Hollywood has a problem.
Raise your hand if you watched fewer movies at the theater this year than you did in 2010. Heading toward the final few days at the box office, 2011 is shaping up to be a theatrical dud. Barring a last-minute War Horse rush, this will be the first time that the industry posts back-to-back years of declining receipts in more than two decades.
Here's another alarming statistic: 2011 will be the first year since 1995 that domestic theaters fail to ring up 1.3 billion movie tickets.
Is it the quality of the movies or the quantity of bills in consumer wallets during these economically challenging times? What if this is a more problematic -- permanent -- trend? What if the waning attention span of new generations spoiled by social networking and the popularity of home-based streaming are eating into the market?
Before the situation gets any worse, let's go over a few things that the industry can do to beef up interest in celluloid.
1. Charge less for admissions
Inflation is a part of life at the multiplex. Exhibitors inch their ticket prices higher every passing year. You have to go all the way back to 1993 -- a whopping 18 years -- to find the last time that the average ticket price actually declined over the previous year.
That's not right.
Sure, it makes sense on the surface. Minimum wages inch higher. Film production costs escalate. Inflation doesn't take a holiday. However, it doesn't make sense for actual ticket prices to increase during economic lulls.
The annual increase hasn't been much in 2011. The average price for a screening is $7.96, just ahead of last year's $7.89 ransom. However, just five years ago the average was at a more reasonable $6.55 per ticket.
The growing popularity of premium cinema is playing a part in this metric. Folks have been willing to pay a little more for IMAX (IMAX) and RealD (RLD) 3-D screenings over traditional showings. However, as attendance is off by 5% this year -- after stumbling nearly 6% in 2010 -- maybe some price breaks are in order.
Chains have been promoting earlier matinees at lower price points, but maybe an entire week or month of rollback pricing is necessary to get folks who have sworn off pricey outings to rediscover the joys of cinema on the big screen.
Instituting lower prices as movies age is another idea, though it probably wouldn't work for exhibitors that take a larger share of box office receipts later in a new release's run. However, studios may need to revisit that relationship, because something needs to give.
2. Encourage repeat viewings
Multiplex operators have spent the past few years upgrading their projection systems. The shift to digital platforms isn't just about crisper images-- movie studios save a bundle by not having to ship out pricey reels.
The other thing digital projection systems allow is easier updates.
Hollywood and exhibitors should cash in on the ability to differentiate a product as it ages. The same die-hard fans who just have to see a movie the week it comes out may also be the same ones to come back if a blooper reel is added two weeks later. It may be too ambitious to expect an alternate director's cut during the theatrical screening process, but tacking on deleted scenes or a "making of" clip at the end may encourage repeat viewings.
Yes, padding a film will make it longer, but it's not as if theaters are filling up for most movies after the first week or two. If anything, the extras can be added during the slower weekday screenings.
3. Play up the social
Nothing can sink a bad movie faster than ho-hum word of mouth. Twitter and Facebook -- and even film critic aggregator Rotten Tomatoes -- can kill a theatrical release quicker than ever these days.
Theater owners need to embrace the technology that may very well be emptying theaters. Hollywood can either embrace Web 2.0 or let it defeat celluloid the way it has for two years running.
Studios already use social media to promote their movies, but exhibitors have been slow to catch on. If Foursquare or Facebook show friends "checking in" near a movie theater for something else, why can't it hit them all with a sponsored movie suggestion? Encourage more people to come along by offering group discounts on tickets or perhaps concessions during these social media promotions.
Movie studios with active Twitter feeds or Facebook fan pages can also do a better job of encouraging friends to head out to the local multiplex for a specific showing.
4. Differentiate the experience
Folks have different expectations from theatrical outings. Couples want quiet screenings without rowdy teens. Parents with young children don't want to risk offending nearby patrons when their kids act up. Older patrons may have a problem with a foreign film whose subtitles are too small or a conventional movie that may not be loud enough.
Theater chains have spent the past few years packing as many screens as they can in a venue in order to show as many movies as possible, but they're behind the curve in differentiating the actual screenings.
Some theaters are already offering special showings. AMC offers select screenings for families with autistic children on weekend mornings that have the lights turned up and the sound turned down. No one gives parents a stern look when autistic kids act up during these Sensory Friendly Film viewings.
How about the other end of the spectrum? Why aren't there some late-night screenings actively patrolled for scene-making revelers? Wouldn't you go see more movies if you were assured that loud and rowdy patrons would be whisked away at select screenings?
I haven't delved into concessions, but why can't some screenings feature updated snacks and premium food offerings to encourage folks to pay up for a different experience? Even if it means outsourcing operations to have a popular barista joint beef up coffee drinks by night and a hot local pizzeria spruce up pie offerings by day, it's all about getting folks to rally around select screenings -- and then collecting their information to make sure that they are alerted as to when such screenings will happen again.
Fade to black
Let's move ahead a couple of years.
I'm at a movie theater, mowing down some tasty boneless wings that Buffalo Wild Wings provides to the exhibitor every Thursday night. I'm sitting in the row reserved for Facebook meet-ups, along with some of my friends who just happened to be in the area. I'm watching a screening made exclusively for repeat viewers of a pretty loopy Chris Nolan flick. It's OK if someone blurts out the ending, since we've all seen it before.
Then again, we haven't seen this particular version. Folks who bought tickets to previous screenings were given unique ticket codes that they could use to vote online for changes that could be made to the story. We're about to see the alternate version -- or at least the one that the majority in this particular theater wanted.
Everybody wins. The studio and exhibitor get me twice. I get to enjoy a movie again on an entirely different level. This scenario may be far-fetched, but it may be what has to happen if the local exhibitor is still around at that point.
Longtime Motley Fool contributor Rick Munarriz does not own shares in any of the stocks in this article. The Motley Fool owns shares of Buffalo Wild Wings. Motley Fool newsletter services have recommended buying shares of Buffalo Wild Wings and IMAX.
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