The Future of Cinema - The Social Experience

I recently read a rather dour commentary by Christoper Campbell over at FirstShowing about the future of the modern movie theater. Campbell believes that theaters as we know them now will eventually cease to exist due to low profits, the current financial situation, and the inability for theaters to succeed in non-major markets. While I don't believe that will happen, he does mention a few examples of new business models that a few theaters have adopted, but I think he's leaving out a few available options that are worth mentioning.

There are a number of articles and blog posts written about how the theater industry needs to change to become relevant again - too many to even list here. For many businesses (including cinemas), change is difficult - especially when the current model is working. It usually requires a certain degree of capital and often a leap of faith that the changes will work for your customers. For those reasons (among others), I think it's too hard for an existing theater chain to completely change it's business model. It does, however, allow for new theaters to take advantage of a new environment.

First off, let me state that I don't see existing theaters ever going away. Even with the current economic state, major chains are still pulling in a profit (just not as big as previous years). There will always be a place for the big, 20-screen theaters as long as Hollywood keeps producing the type of movies that teenagers want to see. The 13-25 demographic is obviously very important to the movie industry, and most teens are not going to care about added luxuries - they just want to go to a theater with friends and watch a movie.

As for the other demographics, I think there is a solid opportunity for new formats. The biggest complaint I see from home theater enthusiasts is that they hate to see a movie in a theater because of the type of people in the theater with them (loud kids, talking teens, etc.). With that being the case, adult-only theaters are the way to go; and one of the most obvious formats is the bar-cinema hybrid that Campbell mentions (similar to the Alamo Drafthouse). I think this could go even further than what the Alamo offers though. Why not combine the bar and theater while keeping both entities intact? I can see many adults loving this - watching a movie at a great theater while having a few drinks, then being able to walk right into a nice bar area after the movie is over and enjoying the rest of the night conversing with friends or watching the end of the big game.

I don't see this as being luxurious (a la Gold Class Cinemas) - I can't see sustaining a business when it costs $35 for a ticket. The novelty might work for a while, but I think this model will have a hard time succeeding outside of major cities. I'm talking about reasonable ticket prices - your main profit will be from drinks and food anyway. By adding a movie, this could be a major draw for many adults - and this is a model that could work in any city (small or large).

This same type of model could be applied for the under 13 crowd as well - just replace the bar with a Chuck E Cheese-type place. That would be a bit riskier of a venture, but it could still work.

As for the existing cinemas, there are a number of ways to increase revenue - and most of these options involve adding more "free" stuff. That may seem like a contradiction, but I'm a firm believer that the more you give away, the more you'll get back. Just like the music industry, theaters need to realize that enticing people with free items brings in more money. In music's case, making the music free means more people are going to hear the musician, which can lead to better word-of-mouth - and in turn brings in more revenue from concerts and other promotional goods. For theaters, they can't make the movie free - but they have a great opportunity to give away other promotional items, such as t-shirts, movie soundtracks, posters, and even free tickets to a future show. Heck, make it a contest - draw a few lucky winners during each show. People love free stuff, and that would be a great way to attract a crowd.

But even beyond free, I don't see why theaters don't do a better job of selling promotional items. I've never understood why there isn't someone standing at the exit trying to sell you the soundtrack of the movie you just watched. There's been numerous times where I watched a movie and thought, "this soundtrack is great". But after a while, I forget about it and never buy it. Throw the movie poster at me; let me see the t-shirts, books, bumper stickers, and games right after I leave the showing - I'm more likely to buy it now than I am two days later.

Movie theaters will never go away. Home theaters may be getting bigger and better, but the attraction of getting out of the house and going to the movies will always exist. It's the same reason we like going to a bar instead of having drinks at home; it's definitely cheaper at home, but we love the social experience. Theaters will survive, but to really succeed they need to embrace that social experience even more.