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Topic: Are movie theaters doomed?

Jeffry L. Johnson
Jedi Master Film Handler

Posts: 809
From: Cleveland, Ohio, USA
Registered: Apr 2000

posted 11-13-2007 08:52 AM

Are movie theaters doomed?

quote:
Are movie theaters doomed? Do exhibitors see the big picture as theaters lose their competitive advantage?

Jon Silver and John McDonnell,
School of Advertising, Marketing, & Public Relations, Queensland University of Technology, Brisbane, Queensland, Australia

Available online 9 October 2007.

Abstract

After three straight years of decline, movie theaters in the US may have recently ended a period of crisis with an increase in annual admissions (+ 3%) in 2006. This article argues, however, that major problems are not over for the industry. Most movie theaters in the multiplex era have adopted a remarkably similar strategy, one which is also very vulnerable to recent trends such as the explosion of home cinema, pay TV, video-on-demand (VOD), discounting by mass merchandisers of DVDs, computer games, and the collapse of video windows. Just as technological convergence has created a challenge for movie theaters, as it has in the past, so too can new technologies and creative use of assets (combined with multiple target marketing) offer a counter measure for at least some movie theaters; at least, until the next challenge arises. What is unlikely to succeed is the status quo, especially when so many multiplexes offer the same format as their competitors, appear to adopt a narrow definition of what business they are in, and manifest a ‘one-size-should-fit-all’ approach to customers. The industry has employed differentiation and niche marketing much less than other industries. As the extensive variety of necessary strategies cannot comprehensively be explored herein, this article focuses on two new technologies from the IMAX Corporation, DMX and MPX, as an example of how a theater operator might counter audience declines.

Keywords: Cinema; Movie theaters; Strategy; IMAX; Home entertainment

Corresponding author.

Business Horizons
Volume 50, Issue 6, November-December 2007, Pages 491-501

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David Zylstra
Master Film Handler

Posts: 432
From: Novi, MI, USA
Registered: Mar 2007

posted 11-13-2007 09:56 AM

Some interesting data to ponder:
From 1970 to 2005 movie attendance increased 52%
From 1970 to 2005 screen count increased 270%
From 1970 to 2005 the average per screen attendance dropped 59%
From 1995 to 2005 screen count increased 37% while location count decreased 20% (the book only had location count back to 1995)

Data taken from the last NATO book we received.

Overall the industry is growing (slowly), but the attendance growth is not keeping up with new screens being built.

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Mark Gulbrandsen
Resident Trollmaster

Posts: 16657
From: Music City
Registered: Jun 99

posted 11-13-2007 10:06 AM

quote:
this article focuses on two new technologies from the IMAX Corporation, DMX and MPX, as an example of how a theater operator might counter audience declines.

Boy the guy that wrote this article is out of touch! I can't think of a single multiplex location thats making any money on its Imax system. Imax still has their hands too deep on other peoples pockets. Everyone with one that I know of wants to get rid of it at the end of the contract. The only thing that might savve Imax's face in the exhibition industry would be for them to go digital to at least keep the operating costs more tame. But of course they will still have their hands in your pocket non the less. So are movie theaters doomed.... certainly not! Only the Imax screens are.

Mark

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Joe Redifer
You need a beating today

Posts: 12859
From: Denver, Colorado
Registered: May 99

posted 11-13-2007 10:11 AM

Was that article written by a computer? For one, the word "Abstract" gets its very own paragraph for absolutely no reason whatsoever. So does the phrase "Corresponding author". Then there are a bunch of keywords. What the hell? Also, I must know... WTF are "video windows" and why did they collapse?

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Mike Blakesley
Film God

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

posted 11-13-2007 11:18 AM

I get the feeling this is a Joe Redifer Sarcastic Question®, but I'll answer it anyway since I have a minute.

Video window = the time between the release date of a movie in theatres and its home video release. Collapsing refers to the shortening of that time, or elimination of it.

The windows have shortened because the studios think they can maximize their return on investment by putting the DVD on sale while the movie is still fresh in consumers' minds.

Actually the average video window has increased in the past couple of years, especially with more popular movies. The window is decreasing mostly with flop films.

That article was obviously written by somebody who doesn't understand the cyclical nature of the movie biz, which has been the same since it began.

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Thomas Pitt
Master Film Handler

Posts: 266
From: Leeds, West Yorkshire, UK
Registered: May 2007

posted 11-13-2007 11:22 AM

Providing there are movie theaters that run new movies as soon as they are released, I don't see them going out of business any time soon. Movies are not released on DVD until a few months later, at least - and not on TV (or TV-on-demand) until about a year after their theatrical release!

There's always the argument that seeing a movie at a cinema, even if it's a second-run or third-run house, is a better experience. You often get full 5.1 surround and an enormous screen without having to invest in the (rather expensive) surround equipment and HD TV/DVD player.

However, I do foresee that in the not too distant future, second-run and third-run houses will see a decline in the number of visitors. More and more people are getting HD-TV systems and the movies these theaters show are often available on DVD already.

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Monte L Fullmer
Film God

Posts: 8367
From: Nampa, Idaho, USA
Registered: Nov 2004

posted 11-13-2007 01:24 PM

quote: Thomas Pitt
I do foresee that in the not too distant future, second-run and third-run houses will see a decline in the number of visitors. More and more people are getting HD-TV systems and the movies these theaters show are often available on DVD already

I dunno about this one since I work in a discount house..being that the quality of movies nowdays geared for the 12 to 18 year old minds, they come out of the gate with guns a-blazing, but they run out of shells and legs within two to three weeks.

Then, we discount houses picks up these exhausted movies and keep them forever. Why? These movies aren't worth the 8 to 9 bucks (3.4 to 4 Pound Sterling in the UK )to see in a first run house.

"Transformers" and "Ratatouille" are now out on DVD, yet we're still doing the business on them. Our biggest surprise was a few years ago when "White Chicks" came out. DIED in the first run houses. Yet, we held on to that crazy movie for a record 17 weeks.

Yet, for the 1 to 2 bucks to spend at the gate: "Well, anyone can afford that kind of money to go see a movie - even the worst ones, cuz that buck or two loss ain't gonna kill them"

But, the big thing is that with a cheap movie ticket means more to spend at the snakbar, esp. if the conc. prices follow the cheap gate prices..

"Thar's gold in dem thar hills, folks"

One little 3plex discount in our area has been striking gold ever since a big 21plex opened up down the next block since they've been getting their overfill from constant sellouts at the 21plex. Plus, this 3plex is always blowing out the other 6plex discount a couple of miles down the street. Why the success of this 3plex? SIMPLE! The owner of that 3plex know how to market that theatre very effectively.

No, I don't think that the discount world will ever fade away simply it's a great avenue to go down on to see the movie on the big screen for little cost involved from the patron.

Plus, it allows those who are strapped for cash, or on a tight family budget, to still get out and go to a movie for their entertainment fix.

-Monte

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Christopher Crouch
Expert Film Handler

Posts: 128
From: Holywood, ca, usa
Registered: May 2006

posted 11-14-2007 12:47 AM

quote: Monte L Fullmer
No, I don't think that the discount world will ever fade away simply it's a great avenue to go down on to see the movie on the big screen for little cost involved from the patron.

I work at a discount oriented theatre myself and attendance almost couldn't be any better. We are regularly at full capacity on weekends (i.e. the only attendance limit being our seating capacity). Defying many of the "dying industry" arguments, we are also located in southern california, where home theatres are plentiful and there are more than a few alternative choices for entertainment dollars. Throw in that this theatre is literally surrounded by other theatres (two mega plexes and four multi plexes within roughly a ten mile radius) and still thriving. I can't speak for every discount house, but I definitely know of a few that aren't disapearing anytime soon.

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Scott McGuire
Film Handler

Posts: 94
From: Elmira, NY/United States
Registered: Oct 2007

posted 11-14-2007 01:12 AM

When you mention discount house what are your ticket prices and what a the large plexes charging in comparison.

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Frank Dubrois
Jedi Master Film Handler

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

posted 11-14-2007 01:13 AM

quote: Mike Blakesley
The window is decreasing mostly with flop films.

Transformers - 4 months
Santa Clause 3 - 1 year and counting

[Confused]

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Christopher Crouch
Expert Film Handler

Posts: 128
From: Holywood, ca, usa
Registered: May 2006

posted 11-14-2007 05:08 AM

quote: Scott McGuire
When you mention discount house what are your ticket prices and what a the large plexes charging in comparison.

We are charging $1.50 at the theatre I was refering to. The nearby megas charge in the $9 to $11 range for their adult tickets. However, this particular area is rather affluent, so I don't believe the lower price is the sole draw.

We have another So Cal discount theatre, in a low income area, that charges $1.50/$2.00 (with nearby megas charging $9 to $11). Interestingly enough, this theatre generally pulls in slightly less people than it's smaller counterpart in the more affluent area; supporting the idea that there is more to drawing patrons than just having a low price.

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Mike Blakesley
Film God

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

posted 11-14-2007 10:14 AM

quote: Frank Dubrois
Transformers - 4 months
Santa Clause 3 - 1 year and counting

Transformers - 4 months is about the average window.

Santa Clause 3 - is a Christmas film. It would make no sense to release it in the shorter window because it would have come out in February. They're releasing it on Nov. 20 to promote it as a Christmas movie. By the way, it did about $85 million, not exactly a flop.

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Monte L Fullmer
Film God

Posts: 8367
From: Nampa, Idaho, USA
Registered: Nov 2004

posted 11-14-2007 01:19 PM

In my area, we have a 14plex that chgs $8.50 night and $6.25 for matinees. And they're right across the way (A KMart is inbeteen them and us. We used to be a Cineplex Odeon location..and long story made real short: I used to work at at 14plex til the change of ownership from EDW to REG that forced me out..).

We're just a plain $2.00 buck 6plex that the entire county on going to since there is no competition for us to be concerned about

If their was ever a condition of "doomed movie theatresw", that would never happened around here.

-Monte

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Louis Bornwasser
Film God

Posts: 4441
From: prospect ky usa
Registered: Mar 2005

posted 11-14-2007 01:45 PM

"We're only doomed if the (financial) insanity continues." Louis

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Mark J. Marshall
Film God

Posts: 3188
From: New Castle, DE, USA
Registered: Aug 2002

posted 11-15-2007 03:22 PM

Sometimes I wonder how doomed we are. I drive into our parking lot, and see more employee cars than customer cars sometimes.

However, I was at a rather unique theater two weekends ago where they were showing Shrek The Third. They sold 170 tickets for one show. Not bad for a movie almost out on video. That's probably close to the same number of tickets we sold for Bee Movie. Then again, this theater provides a much different experience than your standard noisy, advertising infested, flashy neon decorated google plex.

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