Digging Deeper: The End of Movie Theaters?

Movie theater attendance is declining; there is no debating it.  What is debatable however, are the main reasons why and what the theater industry can do in order to get the attendance back up.  In the CBS Sunday Morning segment “The end of movie theaters?” many questions and statements are made regarding these issues of this decline in attendance at movie theaters.  One of the main reasons for the decline that they make, which is an obvious one, is the economy. People aren’t able to fill their wallets like they used to, and when you have less money than you used to, you have to cut back on things you used to do, which for a lot of people was going to the movies.  Another reason for the decline that is proposed in the segment is movie rentals, why would people pay 8$ for a movie when they can wait a few months, rent it, and enjoy the movie in the comfort of their own homes, especially when the homes have surround sound audio and big screen televisions.  I feel that another problem that the theaters are facing pertains to social media; so many people will go to a movie, immediately tweet or post on Facebook about it, and if they thought the movie was awful (which half of the movies produced today seem to be), then millions of people see that and decide to spend their money elsewhere.

            One of the solutions offered in the CBS segment to this issue is simple, yet I believe to be the most effective, create more blockbusters.  In 2011, there were only two movies that made over 300 million dollars in profits, compared to at least four movies that made over 300 million in profits the year before, which makes a huge difference.  Many people only go to movie theaters to watch the blockbusters, so by creating more blockbusters, you get those people into the theaters more often.

           One idea that I have for increasing movie theater attendance is obvious, lower the prices.  However, I feel that they should only lower the prices for certain movies.  Why is it that I have to pay the same price to see a movie that cost 100 million dollars to make as opposed to a movie that cost 5 million to make?  That’s like charging the same price for a Porterhouse steak and a McDonald’s cheeseburger.  Why not keep the blockbuster movies prices the same, because people are obviously willing to pay for them, and lower the prices to view the smaller movies?  I believe this would increase the revenue generated for these movies because, even though people are paying less to see them, more people will attend them, increasing revenue in the long run.

            Ultimately, movie theater attendance is declining, and something must be done if movie theaters want to stay in business.  The CBS segment was a great example of this dilemma.  It relates to the issue of balancing creative and commercial impulses in media-marketing by showing that the two impulses are not in balance and that is a reason for the declining box office.  It shows that they are focusing too much on commercial impulses; they need to take a step back and start to get their creative juices flowing again.          

Digging Deeper: What are movie theaters?

    There are several different reasons I believe movie attendance is down.  Seven years ago when I was in seventh grade, there was no such thing as Netflix, Redbox, Hulu, or even 60 inch plasma HD t.v.'s.  Yes, there were such things as 60 inch televisions, but they weren't so crystal clear that you could literally see a blemish on a reporter's face.  Increasing technology is giving a crucial beating to the movie theater business.

    The first big technological advance that is hurting the movie theater revenue the most is the recent development of streaming of movies through Netflix, Hulu, etc.  For Netflix, you pay a small fee of, I believe, eight dollars a month.  Crap, one movie ticket at a theater costs eight dollars.  Why pay eight dollars (not including the five dollar drink and six dollar popcorn) for a ticket to see a movie when you can watch unlimited movies on Netflix for the same price?  Every movie will have its loyal followers that will spend this kind of money to see a midnight premiere, but it does not make sense to go out and pay this kind of money if you are not completely infatuated with what is playing.

    One might say "Netflix does not come out with the latest, greatest movies that just aired in theaters." This is where Redbox comes into play.  Unlike Netflix, Redbox displays most of the latest, greatest movies that just left theaters, and most importantly, for the slim price of $1.20!  They do not come out right away, but if you wait, you will save money.  The Sunday Morning piece gave a perfect example of this.  Jeremy Remudo, instead of paying eight dollars to see a movie in theaters, waits until the movie comes out on Redbox and saves himself about seven bucks.  That's a meal at Whataburger.

    This leads us the the second major technological advance that is devastating to the movie theater attendance/revenue.  The television industry is booming.  Not only are the TV's getting bigger, they are getting smarter, louder, and more crystal clear than ever.  If movie fanatics pay eight bucks to see a movie in theaters, chances are they have a flat-screen TV now days.  I was watching an advertisement the other day about Sharp.  They just released the biggest LED TV in the solar system at 90 inches (you can watch the video here).  Why would anyone want to pay to see a movie when you can watch it on a jumbo-tron in the comfort of your own home?  Granted, most people do not have the money to go out and buy a 90 inch TV, but this is another advance that is hurting the movie theater industry.

    As you know, most movie theater's are not theater's if they do not have middle school and high school aged kids in them.  I guess you could say this is part technological advance that hurts attendance, but it is mainly a distraction problem.  With the increasing amounts of smartphone/iPhone users, there are many more things to do while sitting through a movie than simply "text."  Middle schoolers and high schoolers are in the "cool" stage where they do not care about the older folks who are actually trying to watch the movie.  They will sit through the whole movie giggling and gaga-ing about Sam's latest Facebook or Twitter post, oblivious to the people behind them.  There is a recent article that goes along with this.

    These are some examples of things hurting the movie theater industry.  I will try to come up with a few solutions that could possibly work.  I do not know how easy it is to just "drop" prices because it probably does not work that way, but I'm sure they would gain more attendance and revenue if they would offer specials for certain types of age groups during certain types of the week.  For example, have a "college night" where tickets are half-off, or a "high school night" where tickets are half-off as well.  Just something along those lines.  Believe it or not, Sherman, Texas used to have a Dollar Movie Theater.  It was similar to Redbox in that they would release movies a few weeks later than regular theaters, but only charge one dollar to see the movie.  Granted, food and drinks were still higher than a tree.  Notice I said Sherman "used" to have one.  It has since closed down.  I figure if a company can figure out a better way to run something like this, it could have the potential to be very successful.  Lastly, I think movie theater's should more strictly enforce the "texting" and "high school drama" that goes on in theaters.  All of these could have the potential to gain more attendance/revenue for the movie theater industry.

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.

Digging Deeper Opportunity: The End of Movie Theaters

Sharon Waxman stated, “The population that is going to the movies less than they used to is clearly young men” and she’s right, the last time I remember going to a movie theater was about two years ago. Things have changed; nowadays we use our computers, tablets and phones for everything. We cannot live without them. This is the new generation. A reason why movie theater attendance has decreased besides the obvious reason of the economy is because the quality of movies has decreased.  This means there haven’t been as many quality movies released in the last couple of years. People like to see movies that are popular and yes there have been a few hit releases but as Joe Picorillo’s said, “there were a lot of other movies that didn’t work”. However movie theaters haven’t given up that easy, a solution that was mentioned for increasing box office revenue included dine-in movie theaters. Which is a good idea because it makes the viewer feel like they are at home. The viewer is able to watch, eat, and relax all at the same time. What the dine-in movie theaters are doing is offering you a service. You pay for the movie you want to watch plus a little extra for the refreshments they bring you. This can generate revenue for the theaters by having pleased their costumers and they keep coming back and production companies by having a steady flow of those people coming back or recommending the dine-in theater to their friends. I find this the most promising idea. 
             I have come up with my own solution for increasing box office revenue. The film industry must to join the technological movement and advance. Each individual production company will be in one web page. In each specific production company web page will be the movie(s) that the production company currently has out in theaters. The consumer would then click to watch the movie and a notification of a payment would pop-up. The payment will be linked to the production company’s account via PayPal. The price would be the same as it is in theaters. However, a way that the price could decrease is if the majority of people who watch movies adapt to this idea. After paying the required price an option of watching trailers will appear instead of having ads. You can choose weather to watch trailers or not too. I believe this idea has the potential to revolutionize the way new movies can be seen in the near future. It simplifies the way individuals watch a newly released movie.  Giving the viewer total control of when and where they want to watch a movie. This idea would not only make it easier for the people to watch movies but also for production companies to generate revenue through the use of computers, tablets and phones. This innovative idea can benefit production companies generate revenues through the web as users pay the price of the movie that they want to watch. Through this the movie industry can keep growing and try to end piracy, at least for a while.

Economic Conditions: Record Labels

"What is the primary revenue stream for music labels?"

Well, in general, the biggest revenue stream for music labels today is online streaming, specifically iTunes. A close second is Spotify. That's simply where the source of where most people today are obtaining their music. It's easy and in some cases it's cheaper than buying a whole 12 song album when you only want the 2 singles you heard on the radio. But with that ease, there comes an easy threat to that revenue.

"How is that revenue stream being threatened?"

With the rise of technology, the more concerns media businesses have and in the case of the music industry, it's rather daunting. The giant that the music industry faces is peer-to-peer sharing, where someone uploads a file of an album, and just like that limitless copies are spread throughout the inter web. It is virtually impossible to stop the pirating of music on the internet, but the industry is doing its best to adapt.

"What are some ways the industry is trying to adapt to those economic threats?"

Cary Sherman of the Recording Industry of America (RIAA) is doing his best to sue everyone. And I mean everyone is on his radar. First, he's going after those who are uploading the content, that's his primary objective, but he's not above suing those who download as well. However, some artists embrace file sharing and use it as a means to promote their work by offering a sample song or two. And these companies that allow legal sharing have ways of tracking who's downloading the content to get a sense of the value of online streaming. Another way the industry is fighting back is the merger of Universal and EMI to take control over 40% of the market, thus being able to more or less dictate how music is shared. This is especially worrisome for artists who are just starting out. So, at the same time, this merger is a combatant against the threat of revenue for the music industry, but it's also a threat to the legal sharing of online music.

"How are these economic shifts leading to shifts in content within the music industry?"

As I mentioned, streaming is the primary source of revenue for the music industry and the industry knows this. Also, as I mentioned, the big issue with this is illegal file sharing amongst users, and the industry knows this as well. So, as I eluded to in the last paragraph, some artists are embracing this. The industry and artists alike know that not everyone wants to purchase an entire album, so they allow purchasing of individual songs. It's quick, it's easy, and relatively cheap. Sites like iTunes, Pandora, and the like can tailor music possibilities to fit your tastes. It's easier to review songs before you buy them to better know what you're getting. So, with today's technology, all sorts of music is available at the push (or click) of a button.

If I were an executive within the music industry...

To adapt, I think the only way is to really embrace file sharing. To know and understand that it's going to happen whether I want it to or not. So, perhaps do a promotional to gain the interest of fans: for a record label, have a deal to where the purchase of an album on your label gives the buyer a code to download a song from another band on the label for free. As some artists do, offer singles for free, but require them to "pay" for it with a tweet or Facebook status to get the word out. As a gamer, if I'm hesitant to buy a new game, whatever perks the developer is offering with the purchase is what will tip me one way or the other. So, I think what people need to buy an entire album is incentive, whether that be a temporary low price, free merchandise with a purchase, song downloads with the purchase of a ticket to a concert, or anything that will push those who are on the fence about buying from that label. I believe a true artist wants their work to be heard, seen, experienced, etc. (and being compensated as well), so in whatever way that can be accomplished would be the best way to adapt.

Sources: Business Insider, Media Shift, Huffington Post, ABC 20/20

Magazine Industry Research

What is the primary revenue stream for magazine publishing?
 
     -Most people believe ads are the way magazine publishers make their money.  This is true, but      
ads are not the only way they make their money.  Other means of revenue are through subscriptions,
single-copy revenue (i.e.. newsstands in convenience stores), website revenue (almost all magazine
companies have a website), and list revenue (renting their mailing list to advertisers).

How is that revenue stream being threatened?

    -With the growing technology these days, more magazine viewers are migrating fast to digital and mobile (i.e.. tablets, iPads, iPhones).  Most magazine companies are not capturing enough of the growth in digital revenue to make up for what is disappearing from print revenue.

What are some ways that the industry is trying to adapt to those economic threats in order to maintain profitability?

    -These publishers are having to find different ways of bringing in revenue, fast.  Since print advertising is starting to become a thing of the past, these companies are having to create new licensing deals and getting subscribers to pay more while working with software giants like Apple and Amazon.  But in the end, there are two things they have to be good at: Creating very good content, and connecting the consumers to advertisers.

How are these economic shifts leading to shifts in content within this industry?

    -I am going to talk about shifts in content within the mobile and digital perspective. Economic shifts are forcing these companies to switch to the digital age by creating apps and websites instead of solely relying on paper-copies.  They have to look at it from the perspective that a reader is probably not going to read a 5,000 word article about a product on a tablet, iPhone, iPad, etc.  In order to combat this problem, they have to create effective articles within these apps that are not too long, but at the same time, not too short.  This is how the content is changing within these companies.

My ideas about strategies:

    -I am going to talk about my strategy from a mobile device (App) perspective.  I believe the reason people buy these devices in the first place is for simplicity and ease-of-use, which happens to be how Apple portrays all of their products (look how successful is has worked for them).  So, if I were a magazine industry, I would design my app to be simple and easy to use.  I would advertise the new simple "app" we created on our magazine website as well as in the paper subscriptions.  All users like to see simple layouts that are easy to use.

Piracy and the numbers

On perusing the internet, one may find arguments on both sides of Piracy. One of the arguments that has surfaced in favor of piracy regards the question as to whether or not piracy is technically "stealing". This argument essentially states that piracy isn't stealing, as piracy simply makes a copy of the product, but does not actually remove a product from a shelf. One post states that when a company, such as Macsoft claims that piracy has cost them millions and millions of dollars, they are pulling numbers out of their behind. The claim shared by many in favor of piracy assumes that the pirates would not even purchase the product had piracy not been available, so to claim "loss", by their logic, is inaccurate as a physical ownership never occurred. 

                Here's the problem: to a certain degree, this argument is correct, insofar as many companies will publish statistics claiming a certain amount to have been "lost" due to piracy, when this number is created assuming that every one of these sales would have happened had piracy not been an option. Some companies will go so far as to inflate the statistics to make piracy seem even worse. In one instance, the Business Action To Stop Counterfeiting produced  a statistic claiming that piracy will have cost Europe "over 240 Billion Euros by the year 2015 and result in 1.2 million jobs being lost in the same period." These claims were later revealed to have been inflated heavily, and to have unsuccessfully posted a thorough explanation of the study's means of achieving these statistics. This seems to be a ubiquitous phenomenon on the internet. A number can be scary, but who is to say whether or not it is accurate? 

                So yes, companies will claim losses higher than what actually occurred, but this does not mean they are not hurt. On the Pro-piracy argument, the assumption is made that NONE of the those who pirated would have ended up buying if piracy was not an option. This is false. One should not make blanket claims about the population without actually addressing the population. As piracy deals with the subject of potential, one must address how people would act--which is exactly what one study did, when analyzing losses to the MPAA due to Piracy. This study noted how it is inaccurate to claim all instances where someone pirated a copy of a film a loss, as, not every person would have bought one had piracy not been available. SO in order to more accurately portray the losses, this study DID THE RIGHT THING and asked the people! In several extensive surveys, they were able to determine who would have bought a film if piracy were not available--and the numbers were substantial. Here are the statistics:

-$5.5 billion annually loss to U.S. workers, $1.9 billion from workers in the motion picture industry, $3.6 billion from other workers in U.S. industries.

-141,030 new jobs would have been added to the U.S. economy.

-$837 million in lost tax revenue.

This study analyzed statistics limited to the film industry, but was able to determine what how this sample represented the whole of U.S. economy. So no, "stealing" is not occurring, as this word applies to the physical loss of a product, when the losses considered due to piracy are all theoretical. This argument, however should not be used to rationalize piracy. Convenience does not muddy the law, but it does seem to muddy many people's sense of ethics. On the other end, however, it is the responsibility of these statistic-publishing companies to give accurate, nonskewed data with listed sources and information on the means of achieving statistics. lists such as these are clear and thorough, but they do not publish much information, if any about sources or methodology. When trying to battle piracy, insulting pirates' intelligence is not the best way to go.