Shape of Things To Come...

While there are many voices in the world of exhibition that are calling for a re-establishment of what was in this battered industry there are many who are working behind the scenes to re-imagine what a movie theater looks like going forward.? Things have changed and changed mightily. Any exhibitor who does not decide that they must modify their approach to this business is deluding themselves. Tsunami after tsunami have hit this industry. As I sit back and attempt to survey the state of exhibition, I have to say I am in awe of the tenacity and the strength of purpose of most independent exhibitors. There is a lot of steel there.

?Streaming is stumbling which is understandable and movie studios are not as secure with the streaming platforms. Netflix took a 50 billion hit in the market and other services seemed to be destined for a similar fate. The first battle for the streaming wars is coming to an end with no apparent victor. The second wave of the wars will erupt in September as the focus turns to content. Studios are grudgingly concluding that to really draw focus to content they must have some form of theatrical release.

One of the concerns going forward is that it appears that tentpole movies have traction, smaller titles which in the past had a chance of breaking through have had their market thoroughly eroded. As the content model shifts within streaming and the awareness of the potential overspend on content, the state of the small movie economy is becoming more dire.

?I firmly believe that it is time for theaters to diversify. I see a couple of models coming to the forefront, Twinned FEC concepts, Community based theaters, and specialty drive-ins.

?One of the first models that has arisen and will continue to keep rising is the twinned Cinema/FEC model. This is a way to evolve from the screen and popcorn model to a situation where the typical cinema shifts its focus and becomes a portal for family fun. The focus is firmly on the building of an arcade like environment, sometimes coupled with bowling. It usually is moving away from a reliance on the screen and to focus on creating as many profit centers using the physical space you have available. There are arcade games out there that often create more revenue than a movie release.

?The phrase family entertainment center is a term multiplex owners must become very aware of. It is basically a small indoor amusement park geared towards families with small children to teenagers. The successful ones are anchored firmly within a suburban economy and really depend on the proximity to a larger population center. Their busiest times are weekend afternoons and Thursday through Saturday evenings, this correlates directly with the traditional business of exhibition.

?Often modern multiplexes have cavernous foyers which can be repurposed as real estate to start seeding the implementation of an FEC strategy. You can start to grow into this expansion of profit centers organically with measured capital outlay.

?One of the things to be aware of is that when you move to a FEC you are moving to appeal to the family and group-based market. This will shape the need to program your screens appropriately, NC17 will no longer cut it in that environment. It evolves into a real distinct business and quickly moves away from exhibitors.

?Theaters are being asked to include esports into their offerings. This is something that should be given consideration. There have companies? who in the early proposed integration of esports into theaters only to see their investors lose tens of millions of dollars. Incumbent equipment, coupled with local team building efforts and associated with pre-existing youth sports and or college efforts prevent success. To expect that “if you build it they will come” you will be deluding yourself. A lot of companies putting tournaments forward do not have the appropriate licenses to hold competitions or they are skirting capriciously around the community licensing agreements. Another factor is that hard core gamers will not consume concessions, casual video gamers will do the reverse and consume many concessions. There is a business here, but it will not play in all locations. It’s a concession business and if you are going to get into esports you have to begin to understand how to alter what your concession stand offers.

?The idea of community or community focused movie theaters is not a new idea. The focus should be to program theaters with content that appeals to the demographics of that community. It usually happens naturally in a classic downtown core theater. The goals of a community movie theater are to create an economic activity which brings traffic and consumers back to the downtown core. Because of the focus these theaters are best organized under a not for profit legal structure. Funding for these theaters are either drawn from civic or State organizations or rely on the community they serve in order to sustain themselves. As a rule these are not profitable ventures. Even though as a business proposition these are not profitable ventures directly, they represent an economic engine that can bring in revenue for a shattered downtown core. They can counteract the effects of box stores and can bring in new and vital business. All of this can widen the tax base. Investment in these community-based movie theaters can often return 4.8x monies invested into these theaters long term. Community movies are not a great business, but can incubate the revitalization of a downtown core.

?My other model is something that I see rising internationally and will bring impact into a North American model eventually. Specialty drive-ins or popups or popup Arthouse drive-ins I believe will begin to reestablish a home for the smaller movies that are being shut out of the traditional multiplex model.? Often the distributors of this product put aside the need for a DCP print and exhibit much more flexibility in regards to business terms. It traditionally works in urban markets and can wander to various locations in order to properly find it’s audience. It allows for a cult-like following to erupt and as well creates a higher degree of audience loyalty due the boutique nature of the offering. It is a niche market, a localized market and could be the best for sustaining a wider cinematic tradition.

?The business of exhibition is evolving rapidly, many other models will arise but unfortunately the one constant in the business of exhibition is change.