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TOPIC: too many screens?

too many screens? 14 May 2012 13:36 #38451

  • actapon
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long time reader - first time poster. After reading this forum for about a year now, I've started to put together my business plan. The forum history is very helpful and has answered a lot of my questions, but i still have more. It's time for me to pay back everything i've learned and start posting about what i find and asking new questions.

My question in this post is about the number of screens in my city. I'm looking to open a 5 or 6 screen premium theater with a richer menu of drinks and food and focus on a high quality experience... something at least one of our theaters in town lacks

The larger city is about 500k, but the west side, where i'm looking to build, serves about 150k and growing. There is one theater located directly in the middle of the west side with 16 screens, but it's getting rundown leaving an opportunity for competition. Also in reach, but about 10 miles away is an 18 screen theater, newer and fairly nice, but serving a different, and larger population on the south side. I'm sure the two compete to some extent.

Am i crazy to think i can open a theater within 5-10 miles of these theaters and expect to compete directly? I'm certain my product would be better and be in a competitive price range (with better up sells), but in putting my plan together, i started getting concerned that there are already 30+ screens serving around 150k people in a 12 mile radius around my site. Any information people can point me at to help my research would be appreciated.
Last Edit: 22 May 2012 11:38 by actapon.
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Re: too many screens? 14 May 2012 13:42 #38452

  • slapintheface
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My rule of thumb is 1 screen for every 5,000 people.
Fist run product could be difficult if you are in 5 miles of either theater.
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Re: too many screens? 14 May 2012 13:45 #38453

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One other thing
what chain is the run down theater?
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Re: too many screens? 14 May 2012 14:15 #38454

  • actapon
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Marcus Theaters - they are improving surrounding city's theaters slowly, and the result is very nice... so competition could heat up.

I should mention also that the city the theater would be located in would technically be different then the other theaters - population is somewhat dense i guess.
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Re: too many screens? 14 May 2012 15:47 #38456

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THEATER MUST BE OVER 5 MILES FROM MARCUS-- SO THERE ARE NO CLEARANCE ISSUES...
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Re: too many screens? 14 May 2012 19:05 #38458

  • rufusjack
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My initial thought is I would not do it. You are looking at $2m probably to do this. You already said Marcus is improving their older theaters.
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Re: too many screens? 14 May 2012 20:34 #38459

  • actapon
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Thanks - re: clearance must be 5 miles... the two theaters we're discussing are only 4 miles apart from eachother by birdseye... 6 by driving. The site i've picked out only puts me near one, not the other, but still, all three would be within 12 miles by birdseye.

I've read a lot of places that the general rule of thumb is 5 miles or 1 screen per 5k or 10k people. But i've seen quite a few case studies and cities where theaters are packed together in a small "densely" populated area. I'm modeling this somewhat after the Alamo Drafthouse where, for example, in Austin they are competing with 6 theaters and 50 screens within 5 miles, but still pulling in 2-7 million revenue.

I've estimated a conservative revenue of 2.1 million for my area in my P&L, but it assumes a market catchment that overlaps the other theaters. I value the feedback very much, where can i find information for overlapping market segments or competitive first run screening rules?
Last Edit: 14 May 2012 20:35 by actapon.
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Re: too many screens? 14 May 2012 20:39 #38460

  • revrobor
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It's too many screens if you are going to try to go head-to-head with the other theatres for first run product. I doubt that you would succeed in doing that. You need to run product that is different from the other theatres. I have enough faith in alternative films to try it myself if I had the bucks. Best of luck
Bob Allen
The Old Showman
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Re: too many screens? 14 May 2012 22:47 #38461

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Major city markets do not follow the same clearance rules as other areas .
I book a 4 screen that does about 1.5 million total so your projections might be doable.
What is the medium income on the area ?
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Re: too many screens? 15 May 2012 00:20 #38462

  • actapon
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median household income is 65k

I'd like my primary screening to be first runs, but i plan to mix in attractions of cult classics, series, and epics from week to week with the help of a creative team to organize the events. As a third entertainment product, I want one of the auditoriums to be capable of running a live stage that can be rented out for live entertainment to local groups.

I need first runs to build a consistent schedule of screenings to offer, while the other screenings will be special offers requiring separate marketing and a unique audience.
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Re: too many screens? 16 May 2012 16:19 #38472

  • Mike
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every city and town is different/ you may not be considered competition whatsoever/ really needs to be looked at and conversations had with the film companies for the area/ they will tell you the situation/ one problem is if you are cherry picking which with 6 screens you will be/ in a major market the film co's will want you to hold films longer as they will be grossing well. That will be your curse. Should you do well. It sounds to me like you are more of an art house edgier theatre/ in which case you'll be somewhat ignored by the big girls and boys
Michael Hurley
Impresario
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Re: too many screens? 17 May 2012 13:11 #38477

  • actapon
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Thanks mike - i think my next step will be talk to a booker for my area(?) Get his impression and opinion on distribution...

Alternativly, if i move about 5 miles north, the population density goes down to about 18k in a small suburb... but it's not being serviced by either theater. Actually, there's not much entertainment in that suburb at all... might be a good opportunity, but i shied away from it because of the low population. Thoughts?

has anybody hired a company to do market research for theaters? any recommendations if it went well would be much appreciated. I'm at the point i feel confident, but would pay some money to get over a little of my anxiety on my sales sales projections :)
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Re: too many screens? 18 May 2012 17:43 #38488

  • rodeojack
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I didn't see... did you say if both of those competing theatres are run by Marcus? If so, then that could be an explanation why they're co-existing only 4 miles apart.

I once had a theatre that was 7 miles from two chain theatres in one direction and 7 miles from another chain theatre in the other direction. I had no problem with them and the studios gave us everything we wanted.

The studios might consider putting additional prints in more densely populated areas, but you would certainly want to get some assurances before spending the kind of money I'm hearing be thrown about here. Definitely talk this over with your booker.
Last Edit: 18 May 2012 17:46 by rodeojack.
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Re: too many screens? 18 May 2012 18:18 #38490

  • actapon
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one theater is owned by marcus, the other by AMC.

Good to know about your situation. what was the population around your theater (in about 5 miles)?

My next step is to contact a booker - i just started a thread about using bookers... i've got a couple names i plan to call next week
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