There is not doubt that the business of motion picture exhibition is about to change,…again. I see it coming as audiences are starting to re-shape their perception of what is movie going and also frankly for what they are looking for in their own movie going experience. Audiences are subtlety abandoning the slick for the genuine, the studio driven for the community driven, and move to an elitist experience to a more collective experience.
This change is coming and it’s coming fast but this time it much different.
The movie business is always in flux, its one constant is change. The first public screening of movies were for movies that for the most part lasted no more than 20 minutes or one reel of motion picture film. The nickelodeon was the first type of indoor exhibition space dedicated to showing projected motion pictures. Usually set up in converted storefronts, these small, simple theaters charged five cents for admission and flourished from about 1905 to 1915.
Probably the first full fledged movie theatre was The Ouimetoscope. Inaugurated on January 1, 1906 at the corner of Saint Catherine and Montcalm Streets, in Montreal, Canada from a converted cabaret with 500 seats and a small screen, it was demolished to be replaced with a luxurious 1,200 seat movie palace that featured air conditioning. Thus began the reign of the movie palace.
The movies expanded from 20 minutes to what we now know as feature length. The Story of the Kelly Gang (1906, Australia) was the first dramatic feature film released (running at approximately 60 minutes). An earlier movie, The Corbett-Fitzsimmons Fight (1897, U.S.) is considered by some as the first documentary feature film (running time is 100 minutes). The first feature-length adaptation was of Victor Hugo’s Les Misérables (1909, U.S.).
In 1927 The Jazz Singer started the movies talking, in 1929 “On With The Show” filmed in two strip technicolor was the first color production in wide distribution. “The Big Trail” starring John Wayne teased audiences with the promise of widescreen movies. In September of 1952 “The Is Cinerama” was released. In 1953 studios began to develop their own strategy for moving into the world of widescreen pictures. Prior to spring of 1953 most movies were shot in 1:137 Aspect ratio also known as Academy. The Fox epic “The Robe” was filmed in both 2.66 (the new widescreen ratio) and 1.37.
Canada was the first country in the world to have a two-screen theater. The Elgin Theatre in Ottawa became the first venue to offer two film programs on different screens in 1957 when Canadian theater-owner Nat Taylor converted the dual screen theater into one capable of showing two different movies simultaneously. Taylor is credited by Canadian sources as the inventor of the multiplex or cineplex; he later founded the Cineplex Odeon Corporation, opening the 18-screen Toronto Eaton Centre Cineplex, the world’s largest at the time, in Toronto, Canada. In the United States, Stanley Durwood of American Multi-Cinema (now AMC Theatres) is credited as pioneering the multiplex in 1963 after realizing that he could operate several attached auditoriums with the same staff needed for one through careful management of the start times for each movie. Ward Parkway Center in Kansas City, Missouri had the first multiplex cinema in the United States.
Since the advent of the movies there have been as many as 80 unique audio formats. From Vivaphone to Vitaphone to Todd AO to Dolby Stereo to THX to Atmos, each promising to be bigger, better and more dramatic.
Flat floors were replaced with sloped floors, balconies were added and then removed or converted into other theatres. Sloped floors were replaced with stadium floors. Traditional Irwin style seats were replaced with rockers and now with recliners. At one time the average auditorium seating was 400 and now its close to 190.
On October 23, 1998, Digital Light Processing (DLP) projector technology was publicly demonstrated with the release of The Last Broadcast, the first feature-length movie, shot, edited and distributed digitally in conjunction with Texas Instruments, the movie was publicly demonstrated in five theaters across the United States (Philadelphia, Portland (Oregon), Minneapolis,Providence, and Orlando). In the United States, on June 18, 1999, Texas Instruments’ DLP Cinema projector technology was publicly demonstrated on two screens in Los Angeles and New York for the release of Lucasfilm’s Star Wars Episode I: The Phantom Menace. In Europe, on February 2, 2000, Texas Instruments’ DLP Cinema projector technology was publicly demonstrated on one screen in Paris for the release of Toy Story 2. The studios as a cost saving to themselves mandated the shift to digital. The embargo to growth that is the VPF was put into place. By June 2010, there were close to 16,000 digital cinema screens, By May 2016, 98.2% of the world’s cinema screens were now digitized.
The martial law like regime of the VPF’s came into being. 3D came and went for the 4th time….4D Cinema was introduced. IMAX was touted as the savior of cinema. Various schemes are being put forward for reserved seating in movie theaters. For decades now that has been the practice in Hong Kong but it is a totally different dynamic and a totally different population density.
Things change, often not for the better or with a manipulative motivation in mind, see VPF. What is constant the base product remains the same. A communal viewing experience. Often technology and changes takeaway the focus from the core product. Many claim that the demise of the theatre is coming due to the erosion of the exhibition windows. It’s more complex than that.
All those billions of dollars spent on improving the movie going experience come with an average ticket price that, adjusted for inflation, is lower than it was in 1976. Forget about the gross dollars, the number of admissions are declining and declining rapidly. That’s not good news. There are paradigm shifts occurring in sister industries,The top-rated television program in 2016 had nearly 27 percent fewer viewers than the top-rated program in 2004. Since 2004, the peak of home entertainment retail revenue, at $24.9 billion revenue has dropped 51.6 percent to $12.05 billion.
Netflix, who this year will make more movies than all the studios combined will see only a $100 million profit on $8 billion of revenue or 1.25% profit. That hamster is on a wheel that eventually will kill it. Amazon will endure because they have re-imagined a virtual mall and movies are just an anchor tenant..
I think there is about to be another shift in movie theatres, some forces driving this are;
The number of movie screens in America has more than doubled in the past thirty years. Our population has not doubled. This has laid the foundation of a false economy based on having theatres becoming anchor tenant of now failing malls. As goes the mall so goes the multiplex. I think the majors are being poorly led and they are always focusing on the sizzle and not the steak. Generation Z and Millennials just want the steak. Big chairs and chicken fingers are not going to consistently boost box office.
The foreign markets growth is being spurred on by local or regional movies, not Hollywood….not by a long shot. Chinese used Hollywood to seed its market and now their box office is being dominated by home grown productions as Hollywood looks in with its nosed pressed against the glass of restrictive trade barriers.
The number of movie tickets sold has remained remarkably flat – fluctuating within a 10% window for the past twenty years. Millennials and Gen Z market share are eroding quickly. The majority of movie-going is being done by folks who make it a habit to go to the movies, any movies. These are a group of people who are committed to and get much enjoyment by going to see movies on the big screen. It is important for any theatre to cultivate this group and grow it. The biggest tool for growing this group is not reclining seats, not chicken fingers…it is the perception of community and the perception of value.
So here are the changes that I think are about to take place which will re-shape the movie exhibition business.
Overstuffed chairs will be a passing fancy, as the mall economy slows to a halt and becomes victim to online retail, mall based theatres will be slowly choked out by their association with a dying mall. The majors will suffer the greatest impact and theatres will begin to shutter on a large scale. A serious Wall Street adjustment will take place for the stock of major chains and their ability to attract new monies will become challenged. A market void will come into play and independent theatres will have a window in which to win over new audiences.
Moviegoers as a result of the rise of Gen Z’s and Millennials will be seeking a truly genuine movie going experience. If the trends rising in Europe are any indication, moviegoers will begin the process of re-discovering the drive-in movie experience. Drive-ins will see an upswing as the retail need for land diminishes and for a period of time the day of the Drive-in will rise again.
There will be a rise in retro marketing, alongside the Drive-in the emerging market groups will start seeking a more genuine more authentic movie going experience. They will seek out the Cherry Bowl Drive-ins and The Historic Artcraft Theatres of the world. They will hunger for it. Retro showing of classic 80’s movies will start attracting a huge audience. This assumption is based what I am seeing take place in Britain and France.
Flowing from the last point is something that many of your reading this might find surprising. The on-demand nature of Netflix and Amazon are eroding the concept of day in date. Some theatres like The Historic Artcraft are building a repertory program that is totally changing the way we are thinking of exhibiting movies. When A decades old picture like Home Alone can out gross the latest Star Wars on a screen by screen comparison, a model is arsing that could really thwart studio machinations.
The days of streaming movies in the home for a $30 fee is coming and with Disney;’s latest business maneuvers is coming quickly. Initially I thought this concept inconceivable, but something changed. My son and I went to see the latest Star Wars installment in Regal theatre near me. Comfy seats, antiseptic theatre and the worst projection I had ever experienced. As I stood at the concession counter and realized that I had just spent $55 for the two of us….an epiphany it me…that $30 is not that far fetched as I might of thought.
Changed is coming and you must develop strategies in order to survive the change. There has always been a tremendous amount of change in this business. I think the quote that might provide the greatest value in going forward, is a line the the Breakspear play “The Tempest”. “What is past is prologue”…. Indeed
