite already being on video. They must be making money.

I think digital could make it easier for one to run a discount. Sure, up front costs will be high but after that, it's all automated. Find the right market, and it will work.

AJG

Posted by Jason McMillan (Member # 5542) on 03-25-2013, 04:20 PM:

I've close ties to one of the three sub-run venues here in Houston, TX. They're upgrading to digital in the next couple of weeks... My understanding is they're going to be installing Barco projectors, Master Image 3D in two auditoriums, and completely re-doing the sound systems (although as old as the current Ultra Stereo processors are, this is kinda a necessity).

If I had to make a guess on the sound systems, I'm betting they go with some sort of Ultra Stereo processor (JS200, I assume) with the USL DAX-602. They are, however, trading the old Peavy CS400 amps for Crown -- can't beat that.

The theatre still does plenty of business for its size -- enough to justify new air handlers, new building signage, remodeled restrooms, remodeled concession stand, and of course the equipment for the digital upgrade.

The new Eprad eCNA10 automations and CLD-2K dimmers just arrived the other day, actually. Was the first equipment to show up.

Sad to say, its going to be better for the theatre because it's been tough to keep a booth staff (and honestly the booth staff thats there couldnt care less about film, its just a paycheck to them), and the labor hours spent with someone upstairs can now be used to keep an extra doorman on the floor cleaning.

You'd be surprised just how many people want to have a birthday party there for their kids, or schools wanting to arrange showings ... and buy kids packs. Cha-ching.

Posted by Edward Havens (Member # 4715) on 03-25-2013, 04:20 PM:

There should be used digital equipment out there by now. I'm vaguely remembering Barco themselves putting some used DP-2000s on sale a couple years ago.

As for "dollar houses" in a digital age, I'm surprised it hasn't happened that much yet, although as a former dollar house manager in the late 1980s and early 1990s, I believe they best work with two to four screens, with double features or day/night split screens bringing in the best mix of guests.

Posted by Jason McMillan (Member # 5542) on 03-25-2013, 04:36 PM:

I'm also pretty sure Cinemark's 16 screen sub-run in San Antonio, TX is all digital, too...

Posted by Christopher Crouch (Member # 3784) on 03-26-2013, 02:38 AM:

I'm employed by a chain which currently operates eleven of it's theatres under a subrun model and all are quite profitable. Seven of these theatres were converted to digital back in 2010-2011 (profitable enough for new NEC & Barco, not used) and an eighth location is currently in the process of being converted. In the right market, subrun remains more than viable.

Posted by Sean McKinnon (Member # 612) on 03-26-2013, 01:55 PM:

How long will 35mm prints be available for sub run houses? I am.told that it would cost 50-100k per screen to do a digital installation from scratch. I think the previous operator took everything out of this location when they left. It is 8 screens and I don't think there is the financing for an $800,000 projection and sound install.

Would it be feasible to start with 35mm and try to convert one house every six months or so or is it way too late for that? When will 35mm prints cease to be struck all together?

Posted by Scott Norwood (Member # 30) on 03-26-2013, 02:38 PM:

Personally, I would stay the hell away from any sort of "dead mall" location unless there were an amazing lease deal and the landlord had plans to bring in other tenants as well in order to revive the location. People avoid dead malls, they attract crime, and are generally bad news for the community.

A nice theatre could potentially help to improve a location like this, but, again, there would have to be a sweetheart lease deal and property improvements (including seat refurbishment/replacement and new/upgraded projection and sound equipment) to make it worthwhile. I don't see the point of installing 35mm equipment in a mainstream theatre at this point. If it were already in place, it could be used for now (of course), but the direction of the industry is clear. I would not spend money to install it, however, unless I had plans for repertory programming or special events, neither of which would likely apply to a mall theatre.

Late-run films would be the least of the problems for a location like this. I do think that the market for cheap tickets exists (at least in some markets), but not in a dumpy location that is being run on a shoestring.

I have been in a few dead malls, and the overall feeling of those places is really creepy. Lots of open space filled with boarded-up storefronts, maybe with a shoe store or drug store or something (there is _always_ a Radio Shack in these places for some reason) still open, and just a handful of people in the entire structure. This is not the sort of place where I would want to go for an evening's entertainment.

Posted by Sean McKinnon (Member # 612) on 03-26-2013, 03:15 PM:

That's pretty much how I feel Scott. Are you familiar with the new harbor mall in Fall River? (edit: i see you are you took the pictures on cinematour) A former co worker/friend of mine contacted me and has this crazy idea on trying to reopen this place. He has some money but no where near enough and wants me to invest with him as partners. I told him that I thought it was a bad idea but that I would think it over. As much as I have always wanted to be a theatre owner I just cannot see this as a winner. I was able start my last business three years ago for about the low end of what it would take to install digital on one screen and tripled my size and am looking at 2 mil in revenue this year. I cannot see putting almost a million dollars into a long closed location In a dead mall.

I think I have to let this one pass me by unfortunately.

New Harbour Mall

Picture 8 shows the entrance to the theatre when it was a Loews

Here it is on cinematreasures

It sais its open but it is not.

Posted by Mike Croaro (Member # 3123) on 03-26-2013, 07:06 PM:

Greetings:

What kinds of prices are "sub-runs" charging these days? Used to be that you had to charge at least 1/2 of the the first run theatres in your area were charghing to be considered sub-run. If you charged less, you wre considered "discount/2nd run"

Is is still the case? Has DVD affected this?

Mike

Posted by Andrew Thomas (Member # 7000) on 03-26-2013, 11:28 PM:

quote: Jason McMillan
I've close ties to one of the three sub-run venues here in Houston, TX. They're upgrading to digital in the next couple of weeks... My understanding is they're going to be installing Barco projectors, Master Image 3D in two auditoriums, and completely re-doing the sound systems (although as old as the current Ultra Stereo processors are, this is kinda a necessity).

I'm assuming this in the Premiere in Webster based off of your description. Gary Moore runs an interesting chain. He used to take over dumpy theaters and run them on a shoestring budget but now has put together a very nice circuit. Too bad his 6 screen in Pearland is so disgusting. Hoping he puts some money into renovating that space now that he has installed the Barcos as of May 2012. Ripped up chairs, curtains, and what not.

Posted by Michael McGovern (Member # 4807) on 03-27-2013, 12:25 AM:

It all boils down to the rent. You can do all the business in the world, but if your landlord is sucking you dry every month, it won't matter.

Posted by Brian DeCiancio (Member # 1422) on 03-27-2013, 10:22 AM:

A partner and I took over a 6 screen sub-run house in November--technically an intermediate as we can play immediately after the local 14 screen Regal has finished its run.

It is a viable theatre for our market, and in fact, Cinemark has an 8 screen discount house 25 minutes away that does extremely well.

Yes, we are converting to digital.

And yes, there is used equipment out there. But it's a small market. When you find the equipment, you need to have the money ready to purchase it, as there are plenty of people looking to save money over buying new.

The considerations are as mentioned above--the local market, the condition and occupancy rate of the shopping center it's located in, and securing a favorable lease.

If you are looking to pocket 6 figures a year, move on. If you enjoy the business, plan on working it at least to some extent and are satisfied with a reasonable return, pursue it.

Shopping centers do not like to have empty theaters and are reticent to invest a huge amount of money to reconfigure the space for typical retail. You may be surprised at the terms you can agree upon. The landlord would not only have to fill in the floor (assuming it's sloped), the mezzanine of the projection booth is, more often than not, a load-bearing wall.

The frontage of a theatre in a plaza or mall is significantly less than what the auditoriums take up. They may have difficulty splitting up the single store front to provide multiple retail outlets feasible frontage versus what lies behind. Those stores end up being essentially a "hallway" leading to nice-sized floor space.

As of this post, we are beginning to feel the squeeze of print shortages. We've had a couple of last minute bookings when "a print suddenly became available".

IMO, don't even consider re-opening or taking one over without a plan to begin converting ASAP.

Posted by Bobby Henderson (Member # 840) on 03-27-2013, 10:38 AM:

All the right variables need to be in place for a sub-run theater to make the expense of buying & maintaining digital projection equipment viable.

Customer demand and demographics are crucial. For instance, it takes enough of a considerably different crowd in order for a theater to show movies that are either fixing to be released on home video or already available on home video.

I'm not optimistic the Vaska Theater here in Lawton will survive. It's a single screen house in need of many upgrades. And that's not including the need for a digital projection system. Fort Sill stopped showing movies at their post theater this past December, and that theater was in considerably better shape.

I was told the folks running the Vaska are actively searching for used digital projection equipment. But finding an acceptable used projector is only one part of a d-cinema conversion.

Posted by Jason McMillan (Member # 5542) on 03-27-2013, 02:04 PM:

quote: Andrew Thomas
I'm assuming this in the Premiere in Webster based off of your description.

Of the three sub-run venues in Houston -- North Oaks Cinema 6, Wind Chimes Cinema 8, and Premiere NASA 8 -- it is one of those, yes. Since I don't officially work for any of those cinemas in any capacity, I wouldn't want to cause any waves.

quote: Andrew Thomas
Too bad his 6 screen in Pearland is so disgusting.

Having myself previously worked for AMC and Landmark Theatres, I've been in a lot of theatres in this city, but this is one I have not been in and unfortunately am not able to comment one way or another.

Posted by Scott Norwood (Member # 30) on 03-27-2013, 02:26 PM:

Sean--I know the location, but not the market. My inclination would be to run in the other direction unless the landlord were to do some sort of amazing sweetheart deal to refurbish the theatre (with [dlp]

equipment and sound systems) and offer some sort of amazing lease terms and is also trying to bring in other businesses and revive the mall.

Posted by Sean McKinnon (Member # 612) on 03-27-2013, 04:25 PM:

I had a conversation with the management company of the mall. They confirmed that they previous tenants took everything but the concession stand. They seem to be willing to make a real sweetheart deal to someone willing to invest the money into reopening the theatre and basically said that if someone makes that investment and builds a relationship with them they will pay to build out a brand new building in 2-3 years (minus equipment) for them when they tear down the existing mall and build a new one.

Unfortunately I just can't get past the 4-800k price tag for a digital install. I will probably wish the other entity good luck and decline as I made an offer to buy another taxi company in a town 30 mins away from me if they accept I will have my hands full anyway.

The other "partner" wants to try and borrow money from a Boston based concession group [Smile]

but I doubt they would be interested as they've partnered in this location before and I think they would have ran it themselves as they have quite a few theaters they run. I am also Leary because I've heard the terms are tough (I think they take 55% of the concession sales till the loan plus interest is paid off) I have heard they built their circuit by taking over theaters that were in default to them.

Thank you all for the advice. If anyone has any info on how these concession companies finance theaters I would be interested to hear about it out of curiosity. I am glad that a sun run or discount house could still be viable I just don't think this is the right time or place.