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Unless you've been under a rock somewhere in the (melting) Arctic Circle, you know that streaming services like Netflix, Amazon and Hulu are about to get some very famous company. Competing for our entertainment dollar over the next year will be new platforms from Disney, AT&T, Comcast and a little company called Apple.
Movie theaters already feel somewhat under siege as their customers, many of whom have been faithful moviegoers for decades, are presented with more and more content options. Cinemas have traditionally been able to weather virtually any storm thrown at them. In the 1950s television was supposed to have been the death knell for movie theaters. The same was to have been the case in the 1980s when home video exploded and we were all making trips to Blockbuster. Through all of these seismic entertainment changes, Hollywood and movie theaters have not only survived but have flourished. Many pundits point to the drop in attendance figures as a sign that moviegoing is, as they love to say, dying. But as with most consumer products, the real number to look at is box office gross and last year's worldwide take was the highest in history.
However, exhibitors will be the first to admit that the advent of streaming services feels like a different kind of threat. One theater owner told me two weeks ago that he wasn't too concerned about the future of the business when it was just Netflix and Amazon in the streaming sandbox. But when names such as Disney, Apple, Comcast and AT&T enter the fray, three of those companies owning movie studios, then that's a different story.
All is certainly not lost and despite a down year in 2019, at least so far, the industry is still headed for a solid year at the box office, albeit not a record-breaking one. But the focus should really be on 2020 and beyond. The gulf between the haves and the have-nots, both on the studio market share chart and on the weekend Top 10, is expanding at an alarming rate and there's a chance that it could expand if left unchecked.
What can the movie theater industry do to prepare for this streaming onslaught and the shift in the tastes of its previously reliable customers?
1- Implement Your Subscription Service. Now.
MoviePass showed that moviegoer tastes have changed. Streaming has turned many of them from POP purchasers to season ticket fans. AMC's Stubs A-List subscriber figures, now over 800,000, show that the public wants to see both the superhero blockbusters and the small to mid-range offerings but will only do so if they consider it a "free" evening out. MoviePass accounted for upwards of 12% of the gross for many of the smaller titles in 2017 and 2018 and since that company has all but pulled a disappearing act we've seen films just in the past few weeks like Stuber and Booksmart open to significantly less than what was predicted. Moviegoers will find those films but only if they view it as free entertainment. Regal announced their subscription service last week and a few of the midsize circuits have done so as well but the time to keep customers coming to the theaters is by making it as simple and as financially painless as possible for them.
2 - There's a process called Marketing. Check it out.
Once upon a time exhibitors shared the cost of newspaper ads with studios. I know that sounds like something that occurred during the Truman Administration but it actually wasn't that long ago. Also not that long ago circuits showed trailers, put up one-sheet posters, and sent e-blasts to its loyalty club members. On their own. Now practically everything is paid for by the studios. Want that trailer played? It'll cost you. The same for an e-blast or a social media post. The marketing savings for exhibition from those days has been substantial. The general rule for most businesses is that they should be spending 20% of their revenue on marketing. That most definitely is not the case in the exhibition industry and it needs to be addressed.
3 - Neither "variable" nor "pricing" are four letter words
Long a point of vehement debate within the industry, the time is ripe for variable pricing. Former Fox President of Distribution Chris Aaronson recently said that it should not cost the moviegoer the same amount to see Avengers as it does Stuber and he's absolutely correct. When I was at Sony I tried to get the concept put in place for selected films. These tended to be the lower budget comedies or horror films. The second week of the remake of When A Stranger Calls had no business being $17 in Manhattan New York or $9 in Manhattan, Kansas. Regal dipped their toe into this concept a few years back and got assaulted for what the media saw as raising prices on blockbuster films. Perhaps the best idea is to lower prices on the third or fourth week of a film like Annabelle Comes Home and gauge moviegoer response. Or, if you don't want to take the "drastic" step of pricing a film according to its relevance in the marketplace then offer double loyalty points or concession discounts if you purchase a ticket to an Annabelle. With the considerable jump in gross on Discount Tuesdays moviegoers have shown that their common refrain of "Movies cost too much!" isn't just bluster. It's time that studios and exhibitors came together to develop a workable plan that takes pricing into consideration.
4 - You show Event Cinema in your theaters. Embrace it.
Go to virtually any circuit website and you'll find information on their Event Cinema offerings somewhere below Have Your Birthday Party With Us or Terms and Conditions. One of the major reasons why EC is so much more popular in the UK and Europe is because circuits don't treat it as the crazy aunt in the closet. Again, this gets back to relying on the distributors to do the marketing. European cinemas embrace Event Cinema as, exactly what it is, viable content with significant appeal to niche moviegoers at off periods and don't rely on content distributors like Fathom or Trafalgar to do be saddled with all of the marketing efforts and costs.
5 - Provide special nights and events for your customers
When I was at Sony I got blasted for suggesting that theaters incorporate social media in their auditoriums. At least that's what was reported I had suggested. What I actually said in 2012 was that it might be a profitable idea to feature one of the three prints of, say, this week's Hobbs and Shaw, as a "Social Media Night" showing. The theater would still provide two sets of showtimes for customers who, and rightly so, don't want people texting in their auditorium. But for the vast majority of younger audiences who simply can't be without their phones for two hours and who want to incorporate the moviegoing experience into their social media accounts having one show on opening Thursday or Friday dedicated to these patrons might be an interesting idea. There is too much of simply opening the theater doors, showing the movie, and then ushering moviegoers back out the door. Make this an experience they can't get anywhere else. Sell movie merchandise, set up Snapchat booths in the lobby, invite local influencers or celebrities to introduce the films. Trust me, the studios won't mind if you try your hand at a bit of showmanship.
6 - A 60-day window is not The End Of Days
News flash, Disney is having a phenomenal year and Disney is also preparing to debut a new streaming service. Despite having content that no one in streaming will have, Disney will still have to strap on the armor and do battle with the aforementioned entertainment conglomerates. What's the best way to stand out in the crowd? Yes, the content, but also when that content will be available on DisneyPlus. Bob Iger is heavily invested in their streaming platform and even though he has publicly supported the existing 80-90 day theatrical window, don't be surprised to see him address this by the end of the year or early next. It would behoove exhibitors to have a seat at that decision-making table by proposing a 60-70 day window. This would allow Iger the flexibility of showing his first run films well before any of his competitors with the least amount of damage done to exhibition. Worried about other studios asking for the same window? Tell them when they have a market share that would rival Coke or Band-Aids then you'll talk. With that much of a stranglehold on the industry it would surprise absolutely no one if Disney simply enacted a new window without consulting exhibitors, knowing there wouldn't be much that the circuits could do in response.
With a few tweaks and a healthy dose of forward-thinking, the cinema industry should continue to remain a going concern for our entertainment dollar. They just have to remember that they are, in fact, in the entertainment business.
