Being Big By Thinking Small

I do not believe that big is better. In fact I would say in the movie business whether its production of exhibition small is much better. I see the erosion of the big mega mall, dwindling of Hollywood output in favor of big tent pole movies and the I see the collapse of the multiplex model. Let me give and example; This is the season of Halloween and horror films are more than popular. A 30 plus year old movie is being re-released usually for a one or two night play dates. Some of the majors have booked the movie and expect to see 30-40 attendees per screening. Smaller theatres in America and in Europe have booked the movie and are seeing 400 plus tickets sold per screening.

Now we are seeing this trends applies across the board where audiences are abandoning the big and are flocking to the small. There is an trend to reject major brands in favor of niche product. The movie business has not escaped this trend. I would make the bold statement and say quite forcefully that being a Regal, AMC or Carmike theatres is a handicap in the present motion picture exhibition market. People do not like the large circuits period. And given the trends I do not see it getting better anytime soon. What I see frankly is a large movie going audience looking for a home and having a hard time finding it.

They are looking for diversity, a retro feeling, value and most of all a sense of community.

I have sat in all types of movie theatres and had all kind of viewing experiences and some common truths emerge. If the audience feels that their time and their money is being respected then they respect the screening environment they are in. If they have to endure commercial after commercial and are being charged outrageous price for concessions they will begin to really chafe at the experience. Let’s face the major circuits are wacky when it comes to concession pricing. Look at the pricing that AMC has;

Chicken Tenders + Fries + 1 Large Drink $18.79

1 Large Popcorn + 1 Large Drink $14.59

1 Large Popcorn + 2 Large Drinks $20.79

1 Movie Nachos + 1 Large Drink $13.09

Audiences are not stupid, they know theatres make most of their money on concessions and the studios really put the boots to the movie exhibitors. A minor sidetrack here, most service industries have an average cost of materials/goods run around 25% to 40%…in the movie business we are seeing 60% plus cost of goods. The creeping rise of studio box office share has really harmed the business and taken the focus on not providing a solid viewing experience but re-capturing revenue from areas like concessions and screen ads sales after being royally &$%# by the studios.

With the major circuits, the audience is just there. They are secondary to the transactions that are going on the that building. A major circuit buys it’s bag in the box from a major soft drink manufacturer and facilitates that purchase by giving manufacturer screen ad time in return for syrup and cups. This forces the circuit to barrage audiences with ad s prior to seeing a movie. I personally like to go into a theatre, settle myself and get ready watch a movie. I will tolerate some local ads because I understand how beneficial this is to the local free enterprise economy but to be inundated with national ad after national ad no thank you….the first thought that comes to any viewer if I have to see all these ads why don’t I just stay home and watch television…by the way many are.

You have to take a fresh look at this business we are in, for example the Bag in The Box average price is running in the mid 70’s for a five gallon box. I am personally starting to look at generic product which will run me $28 for a five gallon box. I understand that I may need the major brands , but for root beer, orange and other secondary flavors it might just be the ticket. I have been told by some very wise older exhibitors, it is not what you charge it’s what you buy for.

The bottom line in my way of thinking is the circuit are facing a huge amount of external pressures starting from their Wall Street investor base to the studios, to the declining of the American Mall, the lack of product for megaplexes that it will become increasingly hard for these companies to really sustain themselves. Luxury seating and $18 chicken fingers might be stop gap but a couple of summers like we just had and the walls come tumbling down.

Disruption, without construction at some point, is just… destruction…In other words it really is time to take a look at rebuilding this business.

It is time to look at other models, other models which can be built and based on strong free enterprise values. It is imperative that remember the old adage “what is past is prologue” and remember the values and innovation that really build this business.

Here is what we should look at in regards to shaping the new smaller movie going experience. Here is a couple of ideas;

Have your audience participate in defining the movie going experience, not NATO and certainly not the MPAA
Make the audience part of the show, make them realize that in many ways they are the show
Looking for content deals that are no more than 45% box office, it may slow going at first but will pan out…those deals
Think of building a firm schedule of alternative content
Develop a post VPF plan for your theatre, look at diversity and look at booking many more independent and alternative pictures.
Put value back in your concession program. Think of ways you can lower your concessions overhead. What are the cost of a popcorn tubs versus a bag, looking at mixing your bag in a box program. Look at joining the Cinema Buying Group.
Have one of your ushers speak before the movie and welcome the audience to the show
Engage local businesses and allowing them to sponsor specials screenings or alternative content
Start looking at running ethnic programming
Realize it’s not about the studios it’s about serving the needs of your community.
The bottom line it is all about you taking back control of your own business, getting closer to the community, instilling respect in your pricing model and distancing yourself from the vagaries and the erratic business habits of the studios. This is your business, no one else’s.