How many of us remember as a kid going to the movies with our parents? Gabbing some popcorn, a soda, and some candy and going to sit and watch a movie together? Or perhaps you snuck out of class in high school to go to the movies. We all have a story at some point about going to the movies, but lately ‘going to the movies’ has taken on a whole new meaning with advancements in home entertainment, streaming, and the pandemic. So the question is, are theatres making a comeback?
First, we need to dive into the financial model of the movie theatre. Movie theaters were hurting long before the pandemic hit for several reasons. Theaters make their money off 2 key categories: Concessions and Ticket sales. Depending on whether they are a large chain or a small independent theatre, the % of ticket sales that go directly to the movie studios can be as high as 80% in the first few weeks. So those concessions are critical for making money. This combined with increased costs to operate has resulted in a 31% increase in the ticket price to go and see a movie. And concessions have gone up too. Now, big chains like AMC want to charge you for the perfect seats.
The truth is, it’s gotten almost too expensive to take the family out to see a movie. Just taking 3 people out to the movie could cost you $80-$100 between tickets and concessions. And that doesn’t take into account XL, or IMAX format premiums. So many have said they will wait for movies to come out on streaming so they can watch at home. At home, you can grab your own snacks which are not marked up 1200% like popcorn is (on average) and you can pick any seat in the house.
When movie studios started making direct-to-stream deals or simul-debut titles on streaming and theater runs, many theater groups protested losing the exclusive debut window they were used to. After all, getting people into the theater is the only way they make any money. The pandemic saw a nearly 90% drop in theater attendance which still has not even recovered 50% going into 2023 but that isn’t the cause for the shift away from theater exclusive or drop in attendance. The experience at the movies just isn’t great.
Que Dec 2022 and the release of Avatar: The Way of Water. James Cameron spent nearly a decade perfecting motion capture underwater to make this film. When we were invited to screen it, Cameron would only allow us to screen it in 1 of 2 theaters in the area with the technology and equipment to provide the full experience. Seems cocky right? Well,
Avatar 2 may just be the shot in the arm that the movies needed to motivate people to come back. His 3D, high frame rate film boasts an experience that at-home technology just can’t fully support yet. So the only way to really experience it is in the theater. Earning over 2bil the film has brought much-needed relief to the industry and some restoration in the faith of moviegoers that perhaps there are still new experiences you can only find at the movie theater.
All sides have settled on a compromise of sorts going into 2023. Many films now get 45 days in theaters (some more, the previous norm being 90 days) before they show up on streaming and then eventually digital and physical media release. Theaters now are getting their exclusive run again but they understand now that the difference in bringing people back isn’t just about James Cameron giving them no choice. Not all films can be Avatar 2. The experience must improve. Prices are not going to drop anytime soon. Inflation and the cost of doing business are just continuing to climb. But the popularity of movies with full dine-in service, bars, and premium seating is how smaller chains are trying to become the go-to spot for moviegoers who are expecting something more for the higher prices.
For me, it’s not black and white. I won’t go to theaters for everything. Some things are just as good at home with surround sound, my couch, and my own concessions. But if the James Camerons of the world can continue to make films like Avatar 2 to excite moviegoers, I might just find myself standing in line to grab a seat in front of the big screen to experience a film on the big screen.
Source: movie ticket sales data from https://www.the-numbers.com/market/