Tuesday, October 23, 2012
Digging Deeper Opportunity: The End of Movie Theaters?
Why Is Attendance Down?
This Sunday Morning piece offers several examples of why theater attendance is down. One of the biggest being the state of the economy. People are picking and choosing what to spend their money on and it would seem that the box office is taking a hit. It's losing out to competition from companies like Redbox and I would assume Netflix. People are able to pay less to rent a movie or they are able to pay the price of a ticket for (nearly)unlimited movies for a month. The piece also claims that the movies' targeted demographic is young men and they are spending their time doing something else. So, their biggest and most hopeful audience isn't even giving them the time of day. The last thing I caught that the piece offered for why attendance is down is the lack of hit blockbusters. Even with Harry Potter, Pirates of the Caribbean, Twilight, etc. there were too many flops to make up ticket sales.
I would say that the main reason that movie theaters are failing to draw audiences is that there isn't much of an incentive to go unless it's a hit blockbuster. Otherwise, you're most likely going to be taking a gamble on whether or not you wasting 8 - 12 dollars. And that's even the case sometimes with the blockbusters. The price wouldn't be an issue if you felt like you were getting your money's worth, but that's often not the case. I agree with the Sunday Morning piece in that attendance is down because people are spending their time doing things more worth their time.
However, the piece does mention that sales will at times pick up again rather suddenly as if nothing happened. Whether or not this has something to do with how the theaters are marketing, I'm not sure, but I don't think that it's something they can try and build on, because it's obviously not stable enough to last.
Solutions For Increasing Revenue
As I mentioned, the segment discussed how people are renting movies for much cheaper and are enjoying films in the comforts of their own homes. So, the segment pointed out how theaters have begun to try and bring the "comforts" of home to the theater with serving food in movie, more comfortable seating (saw someone in the segment reclining and putting a blanket over their legs...movie theaters are supplying blankets and recliners?), and other commodities to make people more comfortable. But it would appear that this has not been enough to keep attendance up. Another strategy offered by the piece is that Hollywood simply needs to create more blockbusters to draw in the big crowds, but as I already discussed, that's either boom or bust. Finally, the piece briefly mentions that some revenue is retained by box office sales over seas, which means upping the flashy special effects and downing any delicate dialog.
I don't really find any of these solutions promising, but I suppose the closest they are getting is with bringing the "comforts" of home to the theater. This is because, like I said, there should be incentive to spend your money, you should feel like you're getting your money's worth. Anything else is going to have that boom or bust quality, because people will spend their money elsewhere unless they really want to see a certain movie.
If I were to propose some solutions, the first one would be simply: lower costs. Hiking the price up is not going to create incentive. But that isn't likely to happen, so I digress. Perhaps if not lowering prices, have more promotions and deals. For instance, if you're on a date, have a discount. It's definitely cheaper to rent from Redbox and have a romantic night at home. The same could go for family nights out. Maybe on weekdays have discounted concession prices.
As I said, I like the "movie taverns" that have in theater dining, and if I ever go to a theater with recliners, I'm sold. But at the same time, I don't think people are going to pay anywhere from 8 to 20 dollars (food and drink) to have an "at home" experience. I'm not too sure on many ways that theaters could drive people back to the box office, but whatever they do they need to make people want to be there.
Balance Between Creative and Commercial Impulses
Well obviously this piece was about how to get people back in theaters as to make a profit. However, to do so, Hollywood is going to have to make people want to be there, and the simplest way is to make movies people want to see. So, the commercial is getting people in to seats, and the creative is producing films that people want to watch. Now, I think the "creative" part of that is a little subjective, but that's besides the point. This segment was tackling the issue between simply trying to make a profit and making people want to contribute to that profit.