Mrs. Curl’s has stood in Greenwood, Indiana since 1962. It is a Tastee Freeze like business which is only open 8 months out of the year. It is housed in a ramshackle building chock full of all manner of machines to dispense all forms of frozen concoctions. Any night you can drive past and there is a line formed in front of the building by people anxious to partake of their product. In many ways it’s a throwback. Old 50’s and 60’s blares over the speaker. People talk amicably among themselves and patiently wait on a sometimes tedious line. The prices of the cones are cheap…for a medium cone it cost’s $1.76. Wait, how can these folks make a buck. Well, they do. In fact business is so good that they are expanding. Now they are doubling in size and will work towards having a 12 month operation.

When Mrs. Curls opens in March, neighboring franchised operations see a solid slump in business . Dairy Queen tries to compete and it fails….other shake and ice cream centric operations have to resort to happy hour pricing in order to maintain a foothold on their core business when this iconic American experience opens her doors.

There are three reasons Mrs. Curl’s does amazing business;

Perceived value
Delivery a constant product that has won loyalty based on consistent service
Won loyalty because of the deep nostalgia factor in its product and it’s surroundings
Perceived value is the worth that a product or service has in the mind of the consumer. For the most part, consumers are unaware of the true cost of production for the products they buy, instead, they simply have an internal feeling for how much certain products are worth to them. Number 2 and 3 really have to be assessed on a theatre by theatre analysis.

Perceived value is the greatest consumer challenge the movie exhibition faces today. Not luxury seating, not laser projection, not over priced chicken fingers……it is simply that most consumers do not see movie going as providing substantive value as a product. In fact most consumers feel that the studios and the major circuits are ripping them off.

During the first half of the 20th Century the only practical option for watching a movie was at the local cinema. Admission was cheap everybody could afford the price of admission as well you could bring in your own food (for awhile anyways). Then, in the early 1940s, television made its appearance in the U.S. Television usage skyrocketed after World War II and by 1954, 56% of U.S. households had a television set. That increased to 90% by 1962.

With televisions threatening the movie exhibition industry, by the 1950’s the practice of producing color motion pictures moved into full swing. At the same time, both film producers and the movie theaters widened the movie screens to provide a more spectacular image providng solid spectactle and a higher perceived value by the consumer.

With the introduction of affordable color televisions and over half of all network prime time programming being broadcast in color in 1965, color television became the standard by the late 1960s, early 1970s. Then in the late 1970s, it became possible to rent VHS tapes of movies to play on televisions. That led to the proliferation of video rental stores including the largest chain, Blockbuster.

It was also during this time period that cable television systems first started spreading throughout the U.S. along with the growth of cable channels and digital-on-demand content. Initially VHS rentals caused a spike in movie going but when sell through pricing was introduced the exhibition base began to be eroded.

Digital HDTV came to the U.S. in the 1990’s along with DVD’s capability of recording movies in high definition. Online DVD rental by mail was offered by Netflix starting in 1997, followed by on-line digital distribution in 1999. Then in 2006, high definition Blu-ray discs became available. Finally, in the past few years, improved quality and 60” and larger HDTVs have become very affordable.

Again, the technological advances with the quality of the TV viewing experience, its increasing affordability and the ease and low cost of obtaining movies to watch at home has pushed the movie theatre industry to improve the quality of their out-of-home movie going experience. We saw the widespread growth of stadium seating, the growth of IMAX screens, improved in-theatre sound systems, modern 3-D and 4K digital projection. Many movie houses have even added bars and in-theater dining.

So initially dens and family rooms across America started to be configured to give families a theatre like environment. Now theatres are trying to emulate living rooms. One day when the studios start revealing their true plans (I got some feedback from a set of SMPTE meetings with Disney and it’s scary) and start really doing day and date….consumers will look around them before they sit down and say to themselves…..I have this at home….what the heck am I doing.

Numerous companies constantly exert pressure on the industry on the whole to adopt new technology and right now the industry is in the throes of fad after fad, each requiring the theatrical owner to expend more of his/her hard earned money. DCP, Laser, Seating Options, 4D…….blah blah blah. It is all parsley and no steak.

It comes down to the following. People are less likely to go to the movies because they think tickets are overpriced, according to analysts. Do not get them going on concessions.

Box office revenues are declining and many truly in the know say high-ticket prices are the villain. Of course the studio attempts to mollify this complaint ….well they have other plans and a consumer who decides to watch his movies at home plays right into them.

In several surveys, 53 percent of respondents cited increasing ticket costs during the past five years as the chief reasons why they abandoned movie going.

With all the new advanced technology, engorged seating, zany concessions and the return of 3D and then the demise of 3D movies, the simple fact is that the negative of higher ticket prices and costly yet more diverse concessions is almost impossible to counter-act.

Industry analysts try to convince the public that the box office next year will see a 2-3% growth. It will not. The numbers behind this growth is camouflaged by a ticket’s price rising on average 3 percent per year. My guess is if you really present the number correctly they will present a conclusion that it simple. The market is shrinking.

The market is shrinking for one reason, a lack of perceived value……as an aside MoviePass is really ill conceived and not well thought out.