Easy Money
Moviegoing will be here for a long time. It is as simple as that. I have come to some conclusions from taking a close look at the situation in the exhibition and realizing that some simple absolutes are universally evident. There is an untapped demand for movies, a concept that refers to the potential audience that is not being catered to by the current film offerings. Data shows that 40-50% of this potential box office is being ignored, which is the core of the issues surrounding the stagnant box office. This untapped demand is evident in the success of independent films and niche genres, which often outperform big-budget blockbusters in terms of return on investment and, as of late, gross box office. You must start giving people what they want. The studios are clueless and totally out of touch with the market. The market is there; it just must be intelligently addressed. The studios are attempting to recover from the cinematic anabolic steroids that are the Marvel Universe. The forced dominance of this franchise, coupled with a lack of imagination on the part of the other studios, has created a vacuum as the tsunami of Marvel recedes.
Aldi, the famous discount grocery store, has 1500 unique SKU products at most. A traditional grocery has up to 20,000. Aldi's only stocks one kind of stone ground mustard, which in a traditional grocery may have five or six. If the studios applied their logic in a grocery environment, you would be lucky to get a bottle of French’s. Studios must begin creating products that meet a diverse and much wider audience. It must re-tool its internal mechanisms to properly address the market.
As we evolve into a new ecosystem, the studios realize that the streaming medium differs from a theatrical release. Less money is spent on marquee high-budget titles in favor of sustained binge-ables. This term refers to the shift in consumer behavior towards binge-watching and the rise of long-form storytelling, which has implications for the film industry. 'Sustained binge-ables' are a new category of content that viewers can watch for extended periods, often in a single sitting. Now, the folks at Netflix should have realized this long ago when they looked at their viewership and consumption of classic television series like 'Friends.' There was a real pushback after the release of the streaming title 'Spenser Confidential.' Released on Netflix and costing $32 million. This Mark Wahlberg vehicle saw less than complimentary reviewers and lackluster viewership. The Netflix regime began questioning the persistent expenditure of higher budgets and put a brake on single-title productions. A feature-length motion picture is primarily the domain of the movie theater and not what streaming does best. What streaming does best is give the viewer the ability to binge.
Once you define what each medium does best, you can start adroitly planning for sustaining that medium's growth. The studios did not fully understand the mediums and were lured by what they perceived as easy money. As they are frequently, they were totally wrong about the market and the market assessment. They frequently need to change paths. They like to rule with sound bites and short-term vision. We need a plan to find out what is best for each medium and not just make a good press release or what will juice the stock.
Thinking must change on the part of exhibitors and distributors. A movie that does not have the marketing budget of a movie studio release has to be shielded from the same success criteria applied to significant releases. There must be re-education for the industry to use a much broader definition of what is successful. One brush should no longer be applied to all movies. A focus should be placed on per-screen revenue, a metric that measures the average revenue generated per screen in a theater, and not cumulative box office. Screen revenue tells us if the theater attracts a more diverse audience and lets the movie stand under its own merit for success and failure. In this business, we tend to subject movies to the immediate proclamation of failure. It is unfair and, from a market perspective, exceedingly short-sighted. Roger Corman used to say that he considered a movie successful if it returned a 40% profit. This sets a movie up for success based on the budget to make the movie and not comparing it to a Marvel picture; as of late, though, the Marvel Universe is showing some pretty deep cracks.
The future of the exhibition business lies not in the studios' assertions and motives but in the business of building unique, community-centric audiences. Theaters are not just venues, but hubs for moviegoing communities. By shifting our focus to audience building, we can cast a wider net and rebuild the moviegoing demographic. Utilizing tools like repertory programs, we can tap into the massive untapped market and make the audience feel valued and integral to the industry's future.
The MPA and NATO keep crowing about the box office—that's all well and good—but the story lies in ticket sales. We are raising the price of movies and selling fewer tickets. More ticket sales mean higher concession sales, reversing a downward trend and higher profitability.
It is the mining of this market where theaters will rise and fall. If history has shown us anything, letting the studios drive the exhibition business is not prudent. Exhibitors must embrace change, experiment, and diversify. By building from common collective interest and letting the market define itself, we can pioneer the re-invention of the moviegoing experience. For 2025, I would dearly like to proclaim it the Year of Moviegoing Re-Discovered. The opportunity for change and growth is there if you reach out and grab it.