The torrent of predictions of the quick demise of movie cinema strikes me as tunnel-vision bordering on dishonesty — and provably by simply looking at past history and ingrained human behavior patterns.
Hey, if movie theaters are dead, then so are legitimate theater (Broadway), music concerts, theme parks, cruise ships and audience attendance at sports events. But the pundits ignore that.
Here’s the other side of the analysis, and it’s a long and strong case for cinema making a comeback. In a social distancing world, many cinemas have already installed spacious seating — often called director chairs — providing more spacing than Broadway and other peers. You want social distancing? Movie theaters operate with an average of 80% of seats empty, while peers like Broadway have tighter seat placements and require fuller houses to be economically viable. Broadway shows risk closing when empty seats average just 20%.
Also consider that cinema patrons sit passively, while at concerts and sports events audiences clap hands, shout and bounce in their seats — all the while vigorously exhaling on adjacent folks.
Next, a characteristic of humans is restless teenagers and young-adults lust for out-of-home experiences. Driven by the youth demographic, $42.2 billion in cinema tickets were sold worldwide in 2019, according to the Motion Picture Association. Movie theaters generated billions more in additional revenue from food/beverage, screening non-movie programming and facilities rentals.
This is not a flimsy industry that could easily disappear overnight, as some pundits would have us believe. It would take a failed reopening of the economy and more epidemics to destroy the out-of-home culture ingrained in humans.
Looking at movie theaters in the United States, it’s a good news/bad news situation. The good is that U.S. cinemas have engaged in a massive facilities upgrade in recent years installing improved seating, digital projection delivering crisp pictures/sound, and some even adding the innovation of in-theater dining. The bad news is that U. S. movie theater companies are debt heavy from this refurbishing binge.
True confessions: painful financial restructuring looms for current debt-laden cinema operators even as industry’s facilities are top-notch. Should the result be bankruptcy, the best workout is to keep those silver screens shining; the alternative of liquidation closure would offer little prospect for creditors and stockholder to achieve significant recoupment. (Hey, American Airlines, Delta and United were all in bankruptcy years ago but kept flying!).
It’s also true that cinema release window is under genuine threat from VOD release of movies at or near theatrical premieres. But cinema has attributes to endure and these strengths get overlooked by naysayers. The cinema window provides one view to one consumer at one moment in time, and generates a hefty multidollar payday per consumer that is superior to what Hollywood gets from other movie windows. For movies on TV, many people can watch the same screen simultaneously — which dilutes the per-capita monetization to film distributors. Simply put, cinema generates excellent per-capita revenue, and success in theatrical extends a halo to downstream release windows.
Here’s my strongest argument. A centerpiece for those now predicting the death of cinema is reasoning that video streaming is becoming deeply ingrained as a consequence of shelter-in-place. It is true streaming is cheaper and more convenient than out-of-home leisure.
But we’ve all seen this movie before and the ending is completely different. For more than half a century, sports events proliferated on TV. Americans watched conveniently from home, in many instances for free, and pulled cheap beers from the fridge. Yet, the inconvenient truth is that at the very same time sports fans continued to buy pricey event tickets for stadiums, where beer is a stratospheric $10 or more. Convenience and low-price do not trump all.
The reality is a lot of cross currents and oppositional forces impact the outlook for the theatrical release window. It’s a fool’s errand to underestimate the attraction of out-of-home entertainment, predict consumer behavior based on top-of-mind reasoning or take at face-value impulsive answers gleaned from simplistic consumer opinion research.
Robert Marich is author of business/academic book “Marketing to Moviegoers” published in three editions.
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Very astute observations! Everyone I know is looking forward to going back to the movies in a real theatre with real seats.
As a regular moviegoer, I think it’s pretty easy to social distance at cinemas, especially since many of them had assigned seating even before virus hit our country from China.