Movie theaters diversify offerings beyond films
On a recent Saturday afternoon, a crowd of elderly patrons bought tickets to see Fabio Luisi conduct the Metropolitan Opera’s performance of Wagner’s “Twilight of the Gods” — at a movie theater in Burbank.
The show was among more than 40 special events shown in movie theaters in Los Angeles and around the country this year alone, including the National Theatre’s stage production “Frankenstein,” a live stage version of Ira Glass’ radio show “This American Life” and the boxing match betweenFloyd Mayweather Jr. and Miguel Cotto in May.
Along with improved food offerings, bigger screens and 3-D projections, theaters nationwide are programming more so-called alternative content. Hoping to reverse long-term declines in theater attendance by luring customers away from an increasing array of entertainment options in the home, they’re showing live rock concerts, plays, operas, boxing matches, college basketball games and even public radio shows, often to sold-out houses.
“We want theaters to be community centers, where people can come hang out and enjoy themselves and not just watch a movie,” said Robert Lenihan, president of programming at AMC Entertainment Inc. “If we can offer better and fresher experiences, we think they will visit the theater more often.”
Traditionally, movies have been physically shipped to theaters in the form of film prints or, as technology advanced, hard drives. About two-thirds of the nearly 40,000 screens in the U.S. have been converted to digital. Studios are expected to stop using 35mm film prints altogether by 2013.
The digital conversion has cleared the way for movies to be delivered electronically via satellite and downloaded to servers at theaters. In the next two years 2,000 theaters with a combined 15,000 screens will be connected to a new satellite distribution network.
The nation’s top three movie theater circuits — AMC, Regal Entertainment Group and Cinemark USA Inc. — recently formed a coalition with Warner Bros. and NBCUniversal to finance and launch the satellite network this fall. Operated by Deluxe-Echostar, the network will serve all theaters operated by the big three chains within the first year, and will also be available to other exhibitors.
The ability to beam movies directly into theaters without having to physically deliver film prints or hard drives has long been the goal of studios. That would significantly cut distributions costs, and theaters owners could receive movies much quicker. The new network will also make it easier for theaters to broadcast live events, especially those in 3-D.
“With the technology we’re putting into place, we will have a high-quality digital delivery system that can support both live entertainment and theatrical exhibition,” said Darcy Antonellis, chief technology officer for Warner Bros. “It’s the natural evolution of digital cinema.”
Currently, the top three chains distribute alternative content, such as the Wagner opera shown in the AMC theater in Burbank, over a smaller satellite network, NCM Fathom, which has about 1,000 screens in the country.
NCM is the largest among a handful of companies that acquire the rights to events, market them and distribute the feeds to theaters via satellite. Tickets generally run $20 to $25. The companies split box-office revenue with theaters.
Whether they are prerecorded, live or shown in 3-D, alternative programs share the same goal: to fill theaters during slow times when they are mostly empty and draw new customers willing to pay for a premium ticket.
“If you have a 16-screen theater, there are four or five screens that don’t have many people in them. If you can fill one of those screens up with alternative content, then you’re way ahead of the game,” said Kurt Hall, chief executive of National CineMedia, which operates Fathom and the nation’s largest cinema advertising network.
Fathom programmed 104 events in 2011, Hall said, up 41% from 2010. The company’s most successful alternative content production to date was a live show in March, hosted by actor Kirk Cameron, to promote “Monumental,” a documentary that explores the origins of America. “Monumental” grossed $1.25 million from nearly 600 screens.
Until recently, theater chains haven’t made much money from alternative entertainment, which accounts for less than 2% of the $10 billion in annual domestic box-office revenue. But executives see potential for a much larger business.
For example, 400 theaters screened the Mayweather-Cotto boxing match in May at $25 per ticket.
At many of those theaters, the fight was sold out and was, on a per-screen basis, the second-highest-grossing offering that day, behind Marvel Studios’ blockbuster “The Avengers.”
“The feedback we got from people who attended was fantastic,” said Bruce Binkow, chief marketing officer for Golden Boy Promotions, which promoted the fight. “We’re hopefully attracting a new generation of fans by making boxing more accessible.”
Another success has been New York’s Metropolitan Opera, which began broadcasting its operas in movie houses in 2006. In April, more than 350,000 people in theaters and cultural centers across North America and around the world watched a broadcast of Verdi’s “La Traviata.”
“It’s a profit stream for us, which we sorely need as a nonprofit corporation with a huge budget,” said Peter Gelb, general manager for the Metropolitan Opera. “It’s a great artistic and marketing tool for the opera house.”
Not all events make money. Box-office revenue alone doesn’t always cover costs, often requiring third-party sponsors to defray expenses. Cinedigm Digital Cinema Corp. discontinued screenings of the San Francisco Opera after determining it was too costly. And rights from major sports leagues are expensive, with television networks such as ESPN demanding hefty license fees to show live sporting events.
Still, many people believe that a larger satellite system will be more appealing to TV networks and sports leagues because it will give them the ability to reach a wider audience for live award shows and games.
“Before, it was tough to negotiate because you didn’t have access to thousands of screens,” Cinemark CEO Tim Warner said. “Now you have scaleability.”
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