At the San Francisco International Film Festival last weekend, I was mentioning to one of the ushers at the Kabuki that my favorite theater in the city was the Metreon. She was indignant at first and then she stopped herself, and said, "No, it's ok, we own them, you know". I was about to go off on how Metreon was not an AMC theater, when I realized that she was right.
What a crazy world. The AMC-Loews merger put the Metreon and Kabuki under the same roof.
It's not really up there with an alien landing or Microsoft merging with Apple or anything really strange. But it got me thinking about the nature of competition in the Movie Theater industry. Anti-competitive complaints are the core grievance smaller theater owners hurl at the bigger chains. And the more I learn about Movie theaters, the more these just seem like necessary business practices; Smart moves, that a big player makes to survive.
The truth is, competition absolutely destroys a movie theater's chances of survival. And not just the bad or outdated ones -- all theaters. If you set up two 30 screen multiplexes right next to each other, they'll both fail. Chances are there won't be enough diversity of films to fill all the screens and there won't be enough people to fill all the seats. Think of a two party election where a third candidate similar to one of the first two candidates steps in and destroys both his own and that candidate's chances of winning.
When it comes to movie theaters, spacing is paramount. One needs a multiplicity of screens to draw enough people in with contemporary film offerings. And supporting all these screens is a sizable investment of time and space. One has to be very calculating to make sure it's going to work. There's not much room for experimentation, or winging it. Too many screens too close, and business dries up for everybody.
That's why a merger like AMC Loews makes sense when you hear about it. If planning is going play a central part in success, the more control you have over the situation the better off you'll be. Now AMC and Loews can grow their businesses through expansion that won't eat into any of the businesses they've already developed.
The marriage is apparently a boon for AMC and Loews. So the question is, is it good for everyone else? Is it good in general that this is the case? Is there any way to tell?
Flat out, it's trouble. It's the kind of trouble that's less like heading for a cliff, and more like getting deeper and deeper into the woods with no chance of getting out.
I love multiplexes. But I have my complaints. And that's the first hint that something's amiss. I'd like nothing more than to devote my life to operating a theater that eliminates all the things I have a problem with. But I've been thinking about this for two years, now, and there's no way to do it. There just isn't.
Even with unlimited funds, there would be no way to do what the big chains do much better than what they're doing. There are too many inflexibles that limit your options for offerings. Initially, I just considered these things (release windows, film availability, ticket revenue sharing) as obstacles or facts of the business, but now I'm starting to see them as something far more disturbing.
I mentioned before that movie theaters no longer benefit from competition, and the parameters for the business are precisely the reason that this is the case. And without the destructive innovation of competition (which is different from the destruction that competition is currently causing) offerings never improve and the industry stagnates. It's obvious that this is bad for the consumers who will never see responses to their various complaints. But in the long run it will be bad for the Theater Industry who will squeeze everyone out and generate a lot of ill will in the process.
They'll make all the right decisions in terms of doing what they need to to stay around. Unfortunately, in order to survive, they're acting in direct conflict to an evolutionary process that would otherwise produce a much more beautiful and efficient animal.
It appears, then, that the answer is not going to come from the upper echelons of the movie theaters chains. That area will trend towards consolidation and immovable institutions. I once wrote that perhaps the movie theater industry (and maybe America) had outgrown its capitalistic roots and that an institution would be the best answer. I've changed my mind. The institutions are only appropriate where the resources are limited and it's impossible to create more of them through innovation, etc (like with land for housing). This is perhaps the case for physical reels of film and you can make a case that movie theaters would have needed this type of institutional control.
Until digital distribution of film came along. The technology itself is not groundbreaking which is why people are not falling over themselves about it. And maybe it's why no one's paying attention to the various efforts to tighten control over digital content.
Like I said, the answer to making movie theaters better is not going to come from the theater chains. In order to survive, essentially, they can only make things worse. What needs to happen is the parameters need to be reset so that the industry can reap the benefits and innovations that come out of competition. Multiplexes need to shrink and become more mobile. Regular people need to be able to start movie theaters at will. Studios need to be more free with their content libraries and independent film distribution circuits need to fill out.
Network Infrastructure and Intellectual Property and Copyright protection are at the heart of what will make the basic complaints (people are loud, cell phones, advertising, expensive concessions, etc) people have with movie theaters go away.
I mean this is America. We love free markets! We count their benefits in every possible forum. Why is the smartest thing a movie theater can do these days is attach itself to the biggest player possible rather than going head to head with them? Somebody needs to rewrite these rules.