BirchTree

Talking tech since 2010

Movie Theaters are in Deep Trouble

Movie Theaters are in Deep Trouble

Hollywood fears movie theaters 'may not survive' pandemic - Los Angeles Times

Groups representing movie studios, theater owners and directors on Wednesday called on Washington lawmakers to provide “specific relief” for film exhibitors, saying that nearly 70% of small and mid-sized theater companies would be forced to declare bankruptcy or go out of businesses without government assistance.

This is tough.

I’m certainly not in favor of 70% of small and medium-sized movie theaters going out of business, but I really don’t see a way forward for this industry in the same way it’s gone on for decades. Whether we take drastic action or not, I think the fate of these theaters a few years down the road is the same either way.

Ticket sales have been dropping consistently over the last few decades, dropping 22% from 2002-2019. Box office totals are up 23% over that same time period, but that is thanks to higher ticket prices, not increased viewership. And of course, the US population has increased 28% since 1992, so proportionally, ticket sales are actually down 39% proportionally to the general population. Now I know that theaters make most of their profits from concessions, not from the tickets themselves, but ticket sales are an indicator of total customers, and there’s no question that has been dropping.

Another factor that has to be hurting theaters is that home theaters are so much better than they used to be. You can get a 55” 4K TV and a soundbar for less than $400 and have a pretty great movie experience at home. And that’s just the low, low end, you can pay more and get much better everything. The movie theater experience is certainly still better in many ways, but we don’t live in a world where most people have a 23” tube television in their living rooms anymore.

And then there’s the experience. While customer volume is down, theaters need to make more money on each customer that comes in, so you see a rise in concession pricing, more ads, more trailers, and more pushes to get you to sign up for a subscription service that gets you into the theater more often. Compared to asking my Apple TV remove to “play Tenet” in a few months and having it start immediately, and it’s not even close as to which is a better user experience.

---

This post has been pretty negative, but I wanted to explain some of the challenges facing movie theaters that have nothing to do with the current pandemic crisis. I wish I had the solutions, but I just don’t right now. It’s hard for me to see a future for theaters that doesn’t entail just the big chains surviving and for visits to be even more reserved for major blockbusters, while most movies get most of their traction and revenue from at-home distribution.

I’m a huge fan of movies, and I think seeing a movie in a theater is almost always the best way to watch a film, but the degraded experience, alternative forms of entertainment, and increasingly affordable and excellent at-home movie experiences are incredibly powerful forces that seem unstoppable right now. The pandemic didn’t start this trend, it simply accelerated it.

Show Comments