The Big Screen Test : As two giant theater complexes in Ontario prepare to go head to head for business, some analysts worry that it may be too much of a good thing.

When movie industry executives require an example of the current boom in theater construction, they need look no farther than the budding film exhibition mecca of Ontario.

During the next four months, 1,000 new screens will be unveiled across the country--a staggering 52 in two competing megaplexes just a football field’s length apart at the mammoth new Ontario Mills mall about 40 miles east of Los Angeles.

“We’re sort of the popcorn capital of the world,” boasted George Urch, an Ontario city spokesman.

But increasingly, executives at movie studios, Wall Street investment houses--and even at exhibition companies themselves--are asking whether theaters are being built faster than Hollywood can put out movies appealing enough to keep them filled.

Single-screen movie theaters began to be replaced about two decades ago by multiplexes, the industry term for complexes of fewer than 12 screens. Now megaplexes--facilities with 12 or more screens--are elbowing out their humbler cousins, with virtually all of the major theater exhibition chains engaging in a breakneck building campaign.

“If the current trend of building continues, the possibility exists that in the future you will be able to walk out of one entertainment megaplex and into another,” said Daniel Wheatcroft, president and CEO of the National Assn. of Theater Owners of California/Nevada.

The megaplex craze--motivated by strides in theater technology and a slate of more than 400 films opening yearly--is causing considerable unease among studio distribution officials who once felt they called the shots.

“It’s the exhibitors’ time now, but it’s a little scary when they’re going so insane. It’s just gotten out of hand. They’re going to end up playing ‘Batman and Robin’ on seven screens,” said Paul Rosenfeld, senior vice president of distribution at Gramercy Pictures.

“This whole building boom may be strictly a pattern that exists and may not have any reference to increasing audience,” said a veteran industry-watcher. “Is it an ego-driven thing or a Wall Street-driven thing or a real accommodation for the consumer?”

Even those building the complexes express some trepidation.

“All of the major players are embarking on this new building strategy,” said Howard Lichtman, executive vice president of marketing and communications for Toronto-based Cineplex Odeon, which will add 500 screens over the next 2 1/2 years. “It’s healthier for consumers because they get the better product. We’re building newer theaters with new amenities. But it has to be done rationally. If we step on each other’s toes too closely and too rashly, no one will be a winner.”

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The 52 new screens due to open next month in Ontario will be equipped with the latest advancements--stadium-style auditoriums, love seats, curved screens for better focus and the most sophisticated digital sound systems.

American Multi-Cinema Inc. will open a 30-theater complex, which will make it the largest in the world, topping the 24-plex the chain opened in Dallas in May 1995. And just last week, AMC announced plans to open a 30-plex in Orange in 1998.

Just across a service road, privately held Edwards Cinema Corp. will open a 22-screen complex. A year ago the company unveiled what was then the Southland’s largest megaplex, a 21-screen facility in Irvine.

“Fifty-two screens within walking distance--there’s never enough movies for that. You can’t go into a place like Ontario and build two megaplexes across the street from each other and expect them to survive. They’re both going to operate at a loss,” said Gramercy’s Rosenfeld.

“There’s no one in the industry that will tell you that any zone requires 52 screens,” said Cineplex Odeon’s Lichtman. “My only thoughts on that are, ‘Thank God it’s them and not us.’ May everyone in the industry take a lesson from it.”

But many in the industry are optimistic about megaplex mania.

“It’s a good thing,” said Phil Garfinkel, senior vice president of Entertainment Data Inc. “In the early ‘90s there was very little construction and now in the mid-’90s we’re catching up. Each of the new theaters will give the public a better experience going to the movies because they should have better sight and sound and good projection. The public will be better served.”

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According to the most recent statistics available, there were 27,843 theater screens in the U.S in 1995, up from 26,689 in 1994.

“It will be competitive and it will be interesting, but it will be to the benefit of the consumer,” said Jim Edwards, president and CEO of Edwards Cinema.

And if history is any guide, it most likely also will benefit the theater owners.

A well-placed, well-marketed megaplex can contribute about $2 million to $3 million annually to the profitability of a theater chain, Edwards said. A megaplex typically costs about $25 million to build and is considered successful if it clears about 10% of that annually, he added.

During the past year most of the major studios have pledged to reduce the number of movies on their slate because distribution schedules have become so crowded.

“You may end up with too many screens chasing too few films,” said Jeffrey Logsdon, entertainment analyst for Cruttenden Roth & Co., a stock brokerage and investment banking firm.

The number of films released jumped substantially from 353 in 1994 to 410 in 1995, according to Entertainment Data Inc. Correspondingly, the total box-office take went from $5.1 billion in 1994 to $5.4 billion in 1995. This year’s box-office receipts are slightly above last year’s, and by the end of the year, 433 films are expected to be released, according to industry-tracker Exhibitor Relations Co.

But the modest increases in box-office take may not justify the scramble for screens.

“They’re overbuilding,” said Gerald Celente, director of Trends Research Institute in Rhinebeck, N.Y. “There’s a time of economic optimism at some levels, but when you look at theater receipts, there’s nothing to warrant this kind of expansion. One of the main reasons the numbers are going up is because of [rising] ticket prices. I predict they’ll be facing the same problem that hotels faced through their overbuilding period of the late ‘80s: a low occupancy rate.”

The big money is not in ticket sales, which are split with distributors, but rather in concessions, which contribute up to 40% of a theater’s total revenue, Edwards said. Popcorn, for example, can be sold for as much as four times its cost.

“If you look at the bottom line, we’re just building huge popcorn stores,” Edwards said.

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Meanwhile, publicly traded AMC will open 150 new theaters across the country before the end of the year. Edwards has 66 new theaters set to open by year’s end and 110 more auditoriums planned in 1997.

Both chains are hoping the growing city of Ontario will become a moviegoing destination not only for those nearby, but also for Los Angeles County and Orange County residents as well.

“We’d better hope they transplant half of Manhattan,” Logsdon said. “I don’t really think there’s the population density to support that many screens.”

Adds John Krier, president of Exhibitor Relations and a veteran box-office observer: “We’ve said the situation was madness, but now it’s beyond madness. It just doesn’t make sense: The egos and power in this industry.”

A battle of egos is the most frequent description of the cinematic contest being waged in Ontario.

“If the other guy wasn’t there, it would be great for one of them,” Rosenfeld said. “But when you go head to head, it’s got to be more about ego than money.”

Initially, Edwards Cinema, an aggressive chain that has made major inroads in Orange, San Bernardino and Riverside counties, had attempted to secure coveted space in the Ontario Mills mall for their megaplex. They were outbid by rival AMC, according to Edwards.

So Edwards bought a 20-acre parcel of land nearby and has spent what he estimates to be $26 million in an effort to be ready at the same time as AMC’s scheduled Dec. 13 opening. AMC officials say they have spent “more than $20 million” for their megaplex. (Industry insiders estimate that building costs for each megaplex are likely closer to $40 million or $50 million.)

Officials from both chains are convinced there will be enough business for two megaplexes.

“The city made the decision that they felt the community could support the two theaters,” said Dick Walsh, senior vice president, AMC West Operations, who is overseeing the building of the 5,700-seat theater complex. “The community certainly felt it would be a good thing. . . . In a five-mile radius there are no other theaters.”

City officials said they left it up to the two companies to know how many screens are enough.

“I can’t imagine them investing $50 million to build these theaters just out of ego,” said Ontario City Councilman Allen Wapner. “These people are professionals in their industry and if they didn’t think the market was there, they wouldn’t be doing it. We’re real enthusiastic and support it 100%. We figure the more entertainment options, the better. Some residents came forward and said, ‘There’s no way all these theaters can survive.’ The city’s reaction was, ‘It’s none of our business.’ You have to keep the government out of business. Private industry knows how to do things better.”