What Movie Theaters Can Learn from Theme Parks to Survive

December 4, 2020, 5:18 PM · Theme parks and movie theaters long have ranked among American's most popular entertainment destinations. So it's no surprise that both industries are struggling during this Covid-19 pandemic, when millions of Americans are staying safer at home. But while theme parks are looking forward welcoming back fans in the post-vaccine future, many theater operators are not feeling so optimistic.

Warner Bros. announced yesterday that it will release its entire 2021 slate of movies on its HBO Max streaming service on the same dates that they debut in theaters. Many studios have been releasing films to video on demand and streaming services since the pandemic began, as a way to recoup some income from productions while theaters remain closed or severely capacity restricted across the country. But Warner Bros.' announcement represents the biggest shift to streaming yet, and one that might continue past when theaters are cleared to reopen.

Theater owners fear that studios will sacrifice the exclusive theatrical window to encourage viewers to subscribe to the studios' streaming services, such as HBO Max, Disney+, and NBCUniversal's Peacock. Theaters had been protected from studios by United States v. Paramount Pictures, Inc., a 1948 Supreme Court case that prohibited studios from owning theaters. But streaming services blow an enormous loophole in that wall protecting studios from controlling both the production and distribution of movies.

And the pandemic has given studios an excuse to run through that hole.

So what can theater operators do to remain in business when fans can watch the same films at home? Here's where the theme park business offers some valuable guidance.

First, forget about competing on price. Theaters will have no future if they try to slash ticket prices to undercut the cost of streaming services, most of which offer a month of unlimited viewing for the same price of a movie ticket in LA. But theaters don't need to try that. Learn from the Disney and Universal theme parks, which never compete on price.

Sure, those parks might offer deals from time to time, especially when they are trying to push visitors into hotel packages or longer multi-day tickets. But they never worry about what SeaWorld, Six Flags, or a Cedar Fair park are charging for a day's visit. Disney and Universal dominate the U.S. theme park business because they offer a superior experience.

That's the path forward for the movie theater business. The pandemic does not have become an extinction moment for the movie theater business. But if it culls a bunch of crappy theaters, I don't think many movie fans would mourn their loss. Here are several ways that movie theaters can provide a superior experience to in-home streaming, even with higher prices and the hassles of leaving home to watch.

Better sound

Many viewers have pretty nice television sets these days, but few have excellent in-home speaker systems. My filmmaker son hooked up a new multi-speaker system to our family TV during our early-epidemic MCU watch marathon, and we loved the upgrade. But he really made the point a couple of days later, when he unplugged the speaker connection so that we went back to hearing the sound from just the TV's speakers. Yuck.

But don't forget the projection

Sound system upgrades offer theaters their clearest advantage over home viewing for a superior media experience, but theaters should not neglect their projection systems. I know that no one can afford to spend money on capital, but now is the best time to upgrade projection and lighting systems to be prepared to blow away in-home viewing when the pandemic ends.

Rip out all the bad seats

I'm not just talking about replacing old, broken, or lopsided theater seats. Theaters need to remove those seats too close to the screen or too far to the sides, where you're straining your neck to watch. Yes, that reduces capacity, but lower capacity allows you to maintain higher ticket prices. And theaters can make up the revenue on...

Improved food

Alamo Drafthouse is the future. Okay, to be fair, Orlando movie fans saw this future years ago at the Enzian. Popcorn's great, but full meal and bar service provides theaters more tools to pry fans from their living room couches.

No more commercials

I probably won't have to sit through 15 minutes of commercials before watching up Pixar's Soul on Disney+. Theaters that continue to assault viewers with commercials during the streaming era are just hurting themselves.

That said, great pre- and post-shows can elevate the theater experience. I love what Arclight does with its Arclight Stories series. Theater chains can distinguish their experience with behind-the-scenes video, short films, music videos and other content that plays while people are ordering their food and drinks before the feature.

Warm up the audience

Theater's top selling point against home viewing remains moments such as this:

Nothing beats the energy of an opening-night crowd watching a great movie. No one wants to hear audience members talking to each other, but the sound of audiences reacting to the action on screen will be what makes watching a movie in the theater most unique from watching at home. Theaters need to lean into that. Put an employee in front of the audience — in that empty space formerly occupied by bad seats — and have them introduce the film and warm up the crowd. Theme parks have been using employees to warm up crowds before shows for years, and all theaters ought to join chains such as Arclight in adopting the practice.

Ultimately, successful movie theaters are not just selling the opportunity to watch a film. They are selling the opportunity to connect with other people in watching that film. Theater owners and operators need to remember that if they want any chance to prosper when their theaters can operate at full capacity again.

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Replies (7)

December 4, 2020 at 9:54 PM

Oh SO agree on how a great audience makes a movie even better. I do still plan on seeing Wonder Woman 1984 in theaters and many others as it just isn't the same as seeing it on screen. Scores of movies (say, Tangled) that I caught on TV and moaning "Man, this would have been great in a theater."

I know, the risks and some sniffing too expensive and easier at home but that robs a key experience that makes movies so special.

December 5, 2020 at 1:01 AM

Hopefully this pandemic encourages movie theaters to improve their services, but a key component to doing that is discouraging rude behaviors and "kindly escorting" disruptive customers from the theater. Also, the high price of a movie ticket feels a little bit like a gamble. There are soooo many bad movies out there these days.

I now pretty much only go see movies at a theater to avoid my co-workers spoiling it for me at lunchtime. (except for The Rise of Skywalker; I laughed at the plot leaks online and they all turned out to be true). Also it's a really poor value for entertainment time-wise. For what it costs for a family of four to go to a movie on a weekly basis I could just spend that money on APs to any of the local Orlando parks.

December 5, 2020 at 6:54 AM

I agree there is nothing like the full movie theater experience. That is why I am glad the the Courts repealed the prohibition on Studios owning movie theaters. Thanks to that decision and the fact that independent theaters have shown they can be profitable by showing old and cult movies, theaters can continue if run correctly. Disney should buy AMC, it's market cap is less than 500 million. They can show their first run movies, cult snd old movies at midnight on Friday's and Saturday's, Disney Classics on select weekend afternoon and of course movies from other studios. We need the big screen with great sound. The movies need the box office to produce movies with huge budgets like Endgame. I just don't see how the theaters can survive until 2022 without the help from the studios. AMC needs money and have a stock offering coming but even with that they are not sure they will survive. Disney should just use an all stock offer and include a requirement that the debt holders agree to accept stock for the debt. That would allow AMC to survive and be profitable. I do not want to see AMC fail and I do not want to see the end of the theater model.

December 5, 2020 at 8:13 AM

I almost got a Smithsonian membership this year because there going to be so many movies filmed in IMAX (Bond, Wonder Woman, Top Gun, Tenet, Dune). It be terrible to only be able to see these on the small screen and they’d end up one of the last Hollywood epics made.

We usually avoid the corporate chains because I go to the movies A LOT and the mark ups are so much higher, unless there’s something like 1917 that I need to see in Dolby Atmos.

December 6, 2020 at 3:09 AM

Actually 2 of your points are some of the reasons people don't go to cinemas.

Full service food - this can be really annoying having people come in with torches to serve food to people in the middle of a film. If the food is served before the film and brought in then it just ads another layer of issues.

The crowd - a crowd yelling out things (good or bad) can be even worse, you miss dialogue, or whole scenes when people carry on like buffoons in a film. Yes it can be great, a cheer wih cap and the hammer at my session was great because it echoed my sentiments of the film and let's be honest, Endgame was the epitome of popcorn film. but when you are trying to watch something else (tenet) and some nitwits explain the twist everyone just saw (and if you were paying attention saw coming a mile away) that makes the experience a lot worse.

The others are all good points, but the investment against the return is unlikely. You want better seats, that money is going to come from ticket prices or ad revenue, it is that simple and the more the cinemas charge, the less likely people are going to pay it.

I know what you're thinking, without the better seats etc no-one will go... and you're right, but without the guarantee of people going, they aren't going to invest.

December 7, 2020 at 12:36 PM

I just don't see a business plan or template where movie theaters can survive. They are a relic of a form of entertainment that is no longer profitable. I think small theaters and chains that integrate the movie-going experience with add-ons (like Alamo Drafthouse) can probably be nimble enough to hang on, but they're facing an uphill climb because of the power of the studios that will continue to push their IP into their own streaming services and expect exhibitors to hand over nearly 100% of the box office. The big chains are pretty much toast, because they are simply too large to adapt to an ever-changing market. Their real estate liabilities alone will be enough to put them under as so much of the expansion within the industry over the past @10 years has been in putting bigger and bigger multiplexes into more expensive and affluent neighborhoods. The AMCs and Regals over the world would have to jettison over half of their locations just to break even, which undermines their primary financial strategy of (over)saturation.

Let's face it, the movie-going experience just isn't that great - and this is coming from someone who regularly went to 1-3 movies EVERY SINGLE WEEK for well over 15 years. In turn, the home viewing experience continues to improve to the point where if you absolutely need to watch something on a "big" screen (over 15 feet tall), you can buy the equipment to put one in your back yard for <$1,000. There is something to be said about the communal experience of watching a movie in a crowded theater on opening night (or at a preview screening), but that experience is increasingly losing its luster with rude behavior and the infinite distractions of our always-connected world (along with an undetectable, microscopic contagion).

The sad thing is that even though I personally have a high end home theater setup (with recliners, Dolby surround, popcorn machine, and 4K TV), I just don't have the desire to sit down and watch a movie very often when given a choice. The beauty of going to a theater was that it was an event/date, while watching at home has a level of flexibility that allows for too many interventions to interrupt or usurp a movie. What's worse is that we still have the opportunity to watch movie screenings by live streaming them from home (as we used to in theaters prior to their official release), but find ourselves distracted by life or lack of desire to sit down and watch the film, particularly one that is slow or sedate. It also doesn't help when many of these movies are set to debut on a streaming service shortly after the screening, so the justification to sit and watch the movie during the screening time is gone.

I don't know what the solution is, but Hollywood better come up with something fast, because the fate of the entertainment industry is hanging in the balance.

December 10, 2020 at 10:28 AM

Still supporting my movie theaters. As I run errands or shopping I run in and buy a take home bag of popcorn. Also, I have purchased gift cards for friends that are low risk and can attend movies.

I will be returning to the movie theater experience as soon as possible.

To my knowledge, our Alamo draft house already shuttered permanently although it was brand new.

The front row seats can go,

I would say:

Commercials have to stay. They provide a needed revenue stream, they are probably getting less for the media right now.

Studios can certainly help. They were getting 50% of the take, they could a 35% stake and help Theaters weather through it.

If theaters fail, you are going to see a non-traditional moving going experience and people seeking this form of entertainment will pay premiums for small scale budget and independent Cinema.

There is a double edge sword, you don't kill movie houses and then continue to make films with $250 million dollar budgets. Those days would be gone as well.

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