The Future of Movie Theaters

I’ve been having a big debate with the guys here at work about the future of movie theaters, and I’m wondering what you think. Here’s my hypothesis:

Home video never hurt the theaters because of the movie industry’s staggered distribution schedules, from box office to DVD to cable. If DVDs were available the same day of a movie’s theatrical release, it would have hurt movie theaters badly.

Now here’s how it comes into play in the future:

Like in any other form of media, the Internet screws up traditional controls over distribution. Many people, confronted with the option of downloading a copy of a movie on the week of release (lesser-quality, cheap) or going to a movie theater (high-quality, very expensive), will choose the former. Of course, this assumes that downloading movies will inevitably be as fast and as simple as downloading music. (Which, in turn, leads to better ways of playing downloaded video on your TV with portable video devices or networked media players.)

Not everyone, of course, because seeing a movie in the theater is a different experience. It’s social and it’s great quality, focusing your attention completely. But going to a movie will become a more elite experience, like the $14 tickets at the Arclight.

But enough families and normal folk (the bread and butter of neighborhood megaplexes) will stop going to affect their livelihood.

This Forbes article, written in March 2001, discusses the state of the movie theater industry. Even without taking the Internet into consideration, movie theaters aren’t doing well as it is, and three of the top five chains went out of business in 2001. (I can’t verify it, but I’d wager that the rising ticket costs and increases in in-theater advertising was designed to offset these losses.)

Meanwhile, compare these 2003 statistics for the home video market to box office sales. The gap between home video sales/rentals and the box office has increased dramatically in the last few years.

The only thing saving the movie theaters is their exclusive access to new films for the first few months of their lifecycle. If the Internet loosens that hold, movie companies will be forced to adapt, most likely by radically minimizing the gap from theater-to-video or offering an iTunes Music Store for films. Earlier this year, Robert Occhialini nicely summarized this situation.

Predictions of the movie theater’s demise have been common (and wrong) for the last century, first by the television and then by the VCR. I’d argue that both did, in fact, erode at the popularity of the movies. But they survived because of their distribution rights. Any opinions?

January 5, 2005: IMDB reports that the number of tickets sold in 2004 fell 2.5 percent from the previous year, and is down 7.5 percent since 2002. Despite this, there was a slight increase in dollar totals. I can’t think of another reason besides rising ticket prices.

61 thoughts on “The Future of Movie Theaters

  1. I haven’t been to the cinema for ages, cant say I miss going either.

    The choice as I see it is either wait in a long line of people, pay what is now a 1/4 price of the dvd itself, and hope there’s no screaming kids in the cinema (or a man with a big afro in front of you).

    Alternatively, wait a few months to buy the dvd and come back to a nice warm home…sit in front of your big screen tv with surround sound. The choice is pretty easy for me to make these days.

    But with that said I think it can still be a good night out, watching superman or starwars on the big screen for the first time left me spellbound… but with time I guess the novelty wears off and convienience becomes more important.

    Hmm.. I do regret not seeing any of the lotr trilogy on the big screen though, that must have been pretty spectacular.

    Lee

  2. I’m just playing devil’s advocate, but here’s another possible scenario (based on anecdotal experience, rather than hard numbers).

    Go to most peoples homes and you’ll find (if they are at all worth visiting) a substantial music collection – either a combo of records (the boomers), cassettes and CDs or just a ton of CDs (the x’ers). People need to own music because listening to a favorite album or song is a repeat experience, and one that can be experienced in an endless variety of settings. I’ve listened to “Exile On Main Street” hundreds of times over the years.

    Now, I’m also a movie buff, yet I own roughly a dozen or so DVDs. But lately I’ve noticed that alot of my friends are buying (as opposed to-or in addition to-renting) DVDs, with the idea of having a “collection.” But how often will they watch them once they own them? I’ve seen “Casablanca” a few dozen times over the years. Compare that with the hundreds of times I’ve listened to “Exile” and you start to see what I’m getting at. DVD’s are a relatively new technology and the novelty hasn’t worn off. But I can’t imagine that people are going to continue to buy them the way they are now. A few years from now, when the collection-minded consumer realizes that he’s never cracked the plastic on that DVD of “Bringin’ Down da House” he purchased the week it came out, he’ll have long since stopped buying up every new DVD release, while his CD (or iTunes) collection will continue to grow.

    Because renting is an option, “owning” movies just doesn’t seem to make as much sense as owning music.

  3. You’re right that movie theaters are in danger. Their business model puts them between diametrically opposed forces: the movie studios and the public. Whenever people decry the high cost of movies, someone like me comes along and explains that most theaters see 5% or 10% of ticket sales if they’re lucky due to their arrangements with the studios, which is why the snacks cost so much.

    At the same time, people are embracing disruptive technologies, and not just the usual suspects. Home theater systems are big business right now and the HDTV changeover is putting a lot of big TVs in a lot of living rooms. Like you point out, just like people with a bunch of MP3s on their hard drives built a market for portable players, there will be a lot of DivX boxes that look nice under a DVD player.

    This leaves theaters in the unenviable position of trying to lure people out of their homes. One metaphor they could use is the difference between frozen foods and going to a restaurant – sure the former is fine for the day-to-day, but going out is an event and a shared experience. Sort of like how bottled water is able to compete with the free stuff by branding…

    Of course, if they could compete better on price (like iTunes does) the theaters would stand a better chance. If I owned a theater today, I’d get a group like Downhill Battle together post-haste to start breaking the major studio’s hold on the business.

  4. Your question brings up the issue of the world becoming a society of individuals. Many of the technological and sociological changes in the last half-century have allowed us to spend less time in public and more time at home. It’s been all about convenience — think about the internet, the shopping mall, the megaplex versus the single screen theater and so on.

    I think that the trend is continuing to favor time alone, which means people would rather just buy the DVD or download the movie and watch it at home. And I think that will continue for the next 10-15 years. After that, I’m guessing there will be a backlash that results in a revival of community. People will get tired of their closeted lifestyles, realizing that using bittorrent to download Spiderman 12 and then heading to a community weblog to talk about it isn’t the same as dinner and a movie.

    Obviously, I’m guesstimating on the timeframe, but I think that humans need communal interaction to thrive and eventually we’re going to trend back towards public gatherings. Also, the loss of movie theaters would result in millions of tweens losing a potential venue for their first date.

    If you’re interested in the decline of American Community, you should check out the book Bowling Alone.

  5. I’m with you on this one Andy. At least to a degree.

    As an extremely amateur Cinophile, I’m one of the people who pays $14 for a ticket at Arclight. Actually, being a member I’ve rarely paid more than $11… but that’s beside the point. There’s something mildly romantic about going to a theatre and seeing something on the big screen. Especially when one can catch a special screening of “This Is Cinerama” in the Dome with a tub of real-butter popcorn.

    Granted, if it weren’t for Arclight my opinion would probably differ greatly. I too hate the cattle trough theatre experience as much as the next guy. The crying babies, theatre hoppers and wannabe gangstas on their Nextels drives me up the wall.

    Unless I really want to see something [or it’s impact will be diminished on my TV] I’ll do like Lee and wait until it’s out on DVD. If I long for the moviegoing experience, I call up my friend with an LCD projector. We gather up 20 people to watch the flick on the side of an industrial complex that another friend rents a unit in. It’s like a drive-in, but we can rewind or pause if someone gets an important call or needs to use the can.

    Occasionally, when we get together for movie night we watch a rip from the net. Normally, it’s a Hong Kong action flick that’s fansubbed with shitty U.S. distribution. Don’t worry MPAA, we’d never dream of downloading one of your films and showing it. [I’m glad that I typed that. It’d be really hard to keep a straight face while saying that.]

    Of course, I know I’m not the norm. Most people who download films most likely have sub-optimal home theatre setups. Many folks are probably happy to watch the videos on their desktop or laptop. Most likely it’s in nothing bigger than an seven inch rectangle while they IM their friends to brag about the movie they just scored.

    I don’t think all hope is lost for the theatres tho. The Arclight is a different beast than an AMC or an Edwards – and that works to its advantage. They can get away with charging a premium by providing a superior moviegoing experience. A proliferation of theatres that do the same thing may be the best way to guarantee that the movie palaces of the past stay in the land of the living.

  6. My local cinema in Glasgow – Europe’s largest, actually, is part of a (French) chain with a novel twist: unlimited tickets for £10 (about $17) a month. Most months I use it with vigour, some I only go twice. Spread that across all the customers, and it makes them money (as well as the snacks we all buy).

    £10 a month is cheaper than buying one DVD, it’s cheaper than any netflix-style subscription, it’s cheaper than the sort of broadband I’d need to download some scrappy movie and the quality’s unrivalled.

  7. I see Dan Searle’s point (see above), but I’ll kindly disagree. Owning movies does make a lot of sense for people in the having-a-library sense. I use the word library deliberately. Many people I know have hundreds or even thousands of books–though most of those books have received only one reading or at most a few reads. And yes, people buy books that they never read, just as they buy DVDs they never watch. So the analogy isn’t to compare movies with music but rather movies with books. People who may have once built up libraries of books or bought a set of encyclopedias for the kids are now investing in movies on DVD instead. Of course, the idea of building a library only appeals to certain people anyway–there are those of us who would prefer to go to the public library, or get a subscription to netflix.

  8. The revenue from DVD sales now frequently exceeds the box office take. As that trend continues, movies will essentially become ads for DVDs.

  9. Though the theatrical release of a film is often not overtly profitable, it still serves as the primary advertising for all ancillary products (dvd, cable tv, video rental, airplane screenings, soundtracks, etc). I’m not saying the studios won’t find another way of pushing their products– but as yet, I don’t think anything comes close to the hype and media frenzy attached to a theatrical release– even smaller movies need it (or perhaps, especially smaller movies). Without having hit the theatres first, films are often ghettoized- there’s still a stigma attached to straight-to-video, tv-movie, or internet distributed films. Again, i’m not saying this won’t change— but for now and in the foreseeable future— quality and cost aside, who would even download a movie that doesn’t have the hype of a big opening weekend? A few, sure— but not a majority.

  10. I disagree that the ability to download films will have any impact on whether people go to the cinema. It’s far cheaper and easier to buy alcohol to drink at home, but this doesn’t mean that people don’t choose to go to pubs and bars too. Plus, there’s something about seeing a film on a TV or monitor that will never be as good as seeing it on a cinema screen, no matter how big your TV is…

  11. It’s worth remembering that it can be months after a US release before many films make it to cinema screens outside of America – and this is in itself a major reason for illegally downloading films.

    Why wait ages for a blockbuster to appear at your local multiplex when you can download a cam version straight away?

  12. I used to run movie theatres for one of the national chains now under bankruptcy protection (I promise, it wasn’t my fault). What I can tell you is that viewership is quite obviously down. What the industry will tell you is that they’ve had record box office numbers (money). The only way this reconciles is if ticket costs rise faster than the decline of audience numbers, which of course is exactly what’s happened.

    But is this a necessary decline? I don’t think so. I used to run two theatres, one was an eight-screen first-run theatre with industry standard ticket prices. The other was a second-run ten-screen theatre with $1.50 ticket prices. Every weekend the $1.50 theatre would outperform the full-price theatre, in attendance and in revenue.

    It is clear that the only thing keeping people out of the theatre is the price of the ticket. Lower it, and the volume of patrons increases, and the internet be damned. What’s the point in spending three hours downloading a crappy movie when you can just go see it in the theatre for a small fee.

    What’s the value of time.

  13. this is a great example of just how Americana we are. But i’ll weigh in as well. (When in Rome…)

    One hour south of chicago, paramount theaters are 5.00 for students. in the city, i pay 8.75-10.00. I’ll only go to the city and pay 8.75-10.00 for films that are distributed in a lower amount of theaters. (independent movies) At the college age, since we don’t have families, going to a movie is still an easy and social experience. There’s also the quality issue… DVD is a crappy format. Film looks so good compared to DVD.

    Also take into consideration the “temperature” of the medium.

    Movie Houses are “Hot” media because they are in a dark room and the screen and the sound consumes your attention. You can really get into the film and feel what seems to be a higher amount/level of emotion.

    Home Video is a “cool” media because there are many distractions, roommates, telephone, IM, a multitude of things, and just being in your domestic space is enough from letting you give the film your entire attention.

    I saw that last year the box office took in a record amount of dollars.

  14. Lets keep in mind that we’re talking about dvd quality rips, even exact dvd images being available on or even a bit before the movie’s release date.

    And creating a “theatre experience” in your home may be a matter of time. With a nice entertainment system, invite your friends (and turn the lights off), and it’s a social experience. You can still go out afterwards.

  15. The movie distribution system is currently set up as a cycle. It goes something like:

    1. action figures/fast food promotions

    2. theater release

    3. HBO/Showtime/pay-per-view

    4. DVD release

    (3 and 4 might be reversed, I’m not sure.)

    What you’re suggesting is inserting “internet release” at step 2. As bandwidth speed gets faster, studios could offer downloads or pay-per-views of new movies, but they’d be eating their own sales. People *already* watch movies on pay-per-view and HBO, and they already rent and buy DVDs. By stretching this cycle out, many movie goers will do all of them. They’ll buy their kids the toys, go the the theater and see the film, subscribe to HBO and watch it, and then buy the disc.

    I worked at a movie theater in high school, and I think that there are movie-goers and there are renters. Some people never (or rarely) go to see a movie. Others do. The current cycle makes sure that all types are covered, while grabbing some people (suckers, like me, who pay to see movies, like them, and then buy the DVD) a few times.

    I agree that instant gratification would be neat, and there are movies I don’t care about seeing in theaters but would pay a few dollars to download, but I don’t think the studios profit from letting me do that a few months earlier.

    What I see happening is that pay-per-download movies will happen — probably a built-in feature in set-top DVRs — but they won’t come out until around until a little before the DVD release. Otherwise why would people ever buy a movie if they can just watch it online whenever they wanted?

  16. Excuse the cynicism, but having been through the betamax-vhs-laserdisc-DVD/VCD cycle (or LP/8-track-cassette-CD-minidisc-mp3-ogg/wma), I don’t think owning a physical library is practical. How many people actually want to fire up the vcr? Soon, the vcr will be gone when recordable DVD/Blu-Ray/HD-DVD comes up. Then what? How many people still listen to their old audio cassettes? A lot of new cars don’t even have the option anymore. The same will go for downloads when the codecs change (or OS changes).

    Theatres need a new concept. The home theatre crowd rightly avoids the cinemas (imagine plunking down a few grand on a system and not really use it?) due to its inconveniences.

    The need for proper streaming video will be best. A small subscription (or one use price) will offset spending the 30$ on that Will Smith movie. It will put onus on the provider to keep up with technology and everyone has a “library” in its current format.

    However, the tech is not there and when it does come around expect more than the screen jockeys to be worried.

  17. How anybody gets any satisfaction whatsoever from downloading an illegally taped video from the theatre and watching it on their computer is beyond me. The idea of a movie is immersion of the story/experience. The poor quality would be too distracting.

  18. David: You’re right, there’s no financial incentive for the movie industry to release new movies online, yet.

    But then again, there was no incentive for the music industry to start selling albums online either, until consumers started choosing a free and convenient alternative to CDs. They were forced to adapt.

    I don’t think there’s any question that the home video sales/rental market is going to be confronting these issues very soon. The question of theatrical releases, for me, is still up in the air.

  19. Maybe this explains why there’s so many big-budget spectacles these days – they won’t look as good on small TV (or computer) screens.

    Movies in the 60s were competing with television – by offering widescreen-format movies like “Lawrence of Arabia” and “The Sound of Music.” So is history repeating itself? When The Polar Express opened, 10% of its revenue came from: Imax theatres.

    I started to say there might be more tie-ins to existing products. (Powerpuff Girls, Sponge Bob Square Pants, the Rugrats, the Simpsons.) But then I realized I was confusing movie producers with the struggling local theatres that show movies. I think producers are prohibited from owning theatres – but if the theatres start to collapse, I can imagine the producers finding novel ways to subsidize them.

  20. I’m rather Internet savvy, but have no interest in downloading movies from the Web. Going to the movies is an event in our household. I may not like the high prices, but look forward to taking my 5-year-old daughter, buying the popcorn, etc. etc. etc.

    I think it’s a mindset thing ultimately.

    I think movie theatres will continue to adapt and that movie studios will not change the distribution. Will the Internet be a factor? — probably. But right now, in my humble opinion, for the average computer user, it’s just not worth the work it takes to get a movie and then play it on a television in poor quality…

  21. On the note of the “social gathering possibilities of movie theaters”, this is a highly speculative line of work. On one end, you have the internet taking down several forms of older social interaction in favor of in-home convenience, counter-weighted by the creation of electronic communities that tend towards niche audiences (This may prove a boon for independents not only in distribution, but exhibition). But of course the niche audience will not maintain the multiplex that has 400 seat houses. It would however support a “mormon” style that has alcoves seating

  22. Jake is on the money (ha). I love going to the movies, and I don’t download movies, but I haven’t seen a first-run film in a long time due to the high ticket prices. I’ll wait for it to come to the reps in a couple of months.

  23. To those who say that it’s not worth the effort it takes to download a movie haven’t downloaded a lot of movies or the more popular, TV Shows. I don’t have a PVR like TiVo but I haven’t fired up my VCR in over year. I download any of the shows that I’m interested in via a Bitorrent site. And these sites are becoming more and more specialized. Want movies – go to this site. Want TV shows – go to that site. It works for me and many others and the tools are making this even easier to the point where you don’t have to do anything. Take for instance #bt-autoloader (http://bt-autoloader.kickme.to/)

    Straght from their site: “What is This?

    This is a Mirc script that listens in the #bt channel for announcemts of new Tv-Show seeds, automatically gets them and feeds a BitTorrent client with it. All without user interaction!”

    Or even this engadget article “How-To: BroadCatching using RSS + BitTorrent to automatically download TV shows” http://engadget.com/entry/1234000167021291/

    You could do the same thing for movies. It’s being done and it’s being done well. You don’t have to be internet savvy to do it either – you don’t have to do anything.

    Ps. theaters are over priced. Why don’t we start to pay our Hollywood “stars” a REAL salary (say $200,000 a year) instead of millions of dollars which ultimately is what has contributed to the high cost of a movie. Some of these actors are crap anyway and way overrated.

  24. Ya’ll are missing two *major* factors in the theater declines. One’s getting fixed, and the other is related.

    One, there are too many theaters. In 90s, spurred by blockbuster after blockbuster, the theater chains began building 6-24 screen megaplexes all over the country. Small towns in alabama were getting 2-3 24 screen buildings. There was *no* market showing the need for this, but the theaters thought they were planning ahead. By 2004, a plateau in theater-goers and rising infrastructure costs really hurt the revenue streams and ticket prices sky rocketed. Today, you’ll start to see many buildings reduce their sizes or close completely.

    Two, once the reduction is complete (give it time, but it’ll come soon), theaters will suddenly look “busy” and there’s the next big factor: the social thing. People don’t like being social in a place where it doesn’t look like anyone else is there. Theater premiers all over the country used to be affairs for lines, parties, dressing up, etc. That can come back. It’s just hype and hype is cheap.

    New technologies are going to come about, as well, making going to the movies just as easy as renting or better. No more lines. Snacks included in the price and waiting for you or delivered to the seat. Keep an eye on ShoWest in March for some of these ideas to be pushed.

    On a related note, the theatres *are* coming up with new revenue streams. Microsoft, IBM and Sun frequently use the theaters in my area to give seminars. Halo2 was hyped by renting theaters where gamers could play Halo2 on a giant screen. You’re going to see more and more of theaters using their massive spaces, vending/catering facilities, and superior A/V technologies to provide more non-theatrical services.

  25. I think a lot of people are giving home theater too much credit. I have a pretty nice home set up, but it doesn’t compare to the theater I go to see movies. I agree that ultimately it comes down to the experience. That’s the opinion of a theater snob; I’m not paying the premium price to watch a movie in some rundown dump. I’m going to the theater with the stadium seating, killer audio or, when I’m lucky, the IMAX. I have no problem shelling out for a quality experience — hell, I’d even pay more. I’m not without culture, but the movies are my symphony or opera. Be picky too — save Bridget Jones Diary 2 for DVD (or better yet never) and go see the LOR for gods sake.

  26. I completely disagree with the notion that mainstream “megaplexes” will soon go the way of the dinosaur. The fact is that people aren’t downloading movies instead of seeing the film on the “big screen.” They have no idea what Bit Torrent is, or what a blog is, or what Usenet is, or what RSS feeds are, etc. The majority do not possess the ability to pirate films in the first place, nor do they really care. They occupy their time by finding their favorite single with SoulSeek, downloading spyware/adware/trojans unintentionally, and posting their pictures on myspace.

    Personally I am confounded daily at how stupid people actually are with their computers. I think you might be giving the mainstream too much techno cred . . .

  27. Jesse: Excellent comment. It’s very interesting to see the perspective of a theater insider.

    Discord: I’m not talking about right now… I’m talking about five years from now, when downloading movies is as simple as downloading an MP3.

  28. I wouldn’t call the mainstream “stupid”. That same maintstream cleans sidewalks, repairs telephones, and replaces the filters on the industrial smokestacks. Just because they don’t live/breathe the techno-world doesn’t make them ignorant, just busy.

    As for 5 years from now? I’m more worried about the laws that will be passed in that time than any socio-economic shift. It’s more likely that by then we won’t be allowed to have movies on un-networked machines (so they can ping back to their distribs), including DVD players, VCRs, etc etc. The MPAA is *very* powerful.

  29. Take one Sanyo PLV-Z2, One set of Creative Megaworks 610D, one fairly decent gaming/pvr box, a Pelican System Selector, one 6.1 Channel A/V receiver, one Da-Lite High Gain screen, and some comfortable seating and boom:

    You haveh your own movie theater. It takes a little time and effort (and about $3000 cash, not including furniture), but from forever on, no one is charging you six bucks for f-ing popcorn. And who cares about seeing a movie first, if it’s worth seeing it’s worth waiting a little bit till you can get it from Suprnova.

  30. I rememebered having this conversation with Ev over lunch a long time ago. Turns out he posted about it.

    My argument was as a new parent it is irrelevant if a movie is out in the theaters, DVDs target a totally different audience of folks who don’t have the time or inclination to leave the house – but perhaps have money.

  31. The Future of Movies:

    1) CD collections vs. DVD collections, Media Convergence

    One thing I’ve noticed lately about films is how the line between film and music is getting very blurred. We can’t imagine films like The Graduate, American Graffiti, Pulp Fiction or even the brand-new Garden State without the soundtrack. The soundtrack is not just a backdrop, it is a character in the film. I think this blending will continue in unforeseeable aways–particularly as the I-generation grows up and takes hold of their media. The media consolidation of the 80s and the rise of MTV have primed our culture for it, computers have given us the technology. There will still be CDs and DVDs (or their small-disc equivalent); but more important will be the infinitely re-watchable “Movietracks.”

    2) The Future of Distribution

    I agree with the general consensus that conventional distribution is going to suffer–seriously–in light of the digital distribution occuring over the Internet. I recently went back to college, and let me tell you there are more students downloading movies here than not. It’s not a trend; it’s a movement. What the theater-owners need is to differentiate the experience of going out & watching a film from staying in & watching one. As Andy noted, the situation is akin to the rise of television & the studios’ responses: widescreen, Cinerama, 3-D, Smell-O-Vision, etc.

    I see two ways of doing this for today’s generation. The one theater here in Seattle that’s *always* packed is the Cinerama, retrofitted with Paul Allen $$ to include plush seats and THX sound. I’ll always drop the money and wait in line to see a movie there; and I won’t see LOTR or SW on any other screen. By contrast, McMenamin’s in Oregon has several bar/theaters, which show second-run or cult films. The atmosphere is very social, particularly in the places where the screen rolls up and out of the way after the film is over. I see an excellent opportunity for indie theaters to get in on the H’wood deal, by slapping a mid-range projector & some speakers in any bar or coffee shop. H’wood studios, as they are forced to move to digital distribution themselves, can make up the loss of 24-plex cinemas in volume. Just like everyone else on the Internet.

  32. I didn’t read everyone’s comments, so I might be repeating someone, sorry. Also, I don’t consider myself to be of the calibre of internet users that generally post.

    I go to the movies pretty frequently. I’ve found that pretty much any film is better when viewed in a theatre. Personally, I am more likely to purchase a film if I have seen it in the theatre, than if I have only seen it on rental.

    I disagree with the assertions that people should collect audio discs and not DVD’s. If I buy the DVD I am guaranteed to watch it pretty regularly. I like movies. I don’t buy music very often at all. I’d have to say I’ve bought 5 DVD’s to the one or two CD’s I’ve gotten recently.

    However, I do have a pretty vast collection of mp3’s (nevermind how many precisely, but a lot) that were horded before the whole legality bubble burst. I pretty much just listen to those. It has to be a truly exceptional album for me to buy it new. For awhile, I also had a pretty large cache’ of divx ripped movies. Even though I own a DVD player capable of playing Divx films straight onto the TV, and even though the quality of the ripped movies is pretty high I rarely ever watch them. I find that if I like a movie enough to watch it, I then want to watch the special features so the Divx or pirated movies just don’t appeal to me anymore.

    But I’ll shell out $7 to see almost any movie that catches my fancy because I enjoy the escapeism of being inside the theatre.

    I do believe the theatre industry is changing, and I think it is unfortunate that prices continue to rise, but I also feel like prices on almost all consumer products, especially services are rising and that singling out theatres as having a big problem is not really what matters. I do not think the theatre industry will go away, and I do expect, as soon as the economy takes a major turn that people will begin going to them in mass again.

    After all, it’s a lot like those skewed statistics about CD sales slipping because of the internet. It’s not the file sharing software’s fault. It’s because everything is so expensive that if we can find a way to get it for free, then we’ll do that. I truly believe that if the minimum wage was higher, you’d have less “piracy” and more sales. People like going to the movies, people like owning DVD’s and CD’s. We are tactile by nature. We like the feel of something in our hands, the smell. Sure, the music and movie industries are going to have to adapt to people wanting to use the internet to get these things, but I don’t think it’s the end of non-home entertainment.

    Also, I think it’s silly to blame long lines for not going to the movies. If you’re using the internet, you can get your tickets in advance right there, thus bypassing all lines all together.

    I believe the true future of theatres will be pretty much like it’s past, except the technology will get better and thus the immersive experience will be improved. This is what will bring people in.

  33. For me, the bottom line is price. I do not go to big cinemas because of the high ticket prices and because of all the ads at the beginning. (LOTR was an exception. Even that wasn’t really worth it. 20 minutes of ads + 3hr film. My ass was sore by the end.) I can find other things to do for $24 (tickets for two). Buying DVDs is the same way. I don’t want to spend $15-20 on a film I’m not going to watch more than once or twice. As for downloading movies, does anyone over the age of 23 do that? Of those people, who has a HTPC hooked up to their home theatre? Of that, who wants to spend the time waiting for a download of a low quality film so they can watch it on their HTPC output to their HDTV?

    I like to go to local inde film places where I can watch unusual movies and have a beer. The picture and sound may not be that great but the social atmosphere makes up for it. I also appreciate the intermission so I can go take a piss without having to interrupt the movie. I also prefer DVD rentals in my living room over big movie-plexes. If NetFlix included game rentals or I watched more movies, I’d join up. NetFlix seems like the new model the movie industry needs to follow. Why download the film when you can have it mailed to you in about the same time?

    The only problem with NetFlix for me is the wait time. Movie going always depends on my mood. I usually rent or go see a film right when the mood strikes me. If Netflix could be more on demand, with the same selection, I would love it. The most ideal situation for me would be if NetFlix were available as ‘on demand’ (not pay-per-view) as an add-on to my digital cable. Wow. That would rock.

  34. As far as the trends go, laziness and common American society go hand in hand – fast food, video on demand, and sitting on the couch. And, by the way, I blame that video generation (which I grew up in) in teaching current crowds the attrocius behavior they display in the cinema, which has gotten out of hand. For many of them, the living room and the movie theater are interchangeble.

    These days, the Arclight is my theater of choice. (Being three blocks from it helps too.) I also am a member and try to attend during the $11 screenings, but I have NO issue coughing up the fourteen dollars. (BTW, rack up the points and score free drinks and popcorn – it all evens out.) Forget making me wait in lines and forget making me sit in lame crowds who don’t care about actually paying attention. Unless I go to the Mann’s at 2:00 in the afternoon on a Tuesday when I know it’s empty – it’s the Arclight for me. The selfish version of me wishes more lazy vidiots would stay at home and leave the theaters for not only movie lovers, but movie-going lovers.

    Occasionally, I’ll rent the missed movie or the one not realeased in theaters…and I’ll catch up on my bad romantic comdies when they play on HBO. And I buy a TON of movies – but ones I love and can watch over and over again.

    In the end though, all things come back to the basics – and no matter how great your home theater is, the movie theater is a place that cannot be duplicated in any other form.

    pJ

  35. Andy, two quick things on the economics of movie theaters. (I don’t see anything to dispute with about your analysis of downloaded videos, except to say that adoption in the US will likely be a lot slower than everywhere else in the world; I’m not sure if this is good or bad based for Hollywood, although it’s good for the theater chains.)

    1. The series of bankruptcies in 2001 was, as someone else noted, largely the result of a multiplex buildout (and to a lesser extent a stadium-seating buildout); the theater companies based their revenue projections on what were in retrospect unusually good years, did the thing that happens in every industry (imagined seizing market share with capital outlays without considering that -everyone- might do it), spent all their money, and blew up the first time there was a downturn in movie audiences. But, just like with the giant fiber-optic buildout, there’s a infrastructure that came out of it, and the currently existing theater companies bought assets out of the bankrupt and smoking remnants of the crash. They’re a lot healthier than the last time through the cycle.

    2. I used to volunteer at a great movie theater in Berkeley, CA, the Fine Arts (once upon a time owned and run by Pauline Kael’s husband, and later turned into a blue movie venue; now I believe it’s been torn down and turned into condos). The projectionist, Josephine Scherer, was absolutely absurdedly good at what she does. Sadly, venues like the Fine Arts are probably going to be the only place where projectionists work in the future. Multiplex projecting (which is dismal to begin with) is in the slow process of being phased out — digital movies are going to be phased in, and the entire method of shipping film around is going to disappear. This eleminates a surprisingly large frictional cost for the industry.

  36. i enjoy going to the theater. I would go a lot more if it didn’t cost a fortune, but I won’t ever stop going completely.

  37. Unfortunately for the theatre owners, their big plan to reduce costs is the installation of HD projection systems. (Philip Anschutz, who owns the largest theatre chain, Regal, also owns a broadband business.) So for the first time in history, the technologies used in theatres will be the same as those used at home. I can’t see how that will help drive people back into theatres.

    From looking at the MPAA’s own stats about the decline of frequent viewership (those who watch at least a film a month in the theatres generate 78% of the ticket sales, and they are vanishing rapidly), I can’t help but see the whole current system as doomed. Unless these guys come up with some new ideas, stat.

    (If you don’t mind the self-link I’ve got a post with a ton of detail about these issues here.)

  38. i go to the theatre as a social event more than because i want to see the movie. if i want to see the movie right when it comes out, i’m quite content with nabbing a telesync and watching it in my room.

    the only real reasons i go to the theatre is because a) it’s a movie worth seeing on the big screen b) i want to support a local theatre company (like landmark theatres) or c) some friends/family are going out together.

    i just can’t understand paying nine dollars once a week to see the latest film and paying ten dollars for concessions just to sit in moderately comfortable conditions and having to miss parts of the movie (and annoy everyone i walk by) when i have to pee.

    alternative to the theatre, i can watch a dvd (or even a telesync/xvid/divx if i want to boot up a home theatre pc) in the privacy of my own home on my own television and pause when i have to use the bathroom. moreover, popcorn is pretty much free.

    furthermore, with the advent of netflix and “mvp renting” from places like hollywood/blockbuster, movies have never been cheaper. couple this with dvdshrink or dvd decrypter and your movie collection grows every week.

  39. Take in mind that Hollywood is simultaneously going to shit as all this is happening.

    I don’t know of many people who actually take the time and bandwidth to download a full version of the League of Extraordinary Gentlemen. You can easily wait for the DVD or HBO if you wanted to watch something like that. Instead, the internet offers many more options. Instead of being subjected to the awful remakes, you can use Netflix to order something you might actually like. I’d rather spend the night reading up on the cannibals of the Amazon.

    Hollywood is slowly understanding what it means to have some competition for entertainment, and eventually they’ll have to figure out what quality is if they want to survive. Or they can continue blaming the few downloaders out there.

  40. I think I wouldn’t mind going to the cinema if I didn’t feel like I was being gouged.

    The problem with the Movie Theatre is that there is no competition. Most areas are under a virtual monopoly.

    Monopoly or not, all theatres provide essentially the exact same service: same movies, same soda and popcorn and oversized candy bars, and they all seem to charge the same ridiculously over-inflated prices (it costs me $20 for a single ticket, a regular Coke and a regular popcorn).

    A single showing of any film would probably earn the cost of the print, so the ticket prices are hard to explain. At least a good 95% of the concession prices must be markup.

    I’m really actually quite surprised that there hasn’t been any investigations into price-fixing.

    My point is this: Cinemas are killing themselves off with their own greed.

  41. There’s an article that was published a couple years ago which helps explain a part of the phenomenon referenced by Jesse (searched, but couldn’t find it). It talked about the way that movie theatres opened more screens in order to beat each other out on “Opening Day”. I remember in the 90’s when going to Batman on opening day was guaranteeing that you weren’t going to get a ticket. Now, I can’t remember the last time I went out to see a movie on opening day and wasn’t able to get one of the next two showings. It seems like if some of these megaplexes fail, it will be a normal business cycle adjustment correcting for overexpansion, as Jesse suggests.

    The price issue also needs to take into account the quality of experience of being in the social commons of a theatre. As soon as I turned 21, I remember deciding that I couldn’t justify paying high prices to go see a movie with obnoxious cell phones, crying babies, rude high school students, and strange mixed smells of hot dogs, ketchup, and popcorn. All this contrasts with my recent trip to the $14 Arclight theatre that hosted a much more movie-buff-like crowd. In that case, I felt my $14 were well-spent to support a smaller release that was shown there.

    In Dallas, we’ve got a couple theatres that show $1.50 movies a couple of months after the original release. Best idea ever. That place is packed with folks each night, especially over holidays. The theatre still makes money on concessions, and it’s a good chance to catch movies that I kinda wanted to see, but didn’t want to spend a lot of money on. In California, such a theatre might not be able to afford the rent, but who knows? I know I would go if there was one near LA.

  42. I think it goes to show how important movies have become to people. When the movie is a good one, people will still flock to it; take LOTR for example. LOTR was a great series with great success. Same with The Matrix. Why waste money on a lackluster film and some ridiculously overpriced treats when one can waste a little time and watch the movie at home, whether it be DVD quality or not. Image and audio quality aren’t the most important part of a film, the film itself is. Film makers are being forced to create movies which stick out, something they’re not used to being forced to do.

  43. Is there any chance that a string of theaters could pop up that play older movies? I’d love to go to the theater to see a great movie on a huge screen with tremendous sound. Add in an enthusiastic crowd too. Problem is that there’s nothing like that playing this weekend; first- or second-run.

    Imagine being able to go see Aliens, or any of the LOTR like that. Heck, it doesn’t even have to be an event movie – I would love to go see Local Hero in the large!

    Is this just not finacially do-able? Is anyone doing this already, other than the local colleges?

  44. Movies will survive because people want to get out of the house. Especially teenagers who make up the bulk of the public. Hollywood will focus more and more on big budget spectacles that both appeal to this market and don’t migrate well even to the best of home theaters. Plus, satellite distribution will make all kinds of new programming possible; programming for dayparts, utilization of film libraries, etc.

  45. This is the same main idea as in the 80s past years with Video tapes, when Cinema were offering the same movies for home vodeos some months later, now DVD are shipped some weeks later, and Here -for example- in Tunisia DVD harms very much Cinema as the next DVD shop offers the choice of a cheap home entretainement. Maybe Cinema inditry must get to an other level that makes the difference (better video and sound).

  46. Speaking as a teenager myself, to the majority of the teenage crowd going to the movies is not so much to see a movie, as it is a social event. Theatres will survive in part because Teenagers feel the need to see so many movies so often, and with so many people.

    Just my ten cents. Sorry if that was redudent, I didn’t read many of the comments 🙂

  47. ESCAPISM

    In smaller towns, the theater is a place to go to besides Walmart and Church where there is lots of music and action.

    I go to the movies because it immerses me in sound and light. I just can’t get that experience in my living room … yet.

  48. I still see a movie a week, occasionally more…my average since college. These days I visit “brew-n-views” almost exclusively. This means seeing second-run films, for $3 at the Box, with a beer in one hand and a pizza in the other. It’s generally acceptable to talk to your friends (no shushing), there are no screaming children, and you get to sit in front of a table, so no food in your lap. Sound and image quality are sub-par, but still miles better than a home movie. It’s cheaper, more sociable, more genteel than seeing a movie in a big box next to the mini-mall.

    These places are all owned by local breweries and probably operated for a pittance. Many of the ones around here (Portland, OR) also show Monday night football, Simpson’s on Sundays, the Oscars, and so forth. Sometimes they’ll re-run oldies like RAIDERS OF THE LOST ARK, which is brilliant.

    If the movie theater industry is hurting, I can suggest a new business model.

  49. I’m running out the door so I have no time for a big post but just wanted to chime in and say that I’d gladly pay the $14 for a theater experience if it was like Arclite. Hell, I’d pay $20 because it’s actually enjoyable. Conversely, it takes quite a bit to get me into another theater, even if tickets were sub $5 it would take alot because of just that, it’s not an enjoyable experience.

  50. As someone who is married to a filmmaker, and who has spent the last year mired in this equation from the independent production point of view, here is my $0.02.

    The business of owning/operating theaters is wholly seperate from the business of making and marketing films.

    When you “sell” your film to a distributor, their main interest is in aquiring _all_ of the re-sellable rights. Most distributors won’t touch something where only the theatrical rights are available. Why? Because most films net little if any profit for distributors during the theaterical run. (Theaters typically take 30 to 50% of total ticket sales right off the top, each film “print” costs thousands of dollars, and mass media TV/print/radio/internet advertising is very expensive.) Disitributors essentially “invest” in the theatrical run because the preceived value of all of the other sellable rights related to a film are very much defined by total gross box office receipts. This is why Variety and related trade rags are so focused on gross box office numbers.

    In sum, film distributors always treat the theatrical release as the loss-leader that drives publicity for the longer term revenue stream of home video, pay tv, free tv and cable tv. Blockbuster and even mom and pop video stores often scale their purchases of product based mostly on how much gross revenue the product created during its initial theaterical run.

    The demise or success of theaters does play on outside factors such as the public’s appetite for the movie-going experience and the new, varied and appealing alternative options for entertainment delivery. But the present day equatuion for theaters relies most heavily on the fact that distributors use them as the primary means for up front publicity campaigns, with the distributors footing the advertising bill and only receiving roughly 50% of the ticket sales.

    As movie distributors find new ways to incorporate internet-based distribution systems into their front line publicity building campaigns, and as ancillary markets start to pay attention to those gauges of success rather than groos box office receipts, THEN and only then will theaters start to be really heavily affected by the alternative distribution schemes, such as online distribution.

    Piracy is a very separate part of the equation that effects most of the actors in the same way: as piracy increases, gross revnues based off the existing distribution models start to fall across the board.

    Until film distributors find a new “release” strategy that works buter then the current methods, theaters will remain willing tools of distributors and will happily pick up whatever scraps they’re allowed via front-loaded commercials, slide advertising, expensive refreshments and so forth.

  51. I think the pattern that the Creative Commons license suggests that if your target with your product is for the general community to consume media, that media needs to be freely owned and resuable.

    Anything less than that, will get hacked.

    Your revenue stream is then on real products, services, or fostering a community.

    I should be able to pay the MPAA directly $5 a month for my own personal consumption of any of their works forever, and in any form, immediately after it is finished, and on my schedule and terms. I can freely trade, comment, remix, share, etc with anyone else who is paying that $5 a month.

    That’s more than 2 or 3 times than what I currently pay at the theaters, and renting in a year.

    But, they just don’t get it, and I’ll want to pay less and less the longer it takes for them to deliver it.

  52. i have a friend who is a projectionist at a local plex…he is down to 20 hours a week…he and i both after being movie fans for a long time see this problem..to many people dirty the theatre and not enough employees to clean up the mess…people constantly on their cellphones which light up…talking to much…feet on furniture…managers who don’t care…they get the bonus for keeping hours down..and they get complete benefits while no one else does…no atmosphere for moving going…concessions to high because movie distrubitiors are taking too much of the profit of the movies shown…like our so called free trade…the profits are totally to the distrubitor. and at last the quaility of movies has really gotten bad.

  53. It’s 2010, and Blockbuster is nearing its end and soon to join Hollywood Video and admit defeat to Netflix, which offers rentals through mail or stream online straight to your television. I was going to continue going to the movies because they were offering 3D movies at $10 which I considered worth it for the unique experience. Recently movie theaters in my area raised the price of a 3D movie ticket to $25. 3D televisions are around the corner, a few on the market.

    I believe that once the movie theater industry disappears, companies like Netflix will raise their prices both for their own greed but also to pay the studios for their movies.

  54. I feel like the ticket prices will never stop going up. Netflix and other companies have put companies like blockbuster out of business for a movie store.

  55. Motion Picture Theaters began decline when The Department of Justice forced the Hollywood Studios to sell their theatre chains. The large single screen theaters began to be torn down and replaced with multiplex cracker boxes. Patrons treated like cattle and soda/popcorn became more important than presentation. Showmen Managers replaced with High School Children and skilled projectionists replaced with push button automation. Auditoriums with awful acoustics and floors sticky with soda syrup and popcorn grease. Greed and stupidity.

Comments are closed.