I have to first apologize, for the past two weeks I have been off gallivanting around rural Indiana making a World War 2 movie. It was an all consuming experience so I had no time to really share some of ideas I have regarding the future of this business of motion picture exhibition that we all hopefully love and wish to maintain.

The Exhibition industry has made some shaky alliances which are moving to come with a high price, these alliances include;

Relying on the economic model of the mall, malls are dying plan and simple
Building a programming model solely on major studio product.
Focusing on the dictates of Hollywood and not on the dictates of the community you serve
Building a business on blockbusters and not on a secure stream of diverse product offerings

Because of the above, the relationship with the American movie going is in jeopardy. According to Box Office Mojo, 704 movies   were released last year that grossed at least some money in theaters. Some made good money, most did not .The exhibition industry made $11 billion at the box office last year, outpacing any other previous year. Of course that number is misleading having sold the third-fewest tickets sold in the past 20 years, with the highest average ticket price ever and the highest number of releases. This includes the revenue for Star Wars: The Force Awakens, which enjoyed a gross of $937 million. One movie represented almost 8% of the total business. For any business, this is a dangerous state of affairs.

With more product, increase medium competition, higher ticket costs and most problematic a much lower audience engagement. The Movie going experience in 2015 provided a few indisputable facts:

There have never been more movies to see, but fewer releases in secondary markets
With the onslaught of the luxury theater experiences, it’s never been more expensive .
Most theatrical releases given the dominance of the blockbuster have almost no chance to succeed.

There is a dangerous trend to make movie going a luxury experience, the problems is for much of our audience luxuries are just not in the cards. Our business is based on serving mass audience.

We are quickly losing our base and the wounds facing our industry are primarily self inflicted. Consider this . Netflix has made a deal for the luxury cinema circuit iPic to play 10 of its films at its theatre in Brentwood , California, and its location New York City’s South Street Seaport. IPIC and Netflix announced that they will not will not report grosses.

The underlying strategy be Netflix’s awards ambitions and its battle with Amazon than anything else. Playing at an iPic qualifies a Netflix movie for Oscar consideration and provides a prime venue for reaching awards voters while giving the filmmakers a theatrical release albeit much smaller than offered by Amazon, which honors the tried and true windows policy and typically holds movies off the service for 90 days. Netflix is using the Oscars to sell its service and not promote movie going. We indeed have an enemy at the gate.

I personally feel that all the trends toward luxury seating is more than bad move. It is a desperate measure to fight the decline of the mall. Converting theatres into restaurants is just a bad idea. Full-service restaurants at all levels spent about 32 percent of each dollar on the cost of food and beverages, 33 percent on salaries and wages, and from 5 percent to 6 percent on restaurant occupancy costs. Profit margins, however, varied according to the cost of the average check per person. Those with checks under $15 showed a profit of 3 percent. Those with checks from $15 to $24.99 boasted the highest profit margin at 3.5 percent. Finally, those with checks of $25 and over had the lowest profits, at 1.8 percent.

You are replacing high profit product like popcorn with low margin product. It does not make sense.

But as always I see hope and opportunity. I see the re-imagining of the drive-in experience and the revitalization of the downtown movie going experience.

It is time to rip off the band-aid of mall based cinemas and go back to our roots. We are just stalling the inevitable.