I have some very good long-term friends in the exhibition business. These are people who guide a lot of my thinking and shape my opinion regarding the state and direction of this business. I find that the exhibitors who have been active since the early 70’s seem to be the most dynamic and the most innovative. They have seen change before, had no choice but to embrace it, and in most cases conquered it.
I had the distinct pleasure of sitting down last Saturday with a fifty-year veteran of this business. The clarity of his thought process coupled with his genuine belief in the movies was just inspiring. He felt that the changes that the studios were throwing at the theaters could with a lot of work, be surmounted. What truly was great was the fact that he had a core belief in the role and the place of the independent small-town theater in the entertainment economy.
There are no doubt things are changing, but what is surprising is that except for Netflix, the other emerging or establishment players in the streaming vertical are suddenly realizing the marketing strength of a theatrical release for revenue for a feature length movie. Without a theatrical release movie often languish and does little business in video on demand. No one knows about these titles and there is nothing that proclaims to the world that they even exist. All movies need a theatrical release if they are going to do any kind of substantive business.
Mid-week news started circulating that Amazon was in talks with Landmark to purchase that arthouse circuit. The online behemoth has among its treasures, Amazon Studios, which wisely brands its productions with strong robust theatrical releases before streaming them on Amazon Prime. Included among the successful Amazon releases that played well at Landmark locations are Oscar contenders “Manchester By the Sea” and “The Big Sick.” on top of that, the more than wise Amazon Studios distribution head Robert Berney has strong ties with Landmark and more than anyone understand the strength in positioning a movie title with a theatrical release. For Amazon, the Landmark arthouse theaters would be a small purchase, especially in the context of the billions it put out to acquire Whole Foods.
The long-term future of theaters is a muddy field driven by the simple fact that consumer viewing habits shift to streaming. The studios in typical short-sighted fashion have forgotten the key aspect of a theatrical release, while those myopic executives get all arm and toasty over the short-term revenues from the expanding foreign markets and the promise of direct to the consumer relationship. It is a sad fact that most movie theaters are run like real estate businesses, based in suburban malls whose long-term futures are very much in question.
What could be interesting is that Amazon is a studio, it makes and distributes movies. With studio ownership of theaters, it would resolve the day and date issue. The theaters wisely insist on delaying other markets until 90 days after opening. Studios could instantly make changes in windowing if they owned theaters and would then have multiple ways of recouping their investment. They suddenly would see the wisdom and strength behind delaying a VOD release for movies. Studio owners could suddenly afford to experiment with various models including a subscription model to a variety of staggered release models based on possibly urban performance.
Many people are excited about reports about it and it may have many people thinking about entertainment options of the film and television programming a circuit of theaters could exhibit. But if you look at the pattern in the company’s business behavior, Amazon could well be priming the theater industry to radically alter the business of motion picture exhibition by changing the model entirely by injecting the dynamic of eSports and gaming.
Entry into movie theaters is seen as a thoughtful next step along the lines that Amazon has taken into bookstores, Amazon Prime drive food and beverage purchases at Amazon Go locations, and of course Whole Foods grocery stores. As many analysts and observers’ figure, these pursuits in brick-and-mortar are all about widening Prime membership and to provide greater value for this membership. A movie subscription plan tied to Prime membership does make a huge amount of sense, considering the base of 80 million users it enjoys. Imagine if this juggernaut of subscribers is unleashed into the world of movie-going. It could be a real game changer.
For quite a while now, I have been mentioning that Amazon has been a sleeping giant and a real potential partner for theatrical exhibition. I have even made a couple of pitches to industry trade organizations to promote interface between Amazon and the independents. The trade organization never took me up on it.
While movie theaters could be an amazing distribution channel for maintaining and expanding Prime business, Amazon, with its expansive plan will not limit the theaters to deliver feature-length film and television content to customers. It doesn’t need the physical locations to sell related product purchases, either. It could, though, use that type of venue for things that have less to do with film productions from Amazon Studios than content being streamed through Twitch and the upcoming Game Prime.
Landmark Theatres, which has more than 50 theaters in 27 markets across the USA, it is primarily known for offering movie fans access to art films shown in a theater environment that includes luxury seating, brilliant 4K projection and with alternative concession options. In the past, Landmark has offered to let customers “play games on the big screen,” where gamers could bring their personal systems to the theater and have it hooked up to Landmark’s equipment for the “ultimate gaming experience.”
This is not a new idea. Last year one of my companies led an initiative to convert a single screen of a theater in Peoria Illinois, coincidentally also called Landmark, but with no common ownership. The operators own one of the largest bowling centers in the USA. We developed a plan and brought in parties to convert a non-used auditorium space into an esports arena. This arena included 33 PC gaming stations, 16 Xbox One consoles, and 24 PlayStation consoles, along with capabilities to stream Twitch and other game centric content on the big screen. By the way, one of our partners in making this happen was Buck Kolkmeyer, an exhibition pioneer of forty plus years.
What is now interesting is that AMC seems also to be in play, AT&T motivated by the Department of Justice review of the Paramount decree has its eye on that theater chain. This movement by AT&T and Amazon is waking up Disney to the idea that maybe it too should own its own chain of theaters. It is no secret that for a long time Regal was available for the right price.
The presumed weakening of the consent decree could be an incentive for studios to explore buying chains again, It is looking like the current administration in Washington is making plans to say goodbye to that ruling. In the past the studios have skirted around the decree in owning theaters, Universal bought a larger share in Cineplex Odeon in 1987, Loews Theaters came under the control of TriStar Pictures and then ultimately Sony, and of course Viacom owner Paramount has complicated ties with Shari Redstone’s National Amusements theater chain.
I am going to suggest again that independent theaters should really be talking to Amazon….