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The Future Of Movie Theatres In America

December 18, 2020

Social distancing has hurt a lot of businesses, restaurants, cafes, bars and malls. However, it hit the movie theatre industry a little harder. Some movie theatre’s have been closed for months and others are operating at under 50% vacancy. None of them have any idea how long they can keep up.

Studios have also delayed theatrical releases of a lot of expected movies. Reports suggest that AMC is on the cusp of declaring bankruptcy. Though they may bounce back, it would be a very close call.

In 2017, US movie-ticket sales hit a 25-year low. That was the year with some of the most famous blockbusters including Wonder Woman, Spiderman (Homecoming), Guardians of the Galaxy 2, Despicable Me 3, and The Last Jedi. Since then the ticket sales have risen, but not as expected (especially with blockbusters like Endgame and Infinity War). With that said, there are a few reasons that the future of movie theatre’s may be surprisingly different.

The first reason is the recent trend of rising ticket costs.

Ticket prices are 109% higher than in 1995- that’s pacing rapidly past inflation. Thus the audiences are picky about what they want to watch in the theatre’s and what they could enjoy from the comfort of their couch. This puts the theatre’s in a Catch-22 situation. Fewer ticket sales have movie theatre’s charging higher prices to cover costs and this leads to fewer people going to the theatre’s.

These days, movie theatre’s highly rely on blockbusters, so they’re very susceptible to loss. Studios get around 90% of the collections in the first week of release. This diminishes over subsequent weeks with more money going to the theatre.

Movie theatre’s depend on movies to run successfully for a long time. This puts them in a dangerous position. If a blockbuster is a flop in the first week, the theatre’s earn a lot because people have been waiting. But after the word spreads about the mediocrity of the film, fewer people show. The movie theatre is losing out on the most lucrative weeks.

Also, with big corporations eating up movie studios, the number of blockbuster releases have been decreasing in number. According to a report by “Business

Insider”, the number of wide releases by the big six, has been on a downward trend since 2006. With more emphasis on blockbusters, there is a societal pressure to consume these movies ASAP. So they aren’t spoiled or you don’t miss out on any fun conversations. No one wanted any spoilers for Endgame, so everyone rushed to the theatre’s. The need to consume content immediately means most money goes to the studios.

The second problem is the shrinking movie theatrical window, i.e. the time frame between the theatrical release and the in-home VOD. With a wider window, impatient audiences are forced to turn to theatre’s. But now the window is shrinking because of the high density of the streaming service industry. In the 80s, it would take a movie 5 to 6 months to arrive on TV from the theatre’s. Now, this gap has been reduced to 2 to 3 months.

Once the studios figure out a way of making VOD releases financially beneficial, they may cut out movie theatre’s, completely. But that’s a very extreme situation. Earlier the only issue was VOD, but now there are steaming services.

Social distancing has messed it all up. During this pandemic, movie studios have to find creative ways of making the movies available to the audiences. Disney’s “Onward” was out on Disney Plus, less than a month after its theatrical release. Major films, like the Invisible man and the Hunt, skipped straight from theatre’s into the streaming services. Then there was “Trolls World Tour”, which went on for a full digital release. So, has Covid-19 killed movie theatre’s?

There will always be people who value the experience of seeing a movie in the Cinema and will pay a premium for that experience. There will also be people who want to look for the cheaper option. Finally, there are the cinema purists like me- the ones that live for the smell of movie theatre popcorn. They want the chance to experience art made by their favorite directors, on the biggest screens possible, and with the best audio, there is. This small group alone isn’t enough to preserve the current state of movie theatre’s.

But why? To answer that, let’s look at the Trolls World tour. After its digital release, it soon became a historic movie. It is the most pre-ordered movie of all time and the best-selling film for over three days of digital release. Amazon prime is not as transparent as the Box office, so we don’t know how much revenue was generated. But, we do know that for some time it was number one on Amazon Prime; regardless of the cost.

The movie cost $19.99 for 48 hours. It was rented more times than anything else on the platform. This is compared to all the far cheaper movies on the platform. When digital releases prove more profitable, family films would be the first to leave the theatre’s. The savings of VOD for a family are far greater.

One night of movie-going for a family of 4 may cost roughly $80 to $100. If you watch the same movie at home, make your popcorn and your soda, your cost comes down just under $40. VOD allows parents to turn their living rooms into cost-effective movie theatre’s. Families would prefer that over spending $100 on a movie like Trolls. You have the option of pausing for bathroom breaks, if snacks run out- you can just re-stack and not miss even a single minute.

Another change that the movie theatre’s may go through- even larger hike in prices. We discussed that ticket prices have been rising like crazy for 25 years now. Yet, people want to go to the movies because the cinema experience feels like an event- with 3D, Dolby, IMAX.

3D showings show an enormous surge after Avatar. These screenings offer theatre’s a chance to charge more for the films and people were motivated to go to the theatre’s. For a lot of the audience, these gimmicks are wearing thin. Now, 10 years later, 3D is dying. Just like in the 80s and 50s, people are over it and very few people care about the Dolby or IMAX experience.

We already know, once this is all over, theatre’s will charge more prices to stay afloat. Post-COVID 19, we will see the 3rd and the most significant change- the one that will kill theatre’s as we know them. We will get fewer but bigger theatre’s. This has always been the trend. In 1995 there were 7444 cinema sites in the US and in 2018 there were 5869. Yet, the drop in ticket sales was not nearly as big as expected. The reason is Megaplex. These put single screens out of business and now it’s their turn to be put out of business.

But what’s next? To answer that, we would have to look at an art form like music. People enjoy most of their music on their own time, depending on their mood and at their convenience, using their own device. But occasionally people will go to see artists live in concert. The same is true for sports. There was a time when you had to go to stadiums to enjoy a game of sports. But, with Radios and TVs, one has the option to sit back on their couch and watch their game. Occasionally, people go to stadiums to support their team for a big game. This could be the future of movie theatre’s.

With the shrinking theatrical window, along with the wide array of available streaming services and the option to avoid unnecessary hassle, people will prefer to watch most of their movies at their own homes. But once in a while, when the next big movie is out, people would go to movie theatre’s.

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It would not be feasible for movie theatre’s to keep multiple screens and locations open; while they have heaps of empty seats. It would be more practical to have one giant auditorium, like a stadium, that fits sizable crowds. That way, movie theatre’s do not lose money keeping multiple screens ON and employing multitudes across various locations.

Post pandemic financial stress, on people, would be very high. Most of the people would still be recovering from the impact of the lockdowns. In these situations, most crowds would not turn to movie theatre’s. For some time after the pandemic, theatre’s will still face a heavy backlash from an economical standpoint. In this situation, closing down locations would be the first logical option. When the large screens emerge, people will start going back to the theatre’s. There will still be some smaller theatre’s for the dramatic flicks. But usually very inactive.

Movie theatre’s have survived for so long because they offer the experience of watching movies with so many people and sharing emotions. This event like experience will lead the new age of Movie Theatre’s.