The Future of Movie Theaters is More Than Movies

Photo illustration by Lisa Larson-Walker

Moviegoing use to be a fundamental part of American life. In 1948, 90 million people — 60 percent of the entire population — attended the cinema every week. There were few entertainment options available, so your local cinema ruled the day. Today, entertainment is no longer confined to a public venue or even your living room — it’s anywhere, at anytime, as mobile apps and streaming have created an unprecedented barrage of competition. As as result, the cinema has become increasingly marginalized. The number of movie tickets sold per person has plummeted by a third since 2002, its lowest point in 40 years. Perhaps most alarmingly, the group primarily responsible for this decline is young people. As Millennials flock to new platforms faster than any other group, they are abandoning the movie theater faster as well.

The film industry has managed to offset these declines by increasing ticket prices and expanding their footprint internationally. Of course, there is a ceiling on both of those elements. Movie theaters and studios alike have been looking at new ways to boost cinema attendance. Yet, this has proven difficult. Consumers have access to a massive amount of content, a variety of ways to watch that content, and theaters will always be the least convenient option and among the most expensive. It is worthwhile to reduce the friction and price associated with moviegoing (something I have personally attempted), but where theaters can make the biggest impact is increasing their breadth of content.

Make no mistake — movie theaters are in the media business. As it applies to any media company, “content is king.” The key for theaters is bringing in content that will motivate consumers to leave their homes. Ironically, the type of content capable of generating increased, sustained attendance has always been viewed inside their homes — television. For more irony, the case for television has been best made by movie studios. Particularly in recent years, a major aspect of the studios’ strategy has been to focus on content that has built-in audiences. It is the reason we see so many sequels, spin-offs, remakes, and adaptations. These stories have already-established awareness from large, readily identifiable audiences. In 2016, 10 out of the top 15 highest grossing films fall into one of the above categories. But why limit this approach to movies? Theaters can adopt this strategy themselves and focus on showing content that has its own built-in audience: television shows.

Theatrical Television

While films have become more formulaic to appeal to a mass, global audience, television has become a refuge for risk-taking and originality. High production costs have created high production value that has vaulted television into the same quality and increasingly, prestige realm as film. These shows are not just entertaining — they draw you in with complexity and edge. Through hours of continuous storytelling, audiences are hooked for the long-haul. These prolonged series with multiple episodes could compel recurring visits to the cinema, while a movie requires only one. But just like movies, television shows are supported by substantial marketing campaigns, which theaters do not have to shoulder the primary burden of. In addition to extensive word of mouth, these shows quickly create large and devoted audiences.

To their credit, the industry has identified the need for more expansive content. Theaters around the globe have begun to embrace Event Cinema — one-off, live entertainment such as operas, plays, and concerts shown on the big screen. In fact, television has already experienced success at the theater. One of Event Cinema’s highest grossing programs was a 50th anniversary special of the television series, Doctor Who. Last year, IMAX theaters grossed $1.5M in just 205 theaters from a couple of Game of Thrones episodes. This taps into the same desire that motivates fans to attend viewing parties to watch their favorite shows. Consumers will forgo the convenience of their living room or mobile device for the thrill of watching their shows with others, on the big screen. In short, they will go for the experience.

But these series should not be shown sporadically. For example, every episode of Game of Thrones, The Walking Dead, and Scandal should play in 2000 theaters across the country. While not every series warrants all episodes or this wide of a release, content should be strategically programmed and targeted based on interest graphs. For instance, some content will do well based on genre. That is, a live crowd can enhance certain content— for instance, comedy. But theaters do not have to wait for the periodic studio hit to bring in the laughs. Picture a theater full of fans watching episodes of Curb Your Enthusiasm, Inside Amy Schumer, or Archer. Horror is another genre where an audience heightens the experience. Imagine if, prior to the Season 2 premiere of Stranger Things or Season 6 premiere of American Horror Story, theaters ran a marathon of the previous season(s).

The abundance of entertaining content and ease of access that other platforms provide has altered consumer behavior — particularly that of Millennials. From “binge-watching” to “Netflix and Chill,” we are even in the midst of a fundamental cultural shift. Theatrical Television can swing that back in the theater’s favor. As opposed to going to the movies once every few months, the episodic nature of television lends itself to repeats visits. Even more important than any immediate financial gain, this can get younger audiences into the habit of going to the “movies” again.

Cultural Tastemakers

The current television landscape provides a unique opportunity for theaters as well. In an effort to compete for eyeballs and acquire brand loyalty, television providers have set off an arms race of original scripted programming.

Since 2009, programming has almost doubled to over 400 shows. Estimates for 2017 are pegged at around 500 shows. Companies who have never done original programming (and those you never thought would) are getting into the game. While it has created a great deal of quality content, it has also created a dilemma for consumers — a great deal of quality content. How often does a friend or family member recommend a new show? It has become difficult not just to identify what to watch, but to allocate time to watch it. FX CEO John Landgraf sums it up perfectly, “There’s just too much competition, so much so that the good shows often get in the way of the audience finding the great ones.”

Enter the cinema. In a world of overabundance, theaters can position themselves as tastemakers. By showing the most sought-after and well-reviewed series, they can create a destination where people know something is worth their time. It is a practical role for theaters to embrace — the premium venue to watch premium content. Along with bringing people to the cinema more often, they can aim to establish their venues as cultural hubs.

They can even further this notion by facilitating the cultural discussion. Fans love to engage around content and these conversations are more prevalent than ever. But they have been relegated to social media, online recaps, and comment sections. Sure, you can riff on Twitter or explore a complex narrative on Reddit, but the cinema can enhance these conversations by delivering them to a live, engaged audience. Theaters can moderate discussions among panelists, audience members, or it may even happen casually, as cinemas increasingly have restaurants and bars where people can congregate to discuss what they just saw.

More Content, More Leverage

Content expansion also holds the potential for theaters to combat broader market trends. As movie studios have focused on creating franchises based on well-known content, their over-reliance on this fare has begun to diminish its box-office dependability. At the same time, it has become difficult to draw audiences into theaters with original content. Diversification means theaters become less dependent on movie studios and less vulnerable to the unpredictability of the box-office. It also means they are less susceptible to competitors encroaching on their turf. It is commonplace for independent films to have a limited release or surpass theatrical altogether in favor of streaming or VOD. In fact, streaming players are outbidding studios for sought-after indie flicks and most recently, big-ticket films with marquee actors — once the exclusive domain of the theater.

These trends are significant factors impacting the “theatrical window” as well, while the period in which studios exclusively release their movies in theaters continues to contract.

More and more, those within the film industry believe eliminating or significantly reducing the theatrical window would be a net positive. As movie attendance shrinks and viewing habits change, it is difficult to imagine a future where day-and-date releases are not the norm. Attracting audiences without having to rely on exclusivity places theaters in a strategic position to adapt to this future.

An Effort Worth the Effort

It is worth noting that successfully executing this initiative would require an internal pivot from theaters. They need to have the resources and flexibility to experiment with various programming, local marketing tactics, and even revenue models. For instance, a limited subscription model lends itself particularly well to content with multiple episodes. Since production companies do not need to rely on box-office receipts to recoup their costs, the actual per event price could and should be substantially lower than a traditional movie ticket. This not only facilitates the goal of creating a cinema-going habit, but also supports the theaters’ high-margin concession business.

Securing theatrical rights poses its own set of challenges. Nonetheless, theaters may find themselves in a favorable position, as this initiative has both significant promotional value and the potential to create meaningful incremental revenue for production companies. Plus, there is an emotional appeal that is not to be ignored. The movie theater is still viewed as prestigious. Similar to why many filmmakers want their work shown on the big screen, what content creator would not want their show displayed in a premium format in front of a live audience in cinemas throughout the country?

New platforms that impose on the theaters’ audience and disrupt their business model will continue to emerge, relentlessly. Cinemas have undergone quite a transformation over the years to compete with technology — this includes state-of-art enhancements in sound and picture, luxury seating and even expanded dining options. These were important upgrades to differentiate and enhance the theatrical experience. But in the end, audiences come to the cinema for what is playing on the screen. In order to thrive into the future, theaters can no longer just be in the film business; they need to be in the content business. The industry will never return to the days of yore when theaters reigned by default, but they can carve out a more significant portion of our leisure time and ensure their place in the cultural landscape.

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