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Does anyone know why theaters are doing blockbuster business dispite the surge in DVDs and home theater? I would have thought that home theater would keep people at home.
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attendance has been flat or slightly down. Ticket prices have been raised quite a bit over the past 1-2 years.I ran a 16 screen theatre here in Miami for AMC and my company hadn't made money in two and a half years--and we were actually in good shape, LOL. Many chains filed for bankruptcy during this period, but this was mainly due to overexpanding and in having to close down the smaller underperforming stores, like mine in January. The problem with theatres is that they're a 'single use' facility and the exhibitor is usually locked into a 20 year lease, so if business turns south, you're still on the hook for the rent.
I was paying $78k/month for rent/tax/CAM on 48,000 square feet and about $10k a month on electricity---alone.
Going to the movie is still the cheapest form of entertainment (outside the home and excluding going to a park) and at $10/2+ hours in air conditioning, a good value. Bowling is close, but not for everyone.
There is still a two year window to navigate through, while the surviving chains cut their losses, but concession prices are maxed out and there is only a little bit of room left for raising ticket prices. Trust me, until then, Theatre Chains aren't the most attractive businesses to invest in.
As far as Digital Projection in the near future? Probably won't see it anytime too soon because at $100k/screen, the chains just don't have the cash.
Take care, Chris
Chris, Thanks for your insights.Slightly off the thread topic -- Roger Ebert of the Chicago Sun Times always points out in his columns that movie theaters make their money on the concession stands, not ticket sales (since much of that goes back to the studios). Since you work in the industry, I am curious how true Ebert's comments are.
roughly 75% of AMC's profits, when we were making a profit a few years back, came from the stand. So buy those Twizzlers and Large PC/Sodas, LOL.Chains rent the films from Hollywood and when all is said and done, at least for AMC, film rent would be anywhere from 50%-52% of our ticket sales. Depending on terms, something like Titanic, which took off slowly might tip in favor of the exhibitor after the run. Many terms are 90-10 or 80-20 (in favor of the studios) for the first two weeks (or so) of the film's run. Yikes! However, Sony wanted 80% of the gross for Godzilla, which was a one week wonder. We got it down from 80%, but it was sending a bad message.
Many theatres don't get to do Day and Date in order for the film companies to control things. If the customer could go to his favorite theatre and see a film (as opposed to having to drive across town,) the exhibitors could then dictate terms to Hollywood. For a company like AMC, who really does a nice job of catering to the customer, we want to go up against the Regals and GCCs of the world. It's almost a monopoly for the film companies.
Gotta run, Chris
How much does the theater know about the films they're offered? Does whoever makes the booking decisions get to see it first or do they have to decide based on just a trailer? I vaguelly recall reading in my youth that my then home state of Virginia had an odd law that required theaters to bid blind on movies without even knowing the title. I'm curious because it seems that anyone who picked movies for a living could look at certain movies and say "this might open big but its so awful that word of mouth will kill it after a week and we'll never run it long enough to get to a favorable percentage of the gate."
or something like that.We have a film department in LA that schmoozes with Hollywood and they, at times, get to screen the movies first. Not always, but I would imagine a good portion of films are being seen by somebody in that department. Predictions are made and our guys/gals are pretty damn good. You might have 10 movies one week with a predicted gross of 63 million and on Friday night, when the preliminary box office take gets sent out to individual theatres (for adjustments,) we'd be within a few mil.. One slice of the pie might be slightly bigger/smaller, but the pie would look like a full pie.
Since we get our bookings Monday/Tuesday, we need some idea on how to place that particular film. I had four theatres with 315 seats, then one with 186 and five with 177. The other six were smaller. Knowing how a film is going to play at any given theatre will help save having to move it (and others) during Friday night's shows.
My last two theatres catered to mostly black audiences, so I grossed quite well with pictures like Rush Hour Two, Nutty Professor and Big Mamma's House. Naturally, the film dept. would load me up.
Generally, a film company will have "X" amount of prints to divey up over the entire country. AMC might get 250 prints to spread out over its 180 theatres, Regal gets theirs, GCC their share and so on. Our film dept. will then place the films across our territory in hopes of getting the most money. Obvioulsy, the MegaPlexes are getting 3, 4, and 5 prints, so the multis will get less. I got three prints as a max, of a popular film. I got two of Pearl Harbor, but three of Lord of The Rings. I can always sync. my larger houses, so with one print, I can play two theatres at the same time. We have triple synced before, but the potential for a brain wrap is quite high and then you have a lot of pissed off customers. The best thing to do in this case is just sell it out.
The one bummer for theatres is that there's an exclusionary rule of like 3 miles. So if you and I have our theatres two miles apart, Star Wars II is probably only going to be given to one of us, with the next Fox film going to the loser. Nice theatres want to play day and date, so the customer will choose the better theatre to give her money to. Now, as it stands, that customer has to possibly drive by the better theatre, to see the film across town in a theatre that they might not prefer.
As for your wondering about 'buying films blind,' this might have been so in the distant past, but not recently.
Chris
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I strongly agree.When they get the encryption down to pair down the costs of distribution...it's bye bye to alot of the small to mid-range theatre chains.
it's no fun scratching a print on the first few shows. Sucks big time, LOL. I guess having the Hard Drive freeze up won't be any better?Chris
Theatres are also increasinly catering to the moviegoers, with less crowded more plush seating arrangements and increasingly better sound. Moviegoers still percieve good value in this, especially during the less expensive matinee showings.
In my opinion, there is nothing like seeing a new release on a huge screen with an awesome sound system. Saving Private Ryan was a perfect example of great sound and picture combo to bring the reality of war one step closer into your face. (Although no movie will ever catch the realness of the fog of war)I don't think the majority of us humans have the patience of waiting for the movie to come out on DVD/VHS and many movies are much better to see at the theatre.
bolt-
For many, going OUT to the movies is a social event. THere are many more people that choose to go to see first run movies as part of an entertaining evening out as a group, than those that that make the choice to be home alone with their rented dvd/video -- young people in particular.
Home theater is fine for movie viewing, and certainly can provide a better selection for the viewing experience, but as an all-encompassing group social event, it can leave something to be desired.Dvds and home theater, like the early days of television, has an effect on the number of movie-goers, but will never seriously impact the social event status of the movie theater.(Not to mention the everpresent Hollywood advertising budget).
When piracy gets to the point to where new releases reach the home before or at the same time new films are releases, and that there are enough bad movie seasons and home theater technology reaches a more affordable level it is right now, that's when critical mass will be reached.One of the advantages of digital delivery of films to theaters that's being pushed by the film studio lobby is getting digital delivery encryption technology developed to the point, where they can save money on not making film prints. How naive, right ?
I'm living in a country where piracy is good as you say... and the movie selection is as bad as you say... and anyone with a basic PC can play MP4 disks... nevertheless, new theaters are opening regularly and they make good money. Still, nothing beats a big screen, analog film, of course.
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