Movie theatres: The show may not go on

Dhaka,  Tue,  26 September 2017
Published : 25 Aug 2017, 19:59:22 | Updated : 25 Aug 2017, 19:59:34

Movie theatres: The show may not go on

Movie theatres: The show may not go on
Ashek Ishtiak Haq
“All you have to decide is

what to do with the time

that is given to you.”

Creativity-wise, the summer of 2017 has not been bad for Hollywood. Wonder Woman and Dunkirk in Imax (amid the allegation of whitewashing) offered a breath of fresh air but effort to keep old franchises (Transformers or Pirates of the Caribbean) going and creating a new one (The Mummy) fell flat on face. Tent pole releases such as King Arthur (-150 mn), Ghost in the Shell, Baywatch, Valerian fell flat in the box office. The latest victim is The Dark Tower, the Stephen King-written franchise-starter. Guardian reports that this year's box-office total projection is $11.2 billion, a significant decline from last year's tally of $11.37 billion. Movie ticket sales in summer are half a billion dollars lower in North America. So why is this happening? Here are some key reasons:

1.    The industry looks to be in the matured state as the revenue for the whole industry has started to plateau. Competition from TV or streaming is proving to be too much for the industry. Content-wise, other media options are eclipsing the movie industry and presenting a strong shift in consumer preference.

2.    The new generation of movie viewers spoiled by too many options is finding it hard to rationalise the high price of a movie ticket. This is a structural change the industry is passing through. Movie attendance is decreasing with the advent of social media, increase in ticket prices, the resurgence of TV. The key demographic, the 18-39 males, is increasingly becoming cord-cutter getting their entertainment via high-speed internet connection.

3.    The budget for the small screen and big screen are converging. With strong resurgence, the studios are not shying away from investing big bucks in small screen offerings. Clever streaming services also overcame a lot of constraints previously synonymous to TV. They have brought changes relating to the size of the shows, storyline, viewing pattern etc to make it more alluring to viewers. Netflix reportedly spent more than $100mn for shows such as Sense 8, Get Down and The crown. They are also buying up movies by Hollywood top stars such as Brad Pitt (War Machine) and Will Smith (Bright) and by-passing theatre to directly releasing them in their streaming service. An episode of Game of Thrones cost more than $10 million.

4.    The entertainment technology industry is appearing to reach the end of its creative run as the innovation they are making in terms of movie viewing are just incremental compared to the era-defining stuff such as IMAX or 3D.

5.    The shortening of the movie release windows is also putting a squeeze on movie revenue as the customers are waiting for these movies on small screens earlier and watch them at a cheaper price and in a more convenient manner.

6.    Increasing political tension and frequent attacks at public places are making customers nervous about going out. The home option is proving to be not only more economical but also safer.

7.    Going to movies simply has become costly. The ticket price has almost doubled over the last five years. In addition to that, the cost of fuel, parking, and snacks have also put a significant cost burden on the customers. The cost for a trip to the theatre by a four-member family can be more than $100. There are plenty of substitute activities with equal entertainment as an option is available for the family to undertake with a lower amount of money involvement.

8.    As the contents of the TV shows have started to become more interesting, the movie industry appears to be going through a creative drought. It has been relying on sequels and superhero offerings rather than bringing in new original stuff.

9.    Piracy is also playing a big role, as the movies become available for illegal download on the same day of their North-American release.

10.    The modern technology allows people to pause any content they have been watching on their private devices. However, movies in the theatre don't offer that. As the consumers are having a short attention span due to decrease in the size of the online contents, sitting through a two-hour plus movie in the theatre is becoming an ordeal.

Movie theatres: The show may not go onIn a PricewaterhouseCoopers survey, a whopping 53 per cent of their respondents said that the increase in the movie ticket prices influenced their decision about attending the movies.

 On top of these, two very major pieces of news surfaced recently, which may prove the theatre industry more interesting. First, Netflix co-founder Mitch Lowe came up with the new service called Moviepass which lets unlimited movie viewership (one movie per day) in the theatre just by paying a monthly subscription of $9.95. The idea makes sense since the theatres make the bulk of their revenue not by selling movie tickets but by selling the pricey concessions (popcorn, fast food and sodas). However, the biggest theatre chain in the world AMC is fighting them tooth and nail. Second, Apple announced the plan for a new service which will allow movie rental for $50 within two weeks of the movie release. Napster's co-founder Sean Parker has been trying to bring a similar service since 2011 but with Apple, in play, this could prove to be a game changer.

These factors are not playing well with theatre chains such as AMC. Over the summer of 2017, the company lost 27 per cent in value as their ticket-sale fell by 10.8 per cent. The four largest multiplex complexes lost $1.3 billion cumulatively. The movie studios can survive such exodus as fast streaming and improved viewership options at home will still let them access the customers bypassing the theatres. However, the theatre industry would need to be more innovative. Bringing the price of the ticket down will be a short-term solution. Since they are in the business of entertaining the audience, the focus should be on enhancing the experience through concessions, better seats and sound systems. Their effort should be on improving the viewership experience by integrating virtual and augmented reality elements in the theatre. They should look closely at the retail industry and come up with a solution fast.

The writer is an MBA candidate in The Schulich School of Business (York University).
Editor : A.H.M Moazzem Hossain
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