4 Ideas to Save the Multiplex and the Future of Movies

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There's less gold in silver screens these days. Box office watcher Rentrak is reporting that ticket revenue in the U.S. and Canada slipped 5.3 percent in 2014. Ticket prices are creeping higher with every year, so the decline in multiplex attendance is actually even more pronounced than Rentrak's revenue tally. You have to go back to 1995 to find the last time that movie theaters sold fewer than the roughly 1.25 billion tickets sold last year.

How bad was 2014 for exhibitors? Well, Disney's (DIS) "Guardians of the Galaxy" was the top draw, ringing up a little more than $333 million in domestic ticket sales. You have to go back to 2001 to find a year in which the highest-grossing film made less than that.

Something's not right at the multiplex. Let's go over a few ways to make it right.

1. Improve the In-Theater Experience

The home theater experience has improved dramatically over the past decade. High-def, Blu-ray and now 4K Ultra HD make pictures screened at home richer than ever before. The popularity of streaming services opens up the options beyond what's on TV, available on demand, or in one's physical media collection. Even something as simple as the DVR that allows someone to pause live TV to take a call, run for a snack in the kitchen or take a bathroom break makes staying at home more compelling than it used to be.

A night at the movies hasn't had the same kind of transformational upgrade. Stadium seating and freestyle fountain drink stations aren't enough. If anything, technology has made it worse since there's always somebody checking a smartphone during a movie. It doesn't matter if the device is respectfully on silent; it distracts your peripheral vision.

It certainly wouldn't be cost effective for a multiplex to divide into hundreds of personalized screening rooms. That's as creepy as it would be expensive. However, exhibitors can help immerse patrons into movies with deeper bucket seats that recline more and optional side blinders to eliminate neighboring distractions.

2. Take Mobile Ordering to the Next Level

Moviegoers have been able to preorder movie tickets for years, but why are they then forced to queue up for concessions? Long lines often lead to folks walking away from ordering tubs of popcorn, buckets of soda and boxes of overpriced candy. That's bad news for everybody. It means exhibitors forgo high-margin add-on sales to the ticket revenue they have to split with Hollywood.

I'm sure that some forward-thinking theaters have already embraced mobile ordering for concessions, but this needs to be the norm. Exhibitors may counter that concessions are visual impulse items, and mobile buyers may spend less than those whose eyes widen as they approach the glass display case or visual menu boards. Well, that only means that they haven't mastered the art of e-tailers with thriving mobile shopping businesses that have thrived at selling the invisible.

3. Make Movies More Interactive

Most theaters have migrated from physical reels of film to digital projection systems. The move saves the industry a bundle in terms of printing and shipping costs, but the ultimate benefit of digital is that movies can be enhanced and updated more easily.

We're not just talking about adding blooper reels after the first week or two. The moment that Hollywood can crack the code on making movies more interactive -- giving actual moviegoers at a single screening a say on actions, alternate endings or soundtracks -- the more fun the experience becomes to jaded millennials who would rather spend their time gaming than at a multiplex. Interactive integration translates into the desire to see the same movie more than once. With theater audiences drying out since peaking in 2002 -- and it's been fairly consistent, with attendance now declining in four of the past five years -- finding ways to encourage repeat viewings from those still going to the movies is important.

4. Embrace Subscriptions

This is the week that AMC Entertainment (AMC) begins its partnership with Movie Pass to offer a month of daily screenings for as little as $35. The test is limited to the Denver and Boston metro markets, but we're living in times where media buffets are trumping piecemeal experiences.

Multiplex owners can't live in a vacuum. DVD and MP3 sales have dried up, but we're not consuming less video or music. Consumers simply appreciate access to a growing catalog of content at a flat rate. AMC tried a subscriptions model a decade ago. It flopped, but it was too soon. The time is right, even if it means devaluing the perceived value of a single screening.

Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool recommends and owns shares of Walt Disney. Try any of our Foolish newsletter services free for 30 days. Is your portfolio ready for a change? Check out our free report on one great stock to buy for 2015 and beyond.​
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