Movie Theaters Struggle Despite Summer's Super Blockbusters

Movie Theaters struggleAfter a hot start this year, your local multiplex is emptying out again. statistics show that attendance during the telltale summer season tallied 533 million moviegoers in North America, nearly 4% fewer than last summer. You have to go all the way back to 1993 to find the last time fewer tickets were sold.

Last year was the first year since 1995 that domestic theaters failed to sell at least 1.3 billion movie tickets. Are we in for another repeat performance?

Strong Start, Weak Finish

Summer matters. Studios tend to put out their biggest blockbusters during the hot months, when a long break from school makes an air-conditioned movie theater an ideal escape.

Studios may save their more artsy critic-pleasing releases for the end of the year to lobby for Oscar nominations, but summertime is all about big action, big stars, and big ticket sales.

The season got off on the right foot.

Sponsored Links
Disney's (DIS) The Avengers took in a super-heroic $207.4 million in North American ticket sales during its opening weekend, obliterating the record established by Harry Potter and the Deathly Hallows: Part 2 a year earlier.

The Dark Knight Rises and The Amazing Spider-Man followed with strong ticket sales in July.

August is when things began to fall apart. Despite healthy marketing for The Expendables 2, the politically timely The Campaign, and the Total Recall remake, there wasn't a single August release that topped $100 million in North American ticket sales.

The Problem of Empty Seats

Movie studios obviously don't want to see folks shying away from the multiplex, especially if it becomes a longer-lasting trend.

Exhibitors and publicly traded companies including IMAX (IMAX) and 3-D outfitter RealD (RLD) also are hoping that this late fizzle to the once-sizzling summer season is just a fluke. Their entire business models revolve around drawing crowds to screenings.

Ways Hollywood Can Save the Local Multiplex
See Gallery
Movie Theaters Struggle Despite Summer's Super Blockbusters

Raise your hand if you watched fewer movies at the theater this year than you did in 2011. Heading toward the final few days at the box office, 2012 is shaping up to be a theatrical dud. This will be the first time that the industry posts back-to-back years of declining receipts in more than two decades.

By Rick Aristotle Munarriz, The Motley Fool

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.

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.

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.

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.

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.

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.

A few factors are at play here. High-def TVs -- and even HD sets with 3-D capability -- are getting cheaper. Movie studios are narrowing the release window between a film's theatrical release and its availability for rent or purchase. There's also the digital revolution, giving homebodies more programming alternatives without having to head out to the closest movie theater.

Sure, there's still the allure of freshly popped popcorn, even though concession prices now border on the ridiculous. A date night at the movies is still an iconic outing, even though renting a movie has never been easier.

Hollywood had better make sure that it comes back strong next summer. Three straight declines during the industry's most potent season would be an ugly trend that no studio can ignore.

Longtime Motley Fool contributor Rick Munarriz owns shares of Walt Disney. The Motley Fool owns shares of IMAX and Walt Disney. Motley Fool newsletter services have recommended buying shares of IMAX and Walt Disney.

9 Financial Documentaries That Will Change the Way You Think About Money and Investing
See Gallery
Movie Theaters Struggle Despite Summer's Super Blockbusters

The story of Paul Tudor Jones.

Watch Trader HERE

This film shows a wizard of a trader at his best, on good days and bad. The movie contains plenty of advice for individual investors and traders.  Watching Jones' prediction of the 1987 downturn, based largely on intuition and Elliott Wave graphs, is especially fascinating in hindsight. Jones is extremely intelligent, but also superstitious. (About half an hour into the film, you see him put on his lucky sneakers that were once owned by Bruce Willis.) As erudite (and often right) as Tudor's analysis is, he says that he would rather have an emotionally invested money manager rather than a cerebrally detached one.

The film also shows the hedge fund manager donating his time and money to help New York City children graduate from high school and attend college on his dime. Jones wrote about the mission of his charity, the Robin Hood Foundation, in Hedge Fund Intelligence last year. 

Poverty is an enemy that comes in many forms. But the worst form of poverty facing America today is the poverty of opportunity. Ironically, it was this poverty of opportunity that drove so many of our ancestors to flee their homelands for America. The promise of opportunity was so important that it became the first founding principle in the Declaration of Independence — “All men are created equal” and implicit in that is a promise of equal opportunity. But go tell that to the 20,000 New York City children -- children, mind you -- who will sleep in a homeless shelter tonight in this fair city. Where is their opportunity?

Watch this one now.  Jones apparently requested that the film go out of circulation — possibly because of the embarrassing technology and fashion statements that were in vogue on Wall Street in the 1980s.

Takeaways: Get up early. And be aggressive.

Article by Vincent Trivett
Read more:

Watch 25 Million Pounds HERE

This is the true story of Nick Leeson, a British trader that went from a Morgan Stanley (MS) clerk, to a rogue trader that brought down Barings, a smug old bank that even held the Queen's money. This story inspired the film Rogue Trader in which Ewan McGregor starred as Leeson. Through interviews with Leeson, this documentary from the early nineties helps us understand the psychology behind dishonest traders like Kweku Adoboli, who managed to relieve UBS (UBS) of $2 billion. Or impulsive gamblers. 

Bank of America's Terrible, Horrible, No Good, Very Bad Year.

Watch Breaking The Bank HERE

Psychology also applies to CEOs and corporations. Are you still wondering why Bank of America (BAC) made those disastrous acquisitions of Merrill Lynch and Countrywide? Taking a look at the bank's history and Ken Lewis's Napoleonic drive to build the biggest bank in the nation in the South  to get some light shed on this. 

The definitive financial crisis documentary.

Watch the trailer for Inside Job HERE

This Oscar-winning documentary is perfect if you are want to explain the financial crisis to an English-speaking extraterrestrial that hasn't read any of our newspapers for the last six years. Even savvy investors can benefit from this concise, cogent, well-executed documentary. A-list sources like Christine Lagard, Barney Frank, George Soros, Dominique Strauss-Kahn (pre-disgrace), and  Eliot Spitzer (post-disgrace) give you a front-row seat to the central story of this generation. 

Niall Ferguson's financial history of the world.

Watch The Ascent of Money HERE

Most documentaries that explain the origins of the financial crisis go back all the way to the mid '90s. Or maybe Regan's first few years in office. This is all well and good, but Professor Niall Ferguson takes you all the way back to ancient Babylonian futures contracts etched onto clay tablets and Fracisco Pizzaro's exploitation of the Cerro Rico at Potosí, which is the mine that flooded Europe with silver. Ferguson's exploration of human history shows the enormous influence that money has on the rise and fall of empires, all the way up to today. 

The birth of globalization.

Watch Commanding Heights HERE

Though dated, this five-hour exploration of economic globalization's origins in the fall of the Iron Curtain is still very informative. This was made in the dusk of the 20th century, when deregulation was gospel.

How indebtedness makes bad situations worse for the small countries.

Watch Life and Debt HERE

One of the issues explored in Commanding Heights was the IMF and World Bank's response to crises like the 1997 Asian Financial Crisis. Though the lenders have since corrected their ways to some extent, Life and Debt is food for thought for Europe's rescuee countries like Greece and Portugal. This film looks at the effects of national indebtedness and IMF policy prescriptions on ordinary citizens and local businesses in Jamaica.  

Instant expertise on the biggest financial crisis since the Great Depression

Watch HERE

If you want to dig deeper than Inside Job, these two PBS documentaries are just the ticket. Though there is some information overlap between the two, they are both worth a look. See them on a rainy day. 

The crisis didn't need have to happen.

Watch The Warning HERE

Did the meltdown of the entire financial system truly blindside us all? Brooksley Born, the head of the Commodity Futures Trading Commission, wasn't surprised at all. She urged tighter regulation of over-the-counter derivatives in the 1990s, but was unheeded. A Washington Post profile compared Born to Cassandra, the mythical character that was blessed with the gift of prophesy, but cursed by Apollo so that no one would believe her. 

"I was very concerned about the dark nature of these markets," Born said in the profile. "I didn't think we knew enough about them. I was concerned about the lack of transparency and the lack of any tools for enforcement and the lack of prohibitions against fraud and manipulation."

Eventually, despite pooh-poohing from Alan Greenspan and Larry Summers, Born presented her concept paper on regulating derivatives such as credit default swaps. She was swiftly decried. The Wall Street Journal claimed that "the nation's top financial regulators wish Brooksley Born would just shut up." And just a few months later, Long Term Capital Management found itself sunk by those very derivatives. 


Read Full Story