Who’s Fault Is It, Anyway? Examining Root Causes to the Movie Theater Industry’s Deconstruction

Follow-on to part one of a three-part installment, “Revival of the Fittest: Evolution of the Movie House Experience.”

In 1948 the Supreme Court ruled big film industry control over the movie business violated anti-trust laws.  Because the major Hollywood studios vertically controlled production, distribution and exhibition, the oligopoly prevented competition within the marketplace.  Although loosely enforced (if at all), the divorcement decree still exists today.  With the FCC recently relaxing rules against cross-ownership between television, print and radio, and the new era of digital distribution and exhibition growing strong, there is reason to wonder if the restriction on Hollywood vertical integration is even relevant anymore.  Lifting the ban would allow Hollywood to once again bolster up movie theaters, bringing back the customer base that is waning.

But is it really their responsibility to intervene?  I think not.  After the divorcement of production/distribution and exhibition, the relationship between Hollywood studios and movie theaters compartmentalized.  Production companies draw crowds in by focused marketing on a particular film, while owners of movies theaters are responsible for facility advertising and sustainment.  This relationship passes accountability of the movie theater over to its management team as a separate business entity.  Movie theaters are their own business.  They are not entitled to “bail outs” by the production company.  Their profit-loss margin is just that – theirs.

The truth is that more and more theaters are closing their doors across the country.  But if you look closely at each as a distinct entity unrelated to its product (the movie), you have a service-oriented business that is individually responsible for inventory, advertising and market relevance.  No matter what the business, if that model does not make changes with its industry, their failure is inevitable.  Most movie theaters are not doing much in regards to service improvements, hence the growing number of closures.  We can lament that one of the world’s favorite leisure activities is fading away, but it’s not simply because of changing times.  American movie theaters are fading away because of bad business management and virtually no brand development.  Result: no brand loyalty and decreasing relevance.

No more is a film enough to draw a crowd.  People opt to stay home if all they want to do is watch a movie.  Not to mention films aren’t promising enough anymore to peel people away from their 42-inch flat screen plasma t.v. and endless trips to the snack bar (the kitchen).  Some theaters are turning to outside agencies in an effort to develop marketing strategies. For example, West World Media out of Connecticut specializes globally in exhibitor and venue-marketing services, strategically directing customers back into dimly lit caves of fantasy.  Yet at large, the issues plaguing movie-houses are internally rooted: lack of ownership.  The definition of insanity is doing the same thing over and over again and expecting different results.  The popcorn is still bad.  The floors are still sticky.  The prices are too high in relation to the non-experience movie-going now is.  If more theaters would take on projects like facility overhaul or strategizing with project specialists externally, they might have a fighting chance.  Thankfully some places in America have gotten a clue and are actively enhancing the theater’s appeal. Alamo Drafthouse Cinema employs a chief creative officer solely responsible for creating unique programming events.  Fox Restaurant Concepts marries film and dining into a boutique experience.  Other major chains are following in suite by offering special dinner seating elevated above the general audience.  There are many options available that do not include dependence on Hollywood for hand-outs, and practical business sense eliminates excuses for entitlement.  The success of a movie theater is dependent on the creativity and management of its owner.  But having a handful of specialty theaters will not save the theater experience as a whole.  What other projects can be implemented to “save the clock tower?!”  A problem is only worth pointing out if possible solutions follow.  In part 3 of the “Revival of the Fittest…” series, we’ll talk about infusing the portals of escapism with new life.

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