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TOPIC: Another industry's plight to consider

Another industry's plight to consider 11 Jun 2005 09:08 #20510

  • reelman
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Before becoming involved with this industry over 20 years ago, I spent a few years in another industry that was once robust but was unable to change with the times and has largely disappeared as it was once known...coin-op games and arcades. I got to thinking the other day how events then bear some eerie resemblance to our plight as exhibitor's today.

Allow me to flesh this out and insert (my analogies) as needed.

There was a time when young people went to only one place to play games, the arcade(theatres). You had an ever changing array of great and not-so-great games(A and B pictures). Pretty soon game manufacturers stopped innovating and started turning out bland rehashes of the same concept(sequels and remakes). The base of players became turned off and quit spending so much in arcades(declining attendance). The game manufacturers responded by souping up the games into simulators and of course a higher price was commanded for these type games(Imax and elaborately themed theatres). Players initially were lured but technology changed things.

Another issue was the collapse of several long established gaming companies and the consolidation of the industry into a few hands(one day we shall all be Regal). Along with the above events was the introduction of ever more sophisticated home gaming units that allowed the player to have nearly the identical experience as at the arcade(DVD and home theatre). The gaming companies at first held back the arcade to home translation to give street operators some time to recoup their investments in very expensive games(DVD to home window). Soon however the combination of the more lucrative home market and almost exact same game experience at home finally tilted the pendulum and manufacturers all but abandoned the street operators and concentrated their attention on the home market. This obviously had an impact. Arcades disappeared and gaming has now become a bigger industry than theatrical exhibition. It will continue to grow as the next generation of consoles and on-line gaming make the players experience better and more affordable than ever.

Where do we in exhibition find ourselves today?

Declining attendance due to mediocre product that has a shelf life of 2 weeks. Theatres responding by raising prices on movies and snacks to make up for the shortfall. Studios seeing the home market as a much more lucrative market and releasing product to home in ever-shortening windows. Theatre execs. decrying these events but continuing with building ever more numbers of screens and proclaiming that "theatres drive the home market". Well, the arcade owners said the same thing 20 years ago.

Consumers embracing the new home systems and spending lots of cash to turn areas of their homes into their own theatres and escape all of the hassles of attending the over-priced, under-staffed, feet-stickin', seat-bumpin', cellphone-talkin', scratched print-watchin', experience that one gets when you visit the average chain theatre. Those of us here on this board have a passion about our places the average plex manager doesn't. Why? Because most of us run smaller theatres and own the place. We're the ones to pay the bills. We know how to put on a quality presentation and interact with our customers.

Unfortunately, the Regals, AMCs, Loews continue to gobble up the small guys. Then turn around and throw up ever more screens for a shrinking base of patrons to fill those seats. When attendance drops, let's raise prices as we have Wall Street to appease. Attendance drops some more and the whole vicious cycle repeats.

I love this business. I love the power of a great movie on an audience. I love the history of this industry and how it has literally changed the world. I love the smell of freshly-popped corn. I love the sight on a childs face after seeing his first movie on the big screen. I don't know 20 years down the road where exhibition as we know it today will be. Or if it will be.

I do know that in my former career, I saw that industry go through a seismic shift that forever doomed most aspects of it and shifted the focus to the home. Will history repeat itself? Right now, I see the beginnings of what will be a profound change if the trends continue. But we all know from our history that calls about the death of theatres have proved wrong on numerous occassions. I know one thing- I will continue to provide my audience with the best value I am able to- affordable admission, clean facilities, outstanding projection and sound, personal interaction with them. I will continue to proclaim that(atleast at my place) the experience is better than at home.

Should technology and consumer tastes drive all that we've worked for and built away, so be it. But until that day comes, I continue to work everyday trying to keep the magic of movies alive in my part of the world.
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Re: Another industry's plight to consider 11 Jun 2005 12:08 #20511

  • leeler
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that is a wonderful post, reelman.

I had never thought of that analogy. I wonder how close these two industries really are.
"What a crazy business"
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Re: Another industry's plight to consider 11 Jun 2005 18:42 #20512

  • slapintheface
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I am sure reelman you are a very nice guy ..but.. That LETTER abve is one of the strangest off base things ever written on any cinema web site.
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Re: Another industry's plight to consider 12 Jun 2005 02:00 #20513

  • jimor
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The tenor of Slap's response to Reelman's "letter" leads me to believe that he did not quite understand the letter. In no way was reelman attacking the industry that he obviously so loves; he was bemoaning the fact that it is changing due to factors beyond the control of the exhibitor, for the most part. The essence of both the industries reelman mentions is the innovation and artistic achievement of an INDIVIDUAL. Artists and creative types make games and good movies; no committee of MBA management types has ever made such a thing of value. It is this creativity of the individual that is disappearing as both industries 'matured' into a format of supposedly consistant profit making structures with a corporate mentality. The logical outcome of such mentality is today's conglomerate: a business structure designed to milk the greatest amount of money out of any 'product' and it doesn't matter to a conglomerate what the product is. They are MBAs who learn a supposed foolproof means to guarantee a profit, and that is all that matters on their quarterly reports.

The innovation and creativity that produced the 'products' that generations before ours did enjoy, is largely gone as each college grad these days learns that he must make maximum profit within the corporate environment in the shortest span of time to be regarded as successful. No longer will anyone tolerate the 'lean times' that used to characterize youth until they produced something useful. Nowadays, it is not the goal to make a 'better mousetrap', but to so dominate a market that only the one mousetrap that you control will ever sell, or better yet, to manipulate the investment funds to make money with money, while the products fade into insignificance.

Thus, the games became immaterial to the conglomerates that bought the game makers, and so it is today with film: the owners are in the business of making money with money manipulation, not creating new and better products. Artistry matters not at all, and if technology makes it easier to sell directly to the public and sidestep the middleman (arcade/exhibitor) then so much the better for short term products. The business owners today look only to their investors and Wall St. for their fortunes, and they will not hesistate to consume or destroy anyone or anything that gets in the way of their immediate profits. Their unspoken motto is: 'The future be damned! We live for now.' They are quite ready to abandon film as they did games to quickly shift their money into any other product that appears to be best at the moment, and then abandon that one as soon as another more profitable one comes along. This is part of the reason that the USA makes very few good products anymore but only manipulates money. It is really ultimate greed which the movie WALL STREET praised as the only real good in the world, and most people believe it to be true. It is just as God's word the Bible says: "For the LOVE of money is a root of all sorts of injurious things... (1st Timothy 6:10) Given this fact prophisied for our day, what else could reelman see?
Jim R. (new E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it ) member: www.HistoricTheatres.org
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Re: Another industry's plight to consider 12 Jun 2005 08:21 #20514

  • reelman
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Maybe I was waxing too nostalgic for some in my post. My point was... I used to make a living in an industry that it's "leaders" thought would endure forever as it too had a long history behind it. Technology, corporate greed and most importantly changing customer tastes wiped out an industry in just over a decade.

In all due respect to those of you who think that movie theatres will always be around forever because "people have to get out of the house" or whatever other reason is used are not fully factoring the bottom line types that are changing all aspects of commerce today. Current examples- within 10 years(probably 5) there will be no need for a record(CD)store, no need for a video store. Even if those brick and mortar stores are still around, will there be enough people patronizing them to turn a profit? The intention of the creators of content is abundantly clear- deliver entertainment to the consumer in the fastest, most efficient manner using new technology.

Movie theatres , as we know them today, will change in ways unknown. We are dinosaurs using a business model that's 100 years old. How many of us have the deep pockets necessary to evolve our traditional theatres to the new model being developed. Studio funding you say. But I don't know what the catch will be. And there is ALWAYS a catch. If they fund my transistion, do they then control my theatre? My programming choices? Do I have to let them run their corporate commercials? Carry their brand of snack at my concession? If you think that these are off the wall suggestions, you are too young to appreciate the sentiment behind it.

As I have been pointing out with my posts to Leeler's original thread- studios are testing the waters with their DVD windows. My last post indicated that Warner Bros. simutaneously released their latest on DVD in China with it's theatrical release in the US. How has "Sisterhood of the Traveling Pants" done at your place? I'm sure WB will see more sales of the DVD in one day versus the entire run of the movie in US exhibition. Last time I checked that flicks national gross, it was on track to do $35 or 40 mil. tops at the end of the run.

Do you honestly believe the studios care about exhibitors? Guys and gals- theatrical exhibition is becoming an ever smaller piece of their pie that is, most importantly to the bean counters, increasingly costly to serve. That is exactly what happened in my last career. Technology, greed and the consumer destroyed my former livelihood. They got a better, cheaper experience at home and the providers of content marketed directly to that new model.

I am not predicting anything as I have no way of knowing the future. I'm very concerned about the livelihood I have now and whether it will carry me in the future. Home entertainment options and incredible equipment at unheard of prices has given consumers the ability to bypass us. For $3000 , you can outfit your "media room" with a digital projector capable of HD quality throwing a picture onto a motorized drop-down screen fed into a surround sound system with LOTS of power. And for the average family, this maybe represents a much more pleasing, less stressful, less expensive option than going to their corner multi-plex. How many of us can survive if our existing customer base decides to halve their viewing and stay home to watch the DVD. Can you survive the spells in between the "blockbuster must see at the googleplex sequel". Don't know about your set-up but I need those regular customers desperately. And over the last couple of years, I'm not seeing them as much.

And I'll say it again without embarrassment, I love this business and all that it has brought me. I hope desperately that it survives and is there in similiar form for my children. They love to watch movies on the big screen and they too understand it's power to deeply move them. We can't quite replicate that experience on my home theatre set-up(40' wide screen vs. 9'6")which cost me 30% more 1 1/2 years ago than a similiar one today. What will the price and quality be 1 year from now? Technology, lower price, and consumer demand marches on.
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Re: Another industry's plight to consider 12 Jun 2005 11:07 #20515

  • Ken Layton
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I, too, come from a long background in the coin machine industry. The longtime mom-and-pop amusement game operator I worked for was gobbled up by a large multi-state amusement company. My 25 years with mom-and-pop didn't matter to the big company---we all got fired. The similarities between amusement games and theater entertainment are intertwined.

I see many of these new Regal Cinemas having these huge 'game rooms' loaded with these expensive-to-play (and buy!) buck a play driving simulators, Dance Dance Revolution, skiing simulators, etc. Do chains like Regal let a mom-and-pop game operator put in machines in those game rooms? NO, they use a giant national game operator instead.
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Re: Another industry's plight to consider 12 Jun 2005 13:18 #20516

  • slapintheface
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Good God help us , To compare the movie industry that is in a small slump, like the rest of the economy, to COIN MACHINE INDUSTRY is almost to much to bear.GRRRRRR lol....
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Re: Another industry's plight to consider 12 Jun 2005 17:13 #20517

  • leeler
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slap' I think you're being a little naive. Technology is moving way too fast to predict what its' effects will be. To be sure, some huge changes are going to come around in this industry, and they are going to come very quickly. Do you want to bury your head in the sand and pretend that things are going to be the same for years to come? I welcome reelmans comments and hope it spurs on a healthy discussion about the future of this industry so that we can at least have some idea of what might transpire. While it might be true that this industry will follow a different path then that of coin-op games, it is important to note the similarities and differences. I used to be one of those MBA educated analysts that jimor spoke of until I woke up and started doing something that I truly love. I have some very real concerns about the health of this business now, however, and would love some further discussion about it.
"What a crazy business"
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Re: Another industry's plight to consider 12 Jun 2005 17:54 #20518

  • wimovieman
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I sure am hoping that we don't end up the way of the arcade, but I really can't think of a better analogy. When you really sit back and think--both industries profit on the same basis--an out of house entertainment that relys on the consumers spendable dollar, and even more importantly--the consumers spendable TIME.
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Re: Another industry's plight to consider 12 Jun 2005 19:03 #20519

  • reelman
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Slap, I think I need to ask how old you are. If you're under 30, you have matured during a time of some wonderful advances in technology and probably have no understanding of the lives us over 50 guys had "back in the day".

Again my point...things are eerily similiar to the conditions I went through a bit over 20 years ago. I'm simply wondering whether there are lessons for us to talk about.

Have you listened to patrons of your theatre? Have you asked them point blank why their attendance is not as frequent as years gone by. I have asked and an answer that I'm am hearing with more regularity is the shrinking DVD to home windows and customers ability to create a movie collection and own the movie for what it would cost to see it at my place. Humans have an insatiable need to collect things and this fits movie buffs interests.

Numerous of them have mentioned actively researching or in some cases installing home theatres. My question in my anology...is this the harbinger of a quantum shift or is it as you say a small slump?

I'm quite aware of the problems of the last few years with the economy, fuel costs, consumer debt, terrorism fears, etc. Let's face it- we've had a rough few years since 9/11. But what if those things continue to plague us? And these things are occuring just at a time of other changes in our business. My analogy talked of a number of things that occured in rapid succession that brought about the demise of the coin-op market. Are we seeing such a "Perfect Storm" again. One that may decide the fate of exhibition?

I think that the next 12 months may make the situation clearer as some quality product comes into theatres and the economy hopefully continues to improve. I think Christmas has some very good films like Chronicles of Narnia and King Kong. These pictures should appeal to a broad array of people and should do blockbuster business. We'll see at that time how far we are down in terms of year to year attendance.

If the trend continues on into 2006, I fear your hopes of a small slump as the cause will be proven wrong. Believe me, I would love nothing more than to see a return of my dwindling customer base. Makes it so much easier to pay my banker that way.
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Re: Another industry's plight to consider 12 Jun 2005 21:02 #20520

  • slapintheface
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I started in the movie bsns in 1982 when video was putting theaters out of bsns. I never said theater bsns is not changing i said to compare it to video coin is way off base. 1st .Video coin never reached but a small market to begin with mostly males 10 to 17. 2nd.The industry does not go back like the theaters do.3rd if you do want to compare the too the video bsns is on a rebound changing with the times to high tech dance machines and more. Trends of mediocre films have a long history in the bsns with dry spells for years at a time. Attendance is down but not to record lows and yes there is a 13 week trend of down box office .THIS WILL HAPPEN IN A 100 YEAR OLD BSNS FROM TIME TO TIME. New digital projection will only bring back old and bring in new bsns. I just put in a home theater in my house and it cost me $35,000.00 dollars i dont see that as a norm for the average person. W e must change like every bsns must change thise who dont will be gone ...look at Howard Johnson over a thousand locations now (6).. Dont fear it ......
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Re: Another industry's plight to consider 13 Jun 2005 00:33 #20521

  • outaframe
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Sorry SLAP, but I gotta agree with REELMAN & LEE, in fact I have been preaching the same sermon for some time (mostly to an empty tent) because of the Alfred E. Neuman "What...ME worry?" syndrome that resides around here...

This upcoming week I'll be chalking up 40 years in this crazy business, and can tell you that it has been on a long downhill slide since the late 1970s... I was also involved in the fledgling broadcast TV business from 1948 thru 1955 (as a very young kid) and can tell you first hand that the advent of free broadcast TV nearly did in the movie business, way back then!... In fact, something like 75% of the existing theaters EVENTUALLY went under as a direct result of broadcast TV AND the decline of downtowns... The ones which survived did so ONLY because we had a better and EXCLUSIVE product to sell... Yes, old movies were a big part of early TV, but the window was DECADES then...

NEXT came CATV (cable) systems that brought more dependable broadcast reception to many fringe outlying areas AT A COST, which further reduced the everyday moviegoing audiences... The movie producers fought tooth and nail, and offered new and innovative pictures and processes which HELPED stem the hemorrhage of business lost to "free" TV...

NEXT came HBO (and clones) which shortened the window of big screen product to the little screen... AND MORE IMPORTANTLY, the movie studios realized there was a much bigger audience for their product OUTSIDE the theaters, than inside... THIS WAS THE TURNING POINT when studios started making exclusive product for cable, and went into general TV production as a big part of their income... They were NO LONGER our partners, they were playing both sides of the fence, and our part was the smallest... THEY joined their former enemy in the get rich quick game, and left US to scavenge for the crumbs...

VHS and DVD came along with the promise that older titles would be the majority of the business... Of course, we all know how long THAT lasted...

Satellite, HDTV, and digital broadcasting are gaining ground every day, and MOST of it is at the expense of the movie THEATER business... The FEW areas which TODAY still rely on "on air" analogue broadcast signals for their "free" TV reception will be FURTHER reduced when analogue broadcasting ends, scheduled for the end of 2006... Yes, the analogue broadcasters will be replacing their old system with a digital equivalent, BUT the situation is that digital is an ALL or NOTHING system: it either produces perfect reception, or nothing!... MANY will be FORCED to abandon their "free" off-air antenna reception and PAY for either cable or satellite PACKAGES to have anything to watch BECAUSE the technology of digital broadcasting severely LIMITS its effective range... BOTH cable and satellite services PUSH the customer to buy PAY MOVIE CHANNELS as part of their PACKAGE deals...

When the customer is PAYING for something day-in day-out in his home already, he isn't about to PAY US to see the same thing a little sooner at the local movie theater... History and common sense BOTH confirm that the future of movie theaters is bleak at the very best!... IF we survive the current slump, there is another waiting right up the road... ONE is going to be the straw that breaks the camel's back!... The ONLY chance we have is IF we can collectively get into production for OUR OWN use... The existing studios have ALREADY sold out to the enemy!...



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Re: Another industry's plight to consider 13 Jun 2005 02:34 #20522

  • reelman
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In fact, coin-op had a history extending well back into the 20th century. The industry reached it's zenith in the late 70's and early 80's with the Pac-Man craze. What Outofframe points out is that exhibition has been on a rollercoaster for a number of decades. Our numbers take a hit with each new technologic introduction. The trouble with the picture today is that technology has (or is about to) leapfrogged the theatre experience.

At no time in our history has the public had the access to on-demand entertainment choices as it does today. This is mainly the result of computers and the internet. This situation will not go away and will only get more sophisticated and omnipresent. Wait till every home and business in America is wired with broadband connections. And as I read alot, there are some technologies in development that make broadband look like dial-up.

Technology will probably radically alter a number of current business models. As I pointed out, downloading songs from any number of sites(both legally and illegally) and the power of Wal-Mart have all but killed the record stores. Blockbuster is on life support as Netflix and others deliver videos to your door for less. Arcades have gone away as the home experience is the only one worth mentioning.

Maybe theatrical exhibition will survive by doing what it always has done when threatened-innovate and change. But at what price? My problem is what I call the tipping point. At what point does a majority of our existing audience simply decide that going to the movies is just not worth it compared to what technology has waiting at home. They then focus their attention and dollars on the home experience and maybe occassionally going out to the local plex to catch something.

Exhibition, atleast for us little guys, can't work like that. Movies have always been a mass entertainment, the "poor man's afternoon" if you will. We have always been(and yes still are) the best value for out-of-the-house entertainment compared to concerts, sporting events, etc. But at what time in our history has a consumer been able to purchase a film for $16.95 less than 75 days after it's theatrical premiere? This is new and unprecedented. And unfortunately is only going to get worse.

So theatres are forced to change. To what and for how much? And who pays and who profits? And what are the ultimate benefits? I still have my note due every month and I can't forever see my customer base erode. But didn't attendance reach a 50 year peak in 2002? Yes it did and guess what? That was also the year that DVD's caught fire and in spite of some great pictures every year since, attendance has eroded further.

There is time to slow the death of theatres and that is if the studios will put a stop to the shortening of the video window. Instead of screaming their heads off about piracy, I'd love to see NATO get worked up a bit about that. I view that as Enemy #1 in the US.

The studios have got to reach out for more audience than just 13-25 year old males.
If it did anything last year, The Passion proved that there is a vast audience out there that would go to a theatre if the right picture is playing. That audience doesn't attend for the same reasons they stopped going in the late 60's. There are those of us who would love to watch a movie without being assaulted by every manner of cussing, sex and drugs. I have been overjoyed to see the recent publicity concerning the fact that R rated movies do less business than PG. Hollywood's attention has been gotten with that one and I think we are seeing more family product than I can remember.

Most importantly, studios will have to alter the revenue sharing percentages that keep going ever higher in their favor if theatres are to survive. The whole..."I gotta charge $3.50 for a bottle water and $4.00 for a small popcorn 'cause the studio keeps 55% and the food pays the bills" model is broke. It's not going to be able to compete with the new technology.

Do I think it's all going to work out and keep exhibition in business? I am probably the most pessimistic I've ever been. The sense of deja vu gnaws at me every week. Soon I'll be seeing the advertisements for Star Wars, Madagascar and Longest Yard at Wal-Mart being released on DVD in late summer. I'll see the price of home theatre continue to drop even lower than the insanely cheap deals now. I'll watch as the technology of streaming movies over fast connections into the home is continued to be refined.

This is my last post on this subject as I see myself going in circles. Ultimately, it will be the consumer who votes with their time and their wallet. I only hope that something resembling what we have now is there for the generation of children in 20 years. Thanks to all of you who have listened and contributed to this discussion. May we all have a better year in '06!!!

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Re: Another industry's plight to consider 13 Jun 2005 07:34 #20523

  • zedpha
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Just wanted to thank Reelman for pitching this topic, especially in such a clear and concise manner.

I'm just a whisker over 30, with little experience in the industry and currently knocking out a business plan to launch myself into a theatre. What you've outlined above has been of considerable interest to me, especially as I share your concerns. However I feel that there are some real opportunities going forward.

Sure, I know how it sounds, but this isn't the irrationality of Slap...I've seen the future and it's change, exactly what that means has yet to be decided. All I know is that time's up for the current business model; raising ticket prices to compensate for lost ticket sales, rinse and repeat is simply not sustainable in the long term.

Regardless of where this change takes us I feel that you also touched on what theatre's all about (at least from my perspective), the experience. Technology be damned. DC, gaming, home theatre, ultimately it's the experience that gets the customer out of their house. Nail that and you get repeat punters. (That sentiment includes charging more for a better experience than the average Joe.)

If you look at the Kiwi experience with music downloading it's the chain stores that have taken the hit. Independent's that have demostrated a knowledgable "love" of the industry, who add value to their customer's experience have thrived.

Now I know that's hard to translate to a theatre, but not impossible. Personally I think that I've managed to achieve this with my business plan and those who've seen it tend to agree, although time will tell how successful my blue sky (or BS) vision will be.

I'm out, Zedpha...
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Re: Another industry's plight to consider 13 Jun 2005 10:26 #20524

  • D. Bird
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It's an interesting topic for sure. I think the beancounters would be crazy to kill the theatrical run, which gets the word out and at least pays for production, if not much more and then creates the repeat customers when we buy or rent the DVD.

That said, theatres DO need to create a better experience. The gaming industry is one example of a business that died. But following the same logic, the baseball industry should have died too. And it nearly did. "Strip-mall" type cookie cutter stadia with astroturf and lousy food were not what we all grew up with when we loved the game. But from near death, the game and fans are back in numbers far above what they ever were in major, minor and independent leagues. Why? Great nostalgic ballparks, good food, and LOTS of entertainment for kids and families.

So here's exhibition at the crossroads. You'll ALWAYS have th 17-24 crowd flocking to the multiplex to shoot-em-up action flicks and cheesy teenage crap. It's a social thing. But what about the rest of us? We're left with that cookie-cutter utilitarian experience NOTHING like what the movies are supposed to be. 25+ is where they're losing us, and that becomes a habit. Now's the time to get the SOCIAL ANIMAL we all want to be hooked on the night out again. The drive-ins fill a nice niche for families where you can find one, but overall, better films for geared to ALL segments you want to attract at theatres that (ironically given the discussion above) don't look and feel like a loud, garish, video arcade would do the trick. At least, if my baseball analogy is anywhere near the mark.
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