Premature Obituaries Part 1: Is The Movie Theater Business Dead?

With each passing week of meager reported box office, conventional wisdom in the press is that the tea leaves are pointing to the eventual death of theatrical moviegoing. While the numbers speak for themselves, the leap from near-term results to eventual demise is a simplistic analysis based on two factors that, while true, are not necessarily predictive. Yes, it is true that the closure of theaters during the pandemic helped to solidify home viewing as the default way of consuming new films. It is also true that many audiences (particularly older audiences) are not currently feeling ready to go back to movie theaters; nor for that matter, given their new home viewing habits, do they feel the need to.

But do these facts point to the end of the theatrical business? After all, the movie business has survived many existential threats in the course of its 100-plus-year history. The assumption here is that the business cannot adapt, as it has in the past, to the new realities in ways that could change the playing field. And the pundits seem not to be paying attention to other trends that are creating a potentially positive environment for a rebound.

The streaming business that has caused much of the current disruption is in the process of combusting. The many companies that were rushing to establish subscription VOD services are rapidly realizing that SVOD is simply not a sustainable business model—at least not in its current form. Netflix is cutting back production. HBO Max is being entirely rethought. Every service is adding an advertiser-supported tier that will cost less per month but will have commercials—the kind that cannot be skipped.

Based on all of this, to have any chance of financial success, subscription services will be more and more dependent on quality rather than quantity. This harkens back to the original HBO model, where must-see TV was built on the kind of word-of-mouth that comes from high concept, high profile and controversial programming. It also means focusing almost entirely on episodic programming that locks in subscribers who may be tempted to continually switch their subscriptions to other platforms.

As the subscription business collapses and consolidates, it opens up the possibility that feature films will begin to default to an old familiar model, where theatrical release will set the stage for ancillary revenues that will come from transactional rentals and eventually from advertiser supported platforms. Value will thus be directly related to box office once again.

But none of this will happen without a rethinking of the fundamentals of the theatrical model, which has been ripe for an overhaul since well before the recent pandemic apocalypse. The current malaise should be looked at as an opportunity to shake things up. Here are just a few of the aspects of feature film distribution that ought to be put under the microscope:

The financial relationship between distributors and exhibitors has been fundamentally the same for more than half the history of the movies. Should movie theaters move to a subscription model? What would this mean for revenue sharing arrangements? In a reversion to past practices, should the theaters consolidate ownership with the major suppliers? Should companies with other retail interests such as Apple, Amazon or Disney own the big theater chains?

The collapse of box office for smaller, specialized films may be a function of outdated marketing and distribution models. Distributors have fallen into rote patterns that put films into prescribed categories with built-in rules of their own creation. Are shorter theatrical windows really enhancing value? Are there distribution patterns other than wide release and traditional platform models that depend on awards consideration?

Can the theatrical experience be enhanced in ways that don’t necessarily depend on expensive food and drink options that cut out less well-off and younger audiences? Are prices for tickets too high? And are there ways to incentivize audiences to become more frequent moviegoers?

When I look at the low box office numbers for some of my personal favorite movies of the current year, I don’t see a dying business. I see a complete lack of imagination. With the streaming business in crisis, if theatrical moviegoing is to be saved, now is the time to disrupt.

Feel free to chime in.

2 thoughts on “Premature Obituaries Part 1: Is The Movie Theater Business Dead?”

  1. I will not discuss here if the storytelling is worthy enough to leave home for. Certainly I am an avid B, C, and low rent filmgoer so I like a lot when my expectations are aligned . Incentivizing theatergoers is the key. The multi-screen theatre itself as the primary outside-the-home venue may be the thing that needs a complete reimagining. Property rents alone bring the ticket prices up. Tentpole events in stadiums? Cafe screening rooms in office buildings like in Japan? Movie nights and popular clubs or restaurants ?(though I resent smelling someone’s dinner in the theatre; popcorn being the perfect food for all meals and seasons.) Theme/Amusement parks that are themselves movie theaters with attractions/rides/merch that change with each show?. Movies + live music/art/dance performances preceding them? Themed theaters that are retro/deco/futuristic/fantasy palaces so that the destination enchants? I don’t know the answer but the current movie theatre just doesn’t do it for me. And then of course there’s having to sit there with a mask on. These thoughts in addition to changing the current business models between distributors and exhibitors.

  2. Re: your questions and osit are so refreshing. Quite opposite of Ted Hope’s recent prognosis. Your questions: “Can the theatrical experience be enhanced in ways that don’t necessarily depend on expensive food and drink options that cut out less well-off and younger audiences? Are prices for tickets too high? And are there ways to incentivize audiences to become more frequent moviegoers?” Are great ways to begin to rethink the old model.

    Repertory curation and subscriptions for new curated programming with membership incentives and crew q&a events following the film might bring in more young people.

    Here in LA, the Musoc Hall/ Lumiere, about the ugliest and most unfriendly and under marketed-promoted, badly run theater I have ever seen at least has a marquis one drives past often on Wilshire Blvd and have been showing Moonage Daydream and Decision to Leave and She Said for so long that they might actually build word of mouth, if only the manager/ programmer/ owner were not so unfriendlyy and unwelcoming. And if only parking were less than $25 dollars or the theater would tell you the cheapest way to park nearby even if they don’t validate. But their films are unique, new and good so those in the know who see the marquis can see them.

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