Saturday, June 25, 2005

Loews, AMC, and Farmer John

Movie theater chain AMC to buy Loews Cineplex
go to original article ... or email me for article text

I swear this was supposed to have already happened...
"The deal will consolidate AMC's already formidable presence in large, urban markets. AMC is known for its huge movie complexes -- nearly three-quarters of its screens are located in "megaplexes" that have 14 or more movie screens -- and a large number of its theaters are located in California, Florida and Texas.

Most of Loews' theaters are in major metropolitan markets. The company lays claim to the biggest share of the market in New York City, Chicago, Detroit and Mexico City.

Once the deal is completed, the new AMC Entertainment will have about 5,900 movie screens in 450 theaters, including its interests in various joint ventures, and be run by AMC Chairman and Chief Executive President Peter Brown.

AMC rival Regal Entertainment, which operates Regal Cinemas, United Artists Theatres and Edwards Theatres, has more than 6,200 screens in more than 550 locations and has theaters spread more broadly across suburban areas."

In any event, I didn't realize there was such a clear industry divide between the urban and suburban. I think it's kind of neat. :) Maybe we'll see some interesting divergent evolution as a result. I'm not really sure what I have in mind, but one has to think that a business that operates in the big city has to be different from one that runs in the 'burbs.

And one other thing this seems to highlight is that there appears to be no market in the rural areas of the world that wouldn't be able to support multi/megaplexes. I think the rural markets are something that could end up being the "long tail" of the exhibitor market. While the big chains are fighting off box office slumps and people that would prefer to watch their movies at home, the people in rural areas may actually need movie theaters to be an affordable way to watch high quality first run films. For people who either can't afford, or don't have access to fancy home theaters, the community supported movie theaters are the best way for them to enjoy movies.

Unfortunately, this hasn't been feasible. Prints are a commodity and can't be sent to remote areas when they could generate a lot more money and exposure if they were played in NYC as opposed to the middle of Alaska. Furthermore, theater economics and way box office profits are shared make it impossible for a small (probably single screen theater) to survive or turn a profit. Especially when the population is small and you can't count on a consistent flow of people.

But I think the technology has made the impossible possible. If movies are going to be distributed in a digital format, you no longer needs physical film prints. Copies of the movie will no longer be scarce and can be shipped anywhere, at will. (Arguably, this already happens with internet piracy and dvd piracy, which just goes to show...) Improved home theater technology makes it possible to create a megaplex quality experience for a fraction of the people at a fraction of the price (I'd estimate you could do it very well for 7K-10K and a typical megaplex screen comes in at 500K-1 Million)

I think this makes room for a new kind of theater that I call the "microplex" (which is a combination of the standard popular progression: mini, multi, mega and this wave of cinema I've been following in San Francisco called microcinema). It would consist of a 3 or 4 low cost, high quality screening rooms, and be completely digital. The profit structure would be such that they wouldn't need concessions (much like some of the small screens I saw in Paris) which would bring their overhead down, but they'd have enough variety and be able to show movies for long enough that they'd still manage to turn a profit. These microplexes could fit anywhere and any job. Whether it's bringing big budget movies to remote communities or more convenient locations and closer to small neighborhoods in big cities or bringing arthouse/foreign films to large communities that don't have enough of a market to support one of Landmark's houses or a Regal Cine'arts.

I actually have a great plan for creating these, that was inspired by my trip to Maui. We spent part of our time after the Film Festival at the tip of the island in Hana which is a beautiful coastal rainforest. There's no theater there and the nearest community that's large enough to support one is 3 hours away. But why not build one in Hana?

A small amount of capital (10K) from some source (Martha's peace corps experience came in handy here when she suggested Peace Corps grants) would get it started by paying for euipment and maybe some permit fees. Then you could get a piece of land or commercial space donated by the local government, a private landholder, a resort, or by the community. Then the community could all come together to build the structure over a couple of months (hopefully using local building techniques and traditions that preserved the culture of the community). Voila! Anything from Star Wars to Whale Rider to The Real Dirt on Farmer John could play there.

This has gotten a little out of hand. It was originally going to be one line long... but all of the rest of this just flowed out. I have plenty more ideas on this subject, though, so if you have any questions or feedback, I'd love to talk.


At 12:43 AM, Anonymous rleather said...

One thing you must keep in mind that people will not go to any films they don't want to. It doesn't matter where or how big. The multi-plexes show the "well-advertised" cultural events, and have less use for the smaller films, which need much nurturing to get the relatively small amount of people interested to go.

Also, please be aware that a very small percentage of US screens are "digital." Digital is not the answer. It's expensive (more than 10k, certainly), it is a lossy format compared to film, and it's buggy. All iterations seem to become obsolete in only a year or two. 35mm film, a format that has remained unchallenged for over 80 years, has allowed many old theatres to remain in business that otherwise would have been forced to close (e.g. the theatres that couldn't afford to upgrade to sound in the '30s).

The problem is not access. It's the relationship between the studios and their financial needs versus the audiences and their attention/whims. The theatres are stuck in the middle, trying to please both. I've worked in movie theatres for 2 decades. The new generation are no longer in love with going to movies. This may be the actual deathknell to cinemas as we know it.


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