January 5, 2006
In a new article on Slate, Edward Jay Epstein looks into the economics of the exhibition business.
While most of you are probably aware that theaters make much of their profits from the concession stand, there’s plenty in this article you might not have thought about before.
Once upon a time, movie studios and movie theaters were in the same business. The studios made films for theater chains that they either owned or controlled, and they harvested almost all their revenue from ticket sales. Then, in 1948, the government forced the studios to divest themselves of the theaters. Nowadays, the two are in very different businesses. Theater chains, in fact, are in three different businesses.
First, they are in the fast-food business, selling popcorn, soda, and other snacks. This is an extremely profitable operation in which the theaters do not split the proceeds with the studios (as they do with ticket sales). Popcorn, for example, because of the immense amount of popped bulk produced from a relatively small amount of kernels—the ratio is as high as 60:1—yields more than 90 cents of profit on every dollar of popcorn sold. It also serves to make customers thirsty for sodas, another high-margin product (supplied to most theater chains by Coca-Cola, which makes lucrative deals with theater owners in return for their exclusive “pouring” of its products). One theater chain executive went so far as to describe the cup holder mounted on each seat, which allows customers to park their soda while returning to the concession stand for more popcorn, as “the most important technological innovation since sound.” He also credited the extra salt added into the buttery topping on popcorn as the “secret” to extending the popcorn-soda-popcorn cycle throughout the movie. For this type of business, theater owners don’t benefit from movies with gripping or complex plots, since that would keep potential popcorn customers in their seats. “We are really in the business of people moving,” Thomas W. Stephenson Jr., who then headed Hollywood Theaters, told me. “The more people we move past the popcorn, the more money we make.”
December 30, 2005
ABC is reporting the bad news that everyone has been pretty much expecting… ticket sales continued to drop this year:
The bad news is that audiences did not exactly go ape over the rest of 2005’s cinema offerings, making this the third straight year of decline in Hollywood ticket sales — the first such stretch of bad news in 40 years. Because of the continued falloff — sales are down 12.6 percent from 2002 — a growing number of analysts are wondering whether America’s movie habits are changing permanently.
“The industry has to consider whether or not American audiences are sending a message about the quality of the movies they are getting — or just the way and the place in which they get them,” said Paul Dergarabedian, president of Exhibitor Relations, a firm that analyzes box-office trends. “You can bet that producers, writers, directors and studio heads are all huddling intensely to consider what this means and change their behavior to keep it from continuing.”
December 23, 2005
Loews and AMC have agreed to each sell five theaters as a condition for the government to approve their merger next year. From the official press release:
“Five theaters from each circuit have been selected by the [uS Department of Justice and various state attorneys general] for sale as a condition to enable the companies to proceed with their transaction. The theaters are as follows:
AMC Fenway 13 (Boston)
AMC City North 14 (Chicago)
AMC Union Station 9 (D.C.)
AMC Kabuki 8 (San Francisco)
AMC Van Ness 14 (San Francisco)
Loews Webster Place 11 (Chicago)
Loews E-Walk 13 (New York City)
Loews (Cineplex Odeon) Meridian 16 (Seattle)
Loews Keystone 16 (Dallas)
Loews (Cineplex Odeon) Wisconsin Ave. 6 (D.C.)
It is anticipated that the sales process could take at least four months.
December 20, 2005
A feature article, “Pressure increases on Lower Hudson neighborhood moviehouses” by Candice Ferrette, ran on December 16, 2005 in Gannett’s The Journal News. (You can read it here, but I’m not sure how long the link will be active.)
The impetus for the article is the opening of the new 14-screen multiplex, The Waterfront at Port Chester, just one of a number of new multiplexes in the area. It focuses on the three-screen Larchmont theater, but also includes a list of all the smaller venues in the lower Hudson Valley. As the article says, “…in the age of the multiplex — and the even bigger megaplex with more than 15 screens each — size, selection and stadium seating may matter more than the ability to walk to the old picture house on Main Street. … neighborhood theaters in some Sound Shore communities are caught in the classic struggle between the ‘quaint and charming’ and the ‘bigger with more selection.’”
As the article points out, Clearview Cinemas, whose parent company is Cablevision, is owner and operator of nearly all of the smaller theaters in the Lower Hudson Valley—seven in Westchester and one in Rockland. Many of them have fewer than five screens per location, including the Mamaroneck Playhouse, the Rye Ridge Cinema in Rye Brook and the Larchmont Playhouse. These compare to the 15 screens at National Amusement’s Cinema De Lux at the City Center in White Plains, the 18 screens at the Regal New Roc City in New Rochelle and the 14 new screens at the Loews theater in Port Chester.
December 19, 2005
The National Association of Theater Owners has requested that the FCC allow the blocking of cell phone signals inside movie theaters, according to this report from United Press International.
John Fithian, the president of the trade organization, told the Los Angeles Times theater owners “have to block rude behavior” as the industry tries to come up with ways to bring people back to the cinemas.
Fithian said his group would petition the FCC for permission to block cell phone signals within movie theaters.
Some theaters already have no cell phone policies and ask moviegoers to check their phones at the door, Fithian said.
The Cellular Telecommunications and Internet Association — a Washington-based cell phone lobby that is also known as CTIA-the Wireless Association — said it would fight any move to block cell phone signals.
December 7, 2005
On Sunday, the New York Times published a story about New York City’s remaining movie palaces and how the majority of them have been converted into places of worship.
With a little divine intervention, however, many of the Roxy’s contemporaries have survived the decline of the cinema age and the turnover of their neighborhoods gloriously intact, even if gospel-choir lofts have replaced orchestra pits and Bible verses have replaced “Coming Soon” posters in their opulent lobbies.
The article also includes a nice photo gallery with recent shots of the Hollywood, Regent, Loew’s Valencia, Loew’s 175th Street, and Rainbow theaters.
Cinema Treasures got a nice little mention, as well.
New York Times: Now Showing: God
November 11, 2005
One concept for these “penthouses in the sky” included a private movie theater:
Pierrejean completed this concept sketch of a 16-person movie theater for an unidentified Middle Eastern client who is considering buying an Airbus A380, the double-decker jumbo jet scheduled for a debut next year.
Needless to say, here at Cinema Treasures, we plan to purchase several of these.
BusinessWeek: Penthouses at 30,000 Feet
November 10, 2005
MADISON, WI — IndieWIRE is reporting that Sundance Cinemas plans to open its next arthouse theater in Madison:
The first theater in the new Sundance Cinemas arthouse chain is set to open one year from now in Madison, WI. The Sundance Cinemas circuit will be a national chain for mainly independent and foreign films, run by the former Landmark Theaters leadership Paul Richardson and Bert Manzari who left the chain about a year ago after working together for nearly 30 years. Oaktree Capital Management is funding the new company.
The six-screen Sundance Cinemas development is set for the Hilldale Mall in Madison that is being renovated by Joseph Freed and Associates; an architect has not yet been selected.
November 8, 2005
I wonder what kind of dystopian cyberpunk future we live in when you are physically searched before entering a movie theatre.
Last night (November 3rd), my girlfriend brought me along to see a screening of Derailed at the Paramount theatre in Toronto, which she had to review for a magazine she works for. The lineup for the screening was unusually long, as I think they also fill seats at press screenngs with radio call-in winners, who in hindsight, might have accepted such poor treatment in exchange for the ostensible privilege of paying for $30 worth of parking and fast food at a free $13 movie.
Anyway, the line was moving slowly because they were asking customers to raise their arms so that they could be electronically frisked with a metal detector, and women’s purses were being searched by uniformed security guards. Try to remember that this is Toronto, Canada we’re talking about here, not New York, Tel Aviv or London.
People who submitted to the search (everyone from what I could tell) had their cellphones taken from them and checked at a table set up in front of the theatre and they were given a ticket to reclaim it when they left.
October 25, 2005
ORLANDO, FL — ShowEast, where 1,300 members of the motion picture industry “gear up for the year end holiday season by gathering to learn about industry trends, screen films and product reels, and be among the first to see state-of-the-art theatre equipment along with services and technologies vital to the industry,” commenced yesterday.
Top issues this year are piracy, movie theater attendance, new technology, and the overall quality of films, amongst other industry issues. According to Reuters, Paul Hanneman, executive vp sales and strategic planning at 20th Century Fox International, asked assembled members of the industry, “Are we making the best films we can? Have profit projections led to quests for tentpoles at the expense of quality?”
Keynote speaker Shari Redstone, president of National Amusements, dismissed the fundamental worries of the business, commenting that “You’ll never hear the voice of doom and gloom out of this mouth.”
But she was quick to add: “So much of the future is not in the U.S.” — highlighting that growth opportunities for exhibitors may lie overseas.