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A movie does well and the business of exhibition breathes a sigh of relief.? Soon though the glow of box office joy dissipates, and the dark clouds start to hover. It was the situation with Barbieheimer and now it will be the situation with “Inside Out 2”.??

I am sure that the success of this release by Pixar was more than a welcome relief for the good folks at Disney. Fighting wars on the streaming front, having both their Marvel and Star Wars IP diminish in front of them with “Madame Web” on the Marvel front and “The Acolyte” on the Star Wars front have both been horrible disappointments. Disney’s sub company Pixar has provided relief, “Inside Out 2,” from what has promised to be a devastating summer box office. It became the first movie in 2024 to reach $100 million smackers in the domestic box office.

?I have been saying it for a long time, the business of exhibition is facing pressure after pressure. I believe that the pressures will start to reshape the business of exhibition into its next iteration. I also think realistically there will be both victors and victims. I take a look at the announcements of both the Sony Alamo acquisition and the Netflix Houses and I am taking this as a re-invention or at least the start of a new form of theater experience. Netflix has announced the first two cities for its gigantic new in-person experience venues, slated to open in 2025.

?The Netflix locations due to open next year in the uber malls King of Prussia, Pa., and Dallas will be more like mini malls and will have stores, a ton of restaurants, and experiential gaming designed to promote Netflix’s releases? like “Bridgerton,” “Stranger Things” and “Squid Games.” The Netflixs Houses will take over two? former department store locations at the King of Prussia Mall on the north end of Philly? and at the Galleria Dallas each with an amazing amount of footage, each with over 100,000 square feet

?It is actually kind of brilliant thinking on their part. They are all attempting, in a modified manner, to Disneyfy their brand. They have come to the realization that while a virtual business model has its place, if you want to really move the needle you must have a virtual foundation and a physical manifestation. Mall owners must be chomping at the bit. Various models have been put forward as to what the future of the retail mall looks like and they have come up with the following basic plan.

?What most mall owners are forecasting is an evolution to a mall which features a 20% food offering, from sit down restaurants, kiosks, to farmers markets, 40% retail stores, skewing toward either high end depending on the demographic or lower end like Five Below and finally 40% of the space will feature experiential. Expect the financial backing of the Netflix physical space and future Alamos to have a strong foundation with either tenant improvements? or direct landlord investment. The Galleria in Dallas is currently owned by Met Life and the King of Prussia Mall is the jewel in the crown of the Indianapolis based Simon Property Group. Simon is interesting since they have been looking at the experiential space now for at least six years. A deal was announced between Simon and Allied Esports to build out esports arenas that have gone nowhere. The deal touted a five-million-dollar investment from Simon.

?What this really signals for the theaters is a period of deep contemplation, asking and answering the question, what’s next? Then there is going to be a period of action, answering the question is experiential something I am comfortable investing in. I think to begin with most people would agree with the statement that having to rely on counting people going to the movies is economically these days a real roller coaster ride. To count on Hollywood or the steady flow of want to see movies is brave to say the least. I think we will be looking at three kinds of theaters: the movie theater hyphen, with added experiential attractions, the smaller center community centric and possibly community run movie theater, the drive-in, which for my money has always been experiential in nature.

?What is key is that we as an industry start to realize that the movement to experiential is underway, that major players have put their toes in the water. Netflix will have theaters in place and will use these underwritten facilities to supply more gravitas to their efforts and projects. With the experience economy, theater owners are going to be challenged to re-invent themselves and to provide bona fide experience to their client base. This will force exhibitors to shift their focus not to a product based approach but to a customer based approach. It will be developing recognition of your customers needs and not have your focus split? dealing with histrionic studios.

?This will create a valid and essential opportunity to develop both sustainability and profit. Loyalty of your customer base will be job one and once obtained your own customer base will shape and define your market and your marketing.??

?Your theater becoming an experiential destination will harvest increased consumer engagement and create a key shift in the behavior of consumption. This will be an economy of relevance and reactivity, which is at its base a paradigm shift away from traditional movie going.

Kevin Mitchell Rob Proctor Rob Arthur Domenico Del Priore Laura Peralta-Jones Tony Franks Steve Winn Gianluca Chakra Adon Quinn John Sullivan Damian Drabble