The premium seating business has boomed in the last few years by as much as 60-70%, vendors tell me. That’s thanks to the new industry emphasis on high end moviegoing and the fact that the costly conversion from 35mm to digital projection is nearly complete across the industry. Per unit prices offered by a half-dozen companies at CinemaCon this year range from $500 to $5,000. Upgrade costs range depending on theater sizing and seating choices but one firm told me their clients’ average spend on seating alone is $200K per theater. Exhibitors of all sizes and regions are taking out standard 18- to 19-inch seats in favor of upgrades as wide as 25 inches or more, even if that means fewer seats in theaters. The polite reason is that “people are getting bigger” and will pay for comfort. (Could candy, food, and supersized soda sales have something to do with that?) READ MORE »
Alamo Drafthouse Cinema’s Tim Reed made the observation this morning at the most refreshingly frank panel about the problems theaters face that I’ve seen so far at the industry event. He says that execs have ”done a horrible job building a fan base for the movie business over the last two decades.” That’s a problem because “we’re in a battle now…We’re brick and mortar. We’ve see a lot of brick and mortar businesses go down. We have to be nimble and find content that will sell to our base” — including young people to “make them movie-going fans.” He and others on the International Cinema Technology Association’s panel agreed that theaters need to become more aggressive about introducing alternative content including live sports and concerts. “This is the year for satellite (distribution) and that whole conversation,” Walt Disney Studios Motion Pictures VP for Strategic Planning Paul Holliman says. But movie distributors have to help by relaxing their terms. For example, Warner Bros International Cinemas President Millard Ochs says studios could just require that a film be shown six nights a week instead of seven after it’s been out three weeks. “We have to change. Everything is changing around us.” Still, Reed warns that alternative content can be expensive and execs don’t know yet what material will pay off. “What we have found is that it’s more market driven on a psychographic level,” he says.
NYC exhibitors escaped Mayor Bloomberg’s attempted soda ban last month. But potential future government regulation of revenue-boosting concessions still has theater owners and operators concerned. And frustrated. “[These] taxations are truly money grabs by the government”, Cinemark Food & Beverage VP Bob Shimmin said at a CinemaCon panel this morning. “They’re not trying to make people healthier, they’re trying to balance their budgets”. Bloomberg’s rule would have limited sales of sugary soft drinks to 16 oz.-sized cups — the smallest portion most theaters even offer. Pushing smaller cup sizes to adults would actually backfire, spins NATO’s Deputy Director of Government Affairs Todd Halstead, because it would lead to more purchasing of refills leading to larger in-theater consumption after all. He insists the NYC soda ban was just the tip of the iceberg: “What better way is there to institute a tax then to connect it to health?”
The upstart exhibitor has expanded its reach since launching in 1997, going from a single theater in Austin, Texas to a mini indie empire with 10 locations in Texas and additional outposts in Winchester, VA, Kansas City, MO, and Littleton, CO. But despite recent moves into San Francisco, Kalamazoo, the Washington DC area and New York, where three new locations are planned for Manhattan, Yonkers, and Brooklyn, Los Angeles has proven a tricky market for Drafthouse to break into. Today LA developer Saeed Farkhondehpour said that Drafthouse is this close to bringing a 30,000-square-foot eight-screen theater downtown where a parking lot currently sits. But reps for the exhibitor caution that ink hasn’t yet been put to paper on a deal. “We have had discussions but no formalized agreement”, an Alamo Drafthouse spokesperson told Deadline.
Bond analysis firm Fitch Ratings offers its bracing analysis of the movie exhibition industry a week ahead of theater owners’ annual CinemaCon trade show in Las Vegas. The company forecasts a “modest” decline in 2013 ticket sales and long-term challenges …
Theater owners don’t want to keep adjusting prices for tickets and concessions based on the movie or time of day, but they also don’t like seeing 88% of their seats left unfilled. That may create an opening for Dealflicks, a Priceline-like service that enables exhibitors to offer discounts tailored to …
Theater owners and investors won’t find much encouraging news in the latest overview of the exhibition industry by Moody’s Investors Service. “Despite an increase of about 6% in US and Canadian movie theater admissions in 2012, the overall trend is negative,” the debt-rating firm’s Assistant VP Karen Berckmann says this morning. Last year’s increase shows that “appealing product will still draw people to theaters.” But attendance remains 15% lower than it was in 2002 when it came close to 1.6B. “Given alternatives for consumers’ leisure time — from video games to Netflix to web surfing — we do not expect a rebound in movie attendance,” she says. Exhibition chains also have discovered that if they continue to raise ticket prices then “they risk turning off customers and reducing attendance.” What to do? Theaters have fattened their bottom lines by improving concession offerings, selling more on-screen ads, showing alternative content (such as concerts and sports events) on slow nights, and generally cutting costs. The premium-priced tickets for 3D movies are probably a wash since they also come with higher licensing costs, but could provide some modest help as studios and theaters experiment with the format.
WESTFIELD, N.J. & VISTA, Calif.– Digital Cinema Destinations Corp. (NasdaqCM: DCIN), a fast-growing motion picture exhibitor dedicated to transforming movie theaters into digital entertainment centers, together with its new joint venture partner, Start Media, LLC, today announced the closing of the purchase of seven theaters with an aggregate of 74 fully digital screens from UltraStar Cinemas.
The acquisition includes six theaters located in the Southern California/San Diego market and a seventh theater based near Phoenix, AZ. Digiplex now operates 16 theaters with 159 screens located in CA, PA, CT, NJ and AZ.
B. Riley & Co analyst Eric Wold is so encouraged that he raised his earnings estimates for Regal, Carmike, and Cinemark this morning — the second time he has done so in less than two weeks. And yesterday Stifel Nicolaus’ Benjamin Mogil upped his projections for Regal and Cinemark, also citing recent theatrical sales. The domestic Q4 box office is up 20.2% to date vs the same period last year. Even if sales cool slightly and the quarter finishes +17.4% then “it would just beat out the current Q4 box office record currently held by 2009, while also representing the sixth highest quarterly box office revenues in history,” Wold says. The good news is that theaters aren’t just benefiting from expected blockbusters led by Sony/MGM’s Skyfall and Lionsgate’s The Twilight Sage: Breaking Dawn Part 2. The $100M+ ticket sales for Sony’s Hotel Transylvania, Fox’s Taken 2, Warner Bros’ Argo, and Disney’s Wreck-It Ralph “demonstrate the continued broad-based strength of both box office and attendance trends even during what could be considered a less-than-optimal movie-going environment (e.g., tough economy and natural disasters),” Wold says.
Theater owners believe they still have a good shot to beat the rule, adopted yesterday by the New York City Board of Health, that would ban sales of large sized sugar drinks in movie houses, restaurants and other …
It’s getting a little harder for movie theater owners to boast that they offer an entertainment bargain. The average outlay to watch a movie hit $8.12 in Q2, exceeding the previous quarterly high of $8.01 in the last …
Time is running out for theaters that haven’t made the switch to digital projection. Studios’ use of conventional 35 mm prints “is projected to cease in the United States and other major markets by the end of next year, with global cutoff likely to happen by the end of 2015,” according to the latest IHS Screen Digest Cinema Intelligence Service report. There’s still a ways to go: The firm says that 51.5% of worldwide screens had digital projectors at the end of 2011, an increase of 82% from 2010. But IHS notes that soon it won’t be sufficient to have a digital projector. Director Peter Jackson is lobbying for theater owners pay for the software upgrade needed to show his upcoming The Hobbit films at 48 frames a second. That’s the speed at which he’s shooting the movies, up from the conventional 24 frames. At the end of 2011 about 50,000 of the world’s 63,825 digital screens, including 19,000 in the U.S., would be capable of being upgraded. Theaters with Series 2 DLP and Sony projectors will be able to accommodate Jackson. Pressure to upgrade won’t abate after The Hobbit. James Cameron plans to shoot his follow-ups to Avatar at 60 frames a second. (Incidently, IHS’ figure on the worldwide total of digital venues is slightly higher than the 2011 tally from the MPAA, which counted 62,684, of which 44% were in the U.S. and Canada.)
Movie theater owners got just the kind of event they wanted — but not the one they needed — last week at CinemaCon. Exhibitors should have used the four-day event in Las Vegas to share thoughts about the serious problems they collectively face as both attendance falls and Hollywood studios begin to slash their output of big-budget movies. Instead the execs largely ignored controversy. Attendees high-fived each other on the soaring box office sales in early 2012, assessed new technologies designed to make movies look and sound more realistic, and tried to make sense out of the studios’ slick sales pitches for their upcoming slates. Here are a few thoughts about what event leaders could have done to make the event more useful:
– Talk frankly about industry problems. From the sound of things at CinemaCon, exhibition is in great shape — and reporters or Wall Street analysts who say otherwise are overly excitable or don’t see the big picture. But the numbers tell a different story. Admissions and admissions per capita have fallen over the last 10 years, and hit new lows in 2011. While there are several reasons, one of them is that lots of people no longer see the movies as a bargain. Theaters have compensated for the declining admissions by raising prices for tickets and concessions. Both have outpaced inflation for most of the decade. Yet the strategy appears to have run out of gas. Continued price hikes will backfire as consumers remain uneasy about the economy — and revel in the less expensive entertainment alternatives they have at home on their HDTVs and computers.