The Competition

Home Theater of the Absurd?
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"There was a time, children, when you watched movies at home by unspooling VHS tapes in a VCR. You listened to the dialogue and music on the two little speakers built into the television. Yes, the TV, which was, if you were lucky, all of 27 inches big.

These days . . . well, chances are the last time you saw a 27-inch TV screen it most likely was mounted in the back seat of an SUV. In the last few years home entertainment has taken on new dimensions, all of them immense."

Admittedly, I'm at a place in my life right now where hearing the word "competition" makes me a little squeamish. Too many documentaries about the degeneration of free markets. Whatever it is, I can't stop thinking about how framing the wrong kinds of situations as competitions causes all kinds of problems.

But it's the first thing that came to mind.

It's not possible to have a conversation about the future of movie theaters without considering the increasingly popular phenomenon of home theaters. At least, I know that I need to address it. I feel like at least 10% of the articles I come across while doing my regular research are about home theaters. (Although 20% of the articles are about elderly or teen-aged people committing acts of violence against each other and I haven't written a post about that).

Home theaters are an interesting business to consider alongside traditional film exhibition. The rapid advancements in high fidelity film reproduction that modern home theaters have been able to make allows them to challenge the role of movie theaters in peoples' lives. Home Theaters look and sound f'in amazing! And the obvious question goes something like, "if a movie looks better in the comfort of your own home than it does at the multiplex down the street, why do we need movie theaters"

But the reality is, people who ask those questions are getting ahead of themselves. Even the fact that with enough money and time you can create a viewing experience that beats going to the movies doesn't mean home theaters are a threat to the exhibitors.

1.) Most people don't have that kind of money
2.) Most people don't have that kind of time
3.) It's just not worth it for most people to put in the time and money for the number of movies they watch. (Even if they watch a lot of movies)

Right now the average person is still going to turn to their local multipliex for the highest fidelity movie experience. But there are some other reasons that movie theaters and home theaters will continue a peaceful coexistence. Many of these are examined in an article cited in a previous post.

So what, then? Does the fact that people (like the journalists) see home theaters spelling the demise of traditional theaters say something about the identity that movie theaters have assumed? About their role as the average person understands it? Or are people just getting swept up by the romantic notions of phat tvs and stereos all for themselves.

To me, this signals that movie theaters (as an industry) should take a break from figuring out new things to do with their spaces (showing ads, streaming concerts, converting them to digital) and assess exactly what their collective identity is.

And then they should push it.

For home theaters not to be a threat to movie theaters, movie theaters can't only be about delivering the best sounding effects and best looking pictures. That has always been an integral part of what they do, and previously, no one could touch that, but now it's time to remind people of the rest of the good stuff that is wrapped up in going to the movies.

But piecing together an identity out of such a multifaceted activity that means so many things to so many different people is as complex as it sounds. I would say the role of the theater has evolved into the following

-A place where one can see movies the way they were meant to be seen. This means a baseline quality of picture, and sound that is current with today's standards. Not necessarily better or the best, but definitely big, definitely immersive and at minimum able to deliver the film maker's' visions
-A place where people can come to watch first run films. Where every showing is effectively a premiere, showing the world something for the first time.
-A collective social experience. Where people's experience can be amplified or counteracted by the fact that there is a room full of human beings experiencing the film as well. The theater should do everything in it's power to optimize this.
-A space where people who understand the world and express things in terms of cinema can come together do all the things that a group of people who share a common interest like to do. Find out about new films, talk to people about current films, learn about related events that are interesting to film-lovers. Like a local bookstore for movies.
-A partner with the surrounding businesses. A multiplex can be the hub of a bunch of great commerce. It can also provide the space for the purveyors of goods and services that compliment film watching (food service, movie rental, etc).

Some of these are things that Brad Bird touched on in his address to the San Francisco International Film Festival, which just goes to show how great minds think alike :)

The things that comprise its identity should be the reason a theater stays in business. The increased quality of home theaters doesn't compromise any of them, so it follows that movie theaters have little to worry about. It's worth noting, however, that most concession driven theaters don't operate the way I think they should...

But getting back to the home theaters themselves. Isn't it possible that movie theaters could benefit from the increased popularity of home theaters? Firstly, their platform is the same. Both home theaters and multiplexes share the common goal of bringing people and movies together in an optimal fashion. One group need not eat up the other's sales. What will happen is that their combined efforts will raise the overall interest in films, and should increase the performance of both businesses. Furthermore, increased popularity of their "home theater" components makes high fidelity sound and pictures cheaper. Movie theaters aren't excluded from being able to use this technology. Maybe a new model of venue could use lower cost equipment that is optimal in a smaller environment for smaller venues or higher quantity of screens. Lastly, consumer home theater products need a showcase to demonstrate their full range of capabilities. What better showcase than the movies and experiences that people will want to bring home with them? Wouldn't it just make entirely too much sense for a theater to partner with a bunch of home theater equipment providers to showcase their systems and allow people to try them out in their exact use case scenario. Doesn't that make more sense than those showrooms at best buy? As long as there's some way to control the partnerships such that they avoid being unwarranted product placement or too in your face, I think this is something everyone would want to see.

Long live the movie theater!

Q&A: Theater Vital Statistics

Lisa asks:

I'm in the process of trying to pull together a business plan for a tri-plex in Oregon. I found your posts pretty enlightening, and was wondering if you happened to know of any source for finding out "vital statistics" of an existing theater -- how many it seats, what kind of projection equipment it has, etc. Thanks! --Lisa

Hi Lisa,

Thanks for the note. i love hearing from kindred spirits and hope you keep reading the blog.

The most comprehensive source (that I've personally read) is the Moxie blog I link to on the sidebar (http://blog.moxiecinema.com/). I can't stress enough what and amazing job Dan Chilton does of chronicling the entire process he's going through to bring his theater to life. He has plenty of vital statistics in the many posts on the blog, but if you want a shortcut to specifics, I'm sure you could just email him and ask. He's also posted a comrehensive budget of purchases he's making which reads like a how-to.

I'd actually really like to see the balace sheets and any other numbers associated with big multiplexes myself, since my leanings are to be numerically analytical, but I don't currently know where to find this stuff myself. If you happen to find a good resource, please let me know :)

There are a few other resources that I've always wanted to chek out as well. One is the nato publication "The Encyclopedia of Exhbition" This is available on their website (www.natoonline.org) for a C note, which is a little too much for me to cough up before I've even seen the book. I attended the nato (national association of theater owners) convention, SHOWest, last year and disappointingly, they didn't have on there. I think this should have some great zeitgeist type views of the industry if not specifics for individual theaters or chains.

There is also the website www.bigscreenbiz.com which they rave about on the moxieblog. I think there are some very accessible forums to query and converse in.

Those are all my ideas. I'd love to hear what you find out!

I just THINK in Movie Theaters

SFIFF: Brad Bird's State of Cinema Address
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"Studios need to 'fire the MBAs and bring in people who know film.'"

As Martha put it when she read this, "That's me!" Or actually, she said "That's you" referring to me and my desire to be in the thick of the business of exhibition (and my lack of an MBA). This is one of the many, many fantastic quotes that came out of Brad Bird's address, "The State of Cinema" at the San Francisco Film festival. I had Martha look around for a transcript, but she was unable to find one, so instead, I'd point you over to the SFist which was my source for hearing about his talk. I highly, highly, highly recommend you follow the link and read it as the talk sounds like it made some great observations about the state of movies.

And consequently echoed a lot of the things that this blog is about :)

When I first read it I wanted to stop every 5 seconds to compose something about each comment for my blog. But that would amount to writing the exact same article the SFist produced, so I'll refrain. I'd like to reprint the whole article here, but it's the SFist's content, so I can't steal credit for it. Hopefully it'll stay up for as long as anyone wants to read it.

Aside from agreeing heartily with everything the man behind "The Iron Giant" and "The Incredibles" had to say about the movies, I was particularly touched by the part that the SF included at the end of their post.

"It reminded us of a time, several years ago, when we were teaching media literacy at a summer camp and asked a particularly energetic and ambitious high-school student why he wanted to be a filmmaker. “I just, you know, THINK in movies,” he said, and it was sort of cute and naïve and idealistic, but it’s also exactly the same brand of passion exuded by successful, creative luminaries like Brad."

Now that I've read that, I'm stealing it because it definitely captures what I always want to tell people when they ask me why I want to own a movie theater. I just, you know, THINK in movie theaters. And if I'm anything, it's cute, naive and idealistic. :)

NATO's Big Book

You might have noticed a couple of posts ago while I was making excuses for not keeping up with my blogging that I mentioned it was my birthay. One of the pleasant byproducts of having a birthday is the presents. And my brother (thanks Rito!) got me a great one!

For the year and a half that I've known of the existence of the National Association of Theater Owners, I've wanted to get my hands on a copy of their publication, The Encyclopedia of Exhibition. I'd been putting it off because of the $100 price tag. Also I don't like to buy books before I've seen them (especially ones that cost C-notes) for fear that I'll never actually read or look at them. So my strategy had been to do the same thing that I do with all moderately priced-to-expensive items that I really wanted. I put it on my wishlist.

(I know that it's rather strange that I feel guilty about buying things like Kobe jerseys, Cake CDs, Basketball shoes, and expensive books for myself but not about asking my friends and loved ones for them. It's a flaw that I hope to someday get over. In the meantime, my excuse is that if I bought them for myself, people would never have anything to get me for Christmas or my birthday)

Between sorting through shipments of DVDs via peerflix I eagerly waited for my book to arrive, and Tuesday, after a long day of work and San Francisco Film Festival going it finally arrived. Unfortunately, I only had the time between when I landed on the bed until when I passed out to flip through it, but it was enough time for me to get a sense of how useful it will be as a resource.

And the outlook is great! At first I was discouraged by the fact that it's essentially a spiralbound set of photocopies on glossy paper (the glossy pages are used for the high rez advertising throughout) and the huge section of the book devoted to marketing films that are about to come out.

But there are a bunch of cool things in there such as the listing of all the registered exhibitors, their contact information, and their presence in the united states. (I wasn't able to find any exhibitors headquartered in Hawaii, but I was able to find the chains that have screens there.) They also have some supplemental stuff such as the document that lays out the criteria for the film rating system.

But my favorite part is the statistics section. It isn't the vast ocean of rich moviegoing data that only the limits of my imagination could touch, but it does have a nice base of numbers to look at. Basic gender and age demographics as well as screen count in various regions over the last 10 years were all in there. There were even some telling figures about how a film's advertising budget was spent.

So one of my major projects is to make this data as useful and accessible as possible. I want to put up as much of this on the internet as I am allowed to (I don't want to steal any of the little revenue that must go towards funding the operation of NATO). There are a few graphs included, but I don't think they really capture the story the way a rich visualization would. I want to try to do what John Hollinger does for the NBA for the exhibition industry. I've never encountered data as compelling and insightful as it is in Hollingers work. And maybe it has just a little to do with the fact that I like basketball :)

But like I've said before, data is my fascination and I want to promote an understanding of it that is compelling, insightful and most importantly, does not have a manipulative agenda. Data has the capacity to tell enchanting stories about seemingly mundane and ordinary phenomena. But executives and pitchmen routinely abuse numbers like they're phony experts on the stand for celebrity justice.

But I digress. The important part is, the book's here, and until this information is available to everyone via the internet, I'm more than happy to offer its services to anyone who's curious. So if the description for it contains anything you think might be interesting, you can come to me to find out!

Q&A: The Concessions Parade

Thanks to inspired web searchers and Martha's AdWords campaign, I've started getting some questions on the comments section of the blog posts. I have a bit of a problem deciding how to answer these. Since generally they do not come with email addresses, I have the option of answering these in the comments or as new posts to the blog.

Since these are generally questions that address topics that are relevant to the blog and I try to be as thoughtful about responding to them as I do about creating new posts, I've decided they belong as posts in the blog. I answered one in the comments section the other day, but I'll repost the reply later in case the inquirer missed it.

So onto the most recent question about Concessions. Eric who is on his way to delivering cinema to the Denver market asked if there was an optimal placement of the concessions stand. More specifically, he asked if per-moviegoer sales would improve if concessions were sold before or after the moviegoers' tickets were taken.

This being a question that I really hadn't though to research before, I tried to think of any sources where this research would be available. Given the corporate nature of the exhibition industry today, somebody must have looked into this somehere. But after mulling over it for a while I realized that the underlying issue isn't about the placement of the concession stand.

So Eric, to answer your question, from my perspective I don't think it's even an issue. While I certainly think all the details of your theater should be deliberate, and the per-caps will definitely be affected by where you place the concession stand, I don't believe thinking about this will help you acheive what you want. In the end, it doesn't come down to what concession positioning has proven to make the most money or pleased the most people in other theaters. It comes down to what specific theater experience you want to provide. You're in total control of how you want to get your patrons from point A to point B, from people choosing to spend their evening at your theater to them finishing that evening having had the awesomest time of their lives. Somewhere along the line they'll probably want to get some popcorn. But let your vision of the theater, and the terms of your patrons decide that. The market research might help inform your decision, but visualizing it for a couple of minutes and leveraging your knowledge of the theater and market would get you to the same answer (if not a more optimal one).

*Martha sometimes tells me that it's frustrating to talk to me about stuff because I'll often disregard the questions that people ask me by reframing them or saying that the real question is something different. For fear that this may be the case with some of my responses (such as this one), I want to say that my intent isn't to stifle ideas or discredit the questions that people are grappling with. I just try to explain things the way I see them. And if it seems twisted, like I tell her, I can't help it if I'm so right :)

Back In the Saddle

To anyone reading, I want to dedicate this post to apologizing from staying away from posting for the last couple of weeks. My absence might not have affected your daily life much, but I want to say this anyway, because it means a lot to me that people consider my thoughts and share my interests. Lately I've been receiving a lot of great feedback about my posts and I wanted to express how excited I have been about it.

A number of things have gotten in the way of me posting recently (my birthday and the related festivities, going to San Francisco Film Festival movies all day and night, unprecedented productivity at work, etc) but the feedback, backlog of thoughts and articles to read have all become too much and I'm bursting with material!

So now onto the onslaught of posts. Keep the feedback coming. And my sincerest thanks for reading :)

Dont be THAT Theater

At a Movie Theater Not So Far, Far Away
'Stars Wars' fans camp at Grauman's Chinese six weeks before 'Episode III' is set to premiere somewhere else.
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"The movie they are salivating to see, "Star Wars: Episode III, Revenge of the Sith," sixth in the "Star Wars" series to be released, is set to open several blocks away at ArcLight Cinemas on Sunset Boulevard.

But it's all a misunderstanding, say the "Star Wars" campers, one of whom came from Ohio and another from Australia. The two dozen fans at the site at midday Thursday said they just wanted the premiere switched to Grauman's. After all, they said, the first movie to be made in the series, 1977's "Star Wars," premiered there.

Moreover, they don't like ArcLight's assigned seating and prefer Grauman's THX-certified sound system to the Dolby at the other theater."

Now let's be honest. Not opening Episode 3 at the Chinese Theater in downtown LA? The Arclight sound can't hang with bajillion year old Grauman's? What's the world coming to. Not too long ago, I had a little crush on te arclight and all it's fanciness. Around the same time, I think I thought of the Chinese Theater as a cheesy tourist attraction and nothing more. And thnen I saw a movie there. And was blown away by the experience. Mann's Chinese is everything that's right about movie watching - amazingly high fidelity experience, deep auditorium, big crowd, and a whole lot of history. The arclight, I later realized, is everything that's wrong with going to the movies -- Inflated prices, gimmicky extras, gaudy LA real estate, and no regard for the grand traditions of moviegoing (like going early to wait in line and fighting for non-assigned seats).

And now they're locking the fan's out of the place where they actually want to subject themselves to Lucas's latest atrocity. No respect these days, I tell ya.

Measurements and Such

One of the things that I've discovered I have a real interest in is the statistical analysis of real life phenomena. In all likelihood, this has lots more to do with the following fantasy basketball than anything else, but I've also found a very comfortable place for it in my real life job. Which involves a lot of data analysis. Naturally.

So here's the thing. I wanted to make it one of goals to develop a relatively sophisticated understanding of the numbers and statistics associated with the activity of moviegoing. I'm hoping that by applying my totally untrained and uninformed number crunching faculties and creating some extremely useful and meaninful models, that I'll have access to insights about operating a movie theater that most people will not have.

And I feel like I'm pretty close to a breakthrough on this. But there are a couple of things holding me back. I figure the first thing I need is some unifying philosophy about the numbers that I can use to focus my thinking. These would hopefully be very similar to those that people hold about life, i.e. sharing is nice, destroying is easy, things that are hard are good, stuff like that. I, of course, haven't come up with this unifying philosophy yet. It's possible that my lack of formal schooling in this arena is the bottleneck. I'm guessing it has more to do with the fact that I'm just not that smart.

But that's not the only thing. I have this genuine fascination with the idea of being data driven, but then when I turn around and see things that I perceive to be data driven, too often my reaction is irritated. I see people explaining things in terms of the numbers and variables and totally ignoring the fact that these situations have complexities that don't relate to numbers. This is all getting very abstract, so let me provide an example.

The other night, my friends (who are still writing papers in college) were trying to explain some economic technique or concept about driving the economy through employment to me and something about it sounded wrong. My first attempt to try to justify the alarm went off was laughed off as me trying to use words that were bigger than I actually understood. That part was true, but so was my argument.

My protest was that jobs were a unit of "good" in this equation. And sociologically that doesn't make sense to me. Lots of people hate their jobs, and I've heard more than one person describe their work as soul sucking. But that doesn't stop them from being grateful for them. And it's all because the academics who saw the data said jobs were a good thing (ok that's not the only reason, but it's part of it). I'm sure when the thoughts were first had, the originator surveyed the state of things and saw jobs were everywhere that good stuff was happening so made the natural connection. The natural wrong connection. One thing about measuring data is that if you don't look deep enough, you can mistake symptoms for sources. Which is why the same understanding of data when analyzing the past isn't always applicable to projecting or trying to drive the future.

So in the meantime, I'm working on my ideas about how to understand the numbers, and will be adding some incomplete but hopefully partially insightful notions on how this applies to the movie theater business. And for anyone who was a real academic in college (or just everyday life) and knows more about this stuff than I do, please don't hesitiate to help me along. :)

Bully of the Century?

Theater operator cries 'foul'
State says it has the included complaint with ongoing probe
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"'Century Theatres has shut us out of 100 percent of the major studio releases since we opened our doors," said Mason, who opened Cinemas Palme D'Or with three business partners in October 2003. "But they haven't stopped there.'

Mason contends Century, which has theaters throughout California and 11 other states, has been using its "circuit power" to steal arthouse, foreign and documentary titles since it began showing some independent films last fall in Rancho Mirage."

Century Theaters has been one of my favorite theater chains for a few years now. Ever since I started researching them, I've always appreciated their local roots, their diverse film offering, their commitment to bringing films to underserved markets, and their deliberate way of doing business.

This compaint seems to be an unfortunate side effect of that last point. Century makes careful deals with distributors in order to assure a favorable position with them. It's a tough arena and asking for exclusivity seems like a solid way to prevent yourself from getting screwed by the distributors. But when it ends up locking out neighboring theaters, then I would have to quetion the wisdom of keeping that clause around once it's started to cause (multiple) problems. And it brings me to my third movie theater belief.

3.) Be a part of a community

You'd never convince me that anyone was ever worse off by being a good neighbor. Which is no coincidence. Aside this being one of my firmest philosophical alignments, one _always_ directly benefits from a joint association whether we're talking about forging military alliances, helping friends, exchanging business, or splitting a meal. And theaters, in particular multiplexes, ar superbly positioned to be the anchor of fantastic communities of happiess and society (and consequently commerce). My favorite examples of this are the dining and shopping communities that sprung up in my hometown (or close enough) of McAllen, TX and in my college getaway location, Union City Plaza. Union city had, literally, one of every restaurant you could imagine.

Theaters naturally bring traffic and more importantly people who are either currently or about to engage in huge emotional exercises. In other words they're ripe for experiences and services that a number of businesses would be well suited to provide. So many theaters (Century included) are guilty of policies that don't allow outside food or beverages into a theater to try to force people to buy teir concessions (which they unfortunately live and die by). They should be encouraging people to keep their neighbor businesses in the black and swimming in green. Better business mean happier moviegoers. And rules like the above only breed resentment in loyal customers. And never keep outside food out.

But I digress. Theaters, like any business, really, need to reach out to not only the businesses that compliment them, but their competitors. Competitors not only make you better at what you can do, but their familiarity with your game can make them the most powerful allies you could have. Big and small theaters should have no problem working together to jointly foster a culture of moviegoing in their shared community. They should advertise for each other and for their specialties. I dare say that this would be a more productive use of resources than filing complants and mounting defenses.

Business as Digital

Sony, Disney, Warner Said Set To Roll Out Era Of Digital Cinema
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"According to people in the industry, the agreement on the table would work this way: Each time theater owners play a digital movie, participating studios will make a payment toward a loan used to buy the digital projectors, somewhere between $500 and $1,000 per digital print. It's estimated Hollywood studios will save about $900 on the cost of reproduction, distribution and delivery of each digital movie, so in the short term the money they pitch in to repay the loan is about what they save by making the switch to digital. The savings would come long term."

This makes things sund relatively peachy for the distributors. Essentially no money is risked. I see a couple of problems right off the bat. The rollout strikes me as kind of timid and might result in a slow conversion. But the biggest issue is that the focus here is not taking additional risks and realizing few immediate benefits. For me it boils down to the same exhibitors getting the same films they would have always gotten.

In the article,the reporter claims theater owners have no interest in paying for the projectors since they will realize so few of the benefits. I'm guessing that these are the big players who show whatever they want anyway. The venues that usually get bullied around by bigger players should be the ones jumping at the chance to get a piece of the newley ubiquitously available content. Of course this is only if the studios can commit to rolling out digital movies. But I think the smaller exhibitors are getting marginalized here and I'd like to see them speak up louder about the benefits they can realize. Unless I'm barking up the wrong tree.