Movie Theaters ‘Aren’t Going Anywhere’ But Must Evolve | PRO Insight

When Warner Bros. announced that its slate of 2021 movies would all be released on HBO Max the same day they hit theaters, Hollywood flipped out and declared the death of cinema. Film director and writer Christopher Nolan responded to the news by saying, “Some of our industry’s biggest filmmakers and most important movie stars went to bed the night before thinking they were working for the greatest movie studio and woke up to find out they were working for the worst streaming service.” But Tinseltown has always had a flare for the dramatic. Personally, I do not believe movie theaters are going anywhere. Instead, they will finally be forced to evolve from an antiquated business model based on overpriced popcorn. Currently, theaters only get to pocket 50% of the revenue from ticket sales. They make the rest of their profit from concessions, of which they get to keep about 80% of the revenue. The whole theater experience is designed around this — emphasizing visuals and layouts around food areas and trying to encourage customers to spend as much money on snacks as possible, even making candy boxes appear bigger without increasing the amount of food inside. Movies even typically start later than their advertised start time to ensure consumers have time to stop by concession stands. This is no way to build an enduring business. Theaters need to refocus on the overall customer experience and reevaluate how they can create true value for moviegoers. This starts with the social aspect: Humans love to interact with each other, and the reactions of a crowd or excitement of the group at a premiere can make the entire experience. The pandemic has not changed this at all. Heck, look at the comeback of drive-in theaters and growing popularity of social watching extensions (think Netflix Party) for streaming services.

Streaming simply cannot replicate the physical experience that theaters own, and theaters cannot match the crowds that streaming draws. Before the pandemic, the average American only went to four to five movies each year, yet now subscribes to multiple different video services, streaming several hours of content each day. So, if you cannot beat them, join them. New content from streaming providers, such as “The Mandalorian,” “The Queen’s Gambit” and “The Crown” have quickly built up cult followings. Theaters should work with streaming providers to incorporate these shows into their slate and provide an enhanced viewing experience for fans. Streaming providers already understand the value this can add to their shows — Netflix has rescued the ailing Paris Theater in New York City and the Egyptian Theatre in Los Angeles, where the company holds special events, screenings and theatrical releases of its content. Currently, many theaters are shackled to the slate of releases from the major studios — all providing moviegoers the same commodified product. With popular streaming shows, live sports and concerts, theaters can work to diversify themselves further from their competitors and focus more on their unique customer base. Today, the biggest challenge any theater has is to give someone a reason to leave their home. And to do that, you need to create a differentiated experience. The New Beverly Cinema is a great example of this, creating a comprehensive experience around the movies it shows. For example, when “Once Upon a Time in Hollywood” was released, the New Beverly adapted to portray the Golden Age of Hollywood — decorating with vintage artifacts, incorporating retro concessions snacks and packaging and playing 1960s radio programs over the speakers. The movie sold out more than 50 consecutive times. Now, the opportunities are endless. In the future, consumers may head to theaters to watch sports games, concerts, Broadway performances or livestreams of their favorite gamers and influencers. And there is no reason the format needs to remain the same either. Theaters should consider offering subscriptions that enable moviegoers to pop in and out or watch new content at a discount. Streaming is clearly becoming the new face of the entertainment industry. Theaters will survive if they can open their minds, and their doors, to these services and their fans. There is no reason it must be one or the other. In fact, I am looking forward to seeing what cool experiences they come up with once they figure out how to co-exist and collaborate.