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TOPIC: I need help defining boundaries of market area & identifying

I need help defining boundaries of market area & identifying 24 May 2002 09:49 #23281

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I nedd some experienced input on realistically defining the geographic market area for a proposed theater (I'm thinking triplex)and identifying my competition.

Here's some info about my community:

A coastal community in the southeaster U.S. County population is 326,000 (2000 census). County-wide pop. density is 570/sq. mile. 17% of pop. is ages 5-24 and tends to be more concentrated in the northern part of the county (the main city is there). About 21% of pop. is age 60-74. These retirees are all over, but their concentration is a little more to the southern part of the county. I've lived in this area nearly all my life and my perception is that folks are not likely to drive from the south to the north to see a movie. However, we seem to have a lot of restaurants (per capita income is near the top of the state and healthy). This tells me people around here like to go out for food and entertainment.

Here's how the other theaters stack up: AMC has 12 first-run screens at the mall located just north of the mid-county area. Regal has 6 first-run screens in the southern part of the county and a 20 screener located on Main Street of the main northern city. There is an 8 screen, 2nd-run theater in a shopping center right on the northern line of the county (don't know ownership, but it was Cobb). Finally, there's a triplex arthouse theater (shows some Hollywood first runs) in the main northern city less than a mile from Regal's megaplex.

That's 49 total screens in a county of 326,000, but 41 are first run and of those, 38 are exclusively Hollywood "mainstream" first run.

My thought is to open a triplex cafe-style cinema with seating similar to a dinner theater. Films would be primarily first run with some independent and foreign mixed in. We have a pretty active "cheese & croissant" artsy crowd in this area. Their exclusive venue now is the downtown arthouse triplex, but they have lousy parking.

My primary approach would be to offer a more comfortable setting than AMC & Regal- better food, cleaner, more personable (owner operated) service.

Questions: Should I consider the 2nd run screens as competition when I want to be first run?

How far away from other first run screens should I locate my screens? That is, what is the limit (miles or time) that the average patron will drive to see a first run movie (assuming there's a choice of directions and all other things being equal). Asked another way, if I have my eye on a potential site what diameter circle should I draw around it for my market area?

Thanks.
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Re: I need help defining boundaries of market area & identifying 24 May 2002 21:21 #23282

Consider all of them your competetion including for that venue restaurants. If it were me building from scratch, 6 screens same concept. You have more marketablility and your not too large. Generally from studies most people will go to the theatre that is closest to where they live (unless it is very very terrible.) They might travel to the "new" one a few times but then return to the one closest to them because of the conveience factor. I would not rely totaly on the "art crowd" for your venture You will prob loose the battle with the established art house in that respect.
You would do better in marketing the cinema -grill experience as an experience like no other theatre in town. (Where else can you have steak and watch a movie)

Plop your self down in a location that is
1. easy to find, get too and has good traffic flow.
2. Locate yourself at least 6- 7 miles (as the crow flies) from any other competition just to give yourself some breathing room.

3. Give your self an ample advertising budget (you will need it) in order to let the people know that your out there and what it is all about. I am not talking newspaper here I am talking TV. Now before you say that TV is too expensive check out the ad rates on your local cable system aome time they can be as low as $4 a spot (cheap) and be on networks like Fox News Etc. using Tv for this venue would show people what you have . you entertain thenm with sight and sound. Show them with sight and sound. ( I also produce TV commercials can you tell)
If i left out anything I am sure someone else will post.



[This message has been edited by GTEntertainment (edited May 24, 2002).]
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Re: I need help defining boundaries of market area & identifying 25 May 2002 11:44 #23283

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Thanks, GTEntertainment.

I'm a big believer in the superiority of owner/operator customer service over that offered by hirelings with no real emotional stake in a business. I can always tell when I'm dealing with the owner of an establishment. They care. That feeling is what I would bring to this business.

Would you answer me this? Do you think it is possible to make a living showing G through PG-13 rated movies, but no R? This issue is personally very important to me and it may end up being the acid test of whether I will be able to go into this business.

Thanks again!
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Re: I need help defining boundaries of market area & identifying 25 May 2002 11:53 #23284

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GTEntertainment,

I forgot to ask- do you think adding 3 or more screens to the area I described above would be too many for the market?
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Re: I need help defining boundaries of market area & identifying 25 May 2002 11:58 #23285

I have looked at the ratings issue before I think you could make a go at it with a good mix of g-pg13 if the product is available and not "stupid"(stupid = "dude where is my car") A few years ago out of 12 screens we had 8 R and 4 PG because that was the only stuff available. I beleive that there are more PG'ish this year. My thoughts on running R If you think in order to survive that you might have to play some R you could be very selective. There are some Good R movies ( if you can call them that) and then there are raunchy ones. If it had been up to me there would not have been South Park at the theatre.

I think it all hinges on if there is enough PG product out there. If the movie is good people will come and see it no matter what the rating . Look at the Rookie its a G rated and it had long play here. I think that making your Cinema grill a Family oriented atmosphere could be a real plus if you are just going to show g-pg13
But your customer service had better shine to keep people coming back.

Very tough question and lets see if anyone else has an opinion on G-PG only

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Re: I need help defining boundaries of market area & identifying 25 May 2002 12:07 #23286

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On your G- PG issue... Why wouldn't you want to show an R rated movie? In this business, ultimately, you want to show the movies that make money, G-PG-R the rating is irrelevant, if the movies you bring in make money. Also, a point to consider with your cinema/grill is that most G-PG movies are shorter than R rated movies. You would want a longer in length movie to sell more FOOD. A "G" rated movie that is only 88 mintes, doesn't leave much prep/eat/repeat time. While a longer "R" rated movie at 2 plus hours will net you more in the food area. Lets remember,whether you're dealing in a regular movie theatre, or a cinema/grill operation, most of our money is made in the food area.
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Re: I need help defining boundaries of market area & identifying 25 May 2002 12:07 #23287

In my opinion ( like armpits everyone has a couple and some stink haha) I don't think it would hurt if you placed yourself in a good location. If you divide 326000 by 49 screens it equals about 6600 give or take a few per screen. add a few more 6100 per screen. In my opinion not a bad ratio. If you were building a 24 plex It would be a different story.
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Re: I need help defining boundaries of market area & identifying 25 May 2002 13:46 #23288

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I have no doubt that you could survive without the R rated movies as long as you include PG-13 in your mix. This will give you enough of a selection most of the time but it can get difficult. You may end up holding something longer than you would like because there is nothing else available but that happens to all of us at some point.
I do want to point out that there are some worthwhile R rated films that you will not be embarrassed to present to your customers no matter how conservative your market. I wouldn't have wanted to miss "The Green Mile" and war films like "Black Hawk Down" or "Saving Private Ryan" are always rated R but your customers will actually want to see them.
As I said before - you can make it with more family oriented matter. We have shown only one R rated movie in the past six months(Black Hawk Down) but we only have one screen to fill.

It tends to be more difficult to find film in the fall that is not rated R because the kids are back in school and only the adults are going to movies. The studios dump product and Halloween brings out the gore fact in movies. Many of us are having trouble finding anything worth running in that season and so we may be forced to choose among things that are less objectionable than the other choices. Some of us schedule cross over art house fare in the fall for these reasons, but many (most?) art house fare is rated R anyway. (If you are planning on being an art house or running independent film you can't have an aversion to R rated film or non rated film - it is contrary to the whole concept of creative free speech and the presentation of new ways of looking at life.)
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Re: I need help defining boundaries of market area & identifying 26 May 2002 09:27 #23289

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Thanks, BECKWITH1.

I, too, enjoyed "The Green Mile" and "Saving Pvt. Ryan" and I understand movies are rated R for different reasons. I guess my objection is with the gratuitous, overkill level of sex and violence in many R movies. Both are frequently splashed on the screen way out of proportion with good story telling. I think of "Good Will Hunting." It was a fascinating story with great characters. But a big drawback for me was all the "f***ung this" and "f***ing that" dialogue by many of the characters. I don't think that approach helped the movie and it was a distraction (IMHO).

So, as a practical matter, how can an exhibitor sift through product in advance and find movies he's comfortable with showing?

And, I'd be interested in your comments regarding the original theme of this thread (I swerved it off course with my question to GTEntertainment, I know): Appropriate market area and whom to count as my competition?

Thanks.
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Re: I need help defining boundaries of market area & identifying 26 May 2002 11:29 #23290

There are advanced ratings data on movies as to why the receive the ratings the do. www.mpaa.org And we had other info from a news letter from IME, Independant Marketing Edge out of Montana.
I beleive its www.imeonline.com
We had this info readily available to customers who would want to know why it was rated R and such.

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Re: I need help defining boundaries of market area & identifying 26 May 2002 21:58 #23291

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Continuing on the ratings discussion:
One of the good things about having a professional booker is that they attend screenings of movies so that they can tell you whether this is a "quality" R rated film that your conservative demographics will want to see or if it is one of those trashy things made so that the movie companies can get the teenagers to spend freely. (And thus contributing to the ratings enforcement problems.) If you have the time, I think that you can attend screenings as well. The only problem is that screenings occur only a couple of weeks before the movie is released and this cuts into your preplanning time.

BTW the foul language in Good Will Hunting has been the topic of discussion over lunch many times in my day job. The vote is split one whether it was absolutely necessary to create the environment needed to understand the movie but no one really enjoyed hearing all that language. I am still glad I saw it though.

Market area & competition:
This is tough. GTEntertainment has given you a some really good points. I also work in a very competitive area where there are many theaters and we are all splitting the pie. You need to look first at location based on where you can get first run film. Where I work we have to all be in different towns (different zip codes?) in order to get equal access to first run film. If we are in the same town then it gets hairy. You either lose to the established theater or you can try to horn in on their product. You cannot both be licensed to run the same film. If you get it they can't. Obviously they are going to fight you tooth and nail to keep their product unless they are too small to run everything. Then, by default, you will be able to get something. The distributors will be sizing you both up and may put you on allocation where the films are evenly split if you are lucky. But is tough to run a business where you only get half the movies that you want. If you move into an area controlled by a chain theater, you will have difficulty getting film as the chains have more leverage than you do. You will probably only be able to get film on subrun after they are done with it.

As GTEntertainment said that established Art house is probably not going to let you have film. You can locate in an area just far enough away to have both of you getting equal access but I suspect that is farther away than you would have to be for first run. Art houses need more space because the market they pull from is less dense.

You will probably want to establish contact with a booker now and try to discuss your possible locations with them so that they can advise you about your ability to get product(film).

Next evaluate all your competition. Sample their products and see what they do well. Write down your observations about what they do well and what they don't do well. You will probably find yourself referring to these observations over the course of your first couple of years in business. Try to figure out why people go to this theater. Is it because they are big and get all the film? Do the teenagers all go there because it is the "IN" place. Maybe the adults go there to stay away from the kids? Do they offer amenities such as stadium seating and digital sound that are not found elsewhere or are all your competitors similarly equipped. Think about how your business will fit in. What are you going to offer that is different and who are you going to appeal to?
I am unclear about your concept because I don't know if you are planning to be more like a regular theater except that you will have tables in the theater. Or whether you plan to serve food in the theater and will have waiters and waitresses inside. If you are not serving inside the theater then consider yourself as a regular theater with expanded menu offerings. That is probably how people will look at you. If you are doing table service then your appeal is different. I think teenagers aren't going to be your primary market and more upscale adults will be. This is not a concept that I understand much about yet.

Pricing - This is very important as you can define yourself and your market by price. However, most newcomers seem to feel that they can set whatever price they want and still get the films that they want. This is not so. There are rules even if ill defined. When you are competing for movies with another theater your price will become an issue. If it is too low then you may not get the film because the studio is essentially in partnership with you. You may be paying them 50 - 70 % and they are very concerned about the overall gross that that number is calculated on. If you charge a lower price and get a lower gross then they get less money. If you charge a higher price you may be able to get film, but not people. If this continues eventually you won't be able to get film either. This is where people are evaluating you and deciding whether the services you offer justify the higher price.
FYI - in my area the threshold for first run pricing is $3.00 matinee $5.00 evenings. They won't tell you that you have to charge that because they would be breaking the law, but that doesn't mean that they have to license to you.

Hopefully some of this detail helps!
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Re: I need help defining boundaries of market area & identifying 26 May 2002 23:05 #23292

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BECKWITH... WELL DONE!
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Re: I need help defining boundaries of market area & identifying 27 May 2002 11:24 #23293

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Good Will Hunting: what I liked about all the **** usage was that it was accurate. As an urban kid who hung out on corners I can attest that if you want reality you use the language. Same for soldiering: they swear a lot! Oh gosh! For me I play certain films for certain audiences. It's always a choice. I have a lot less problem with a Good will than a Scary Movie.

Michael Hurley
Impresario
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Re: I need help defining boundaries of market area & identifying 27 May 2002 11:44 #23294

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BECKWIIH1,

"Hopefully, some of this detail helps."

Correction! ALL of your considerately offered detail helps. Thank you.

The concept I'm considering is seating with tables and expanded food items, but no table service. No one else in my area does this, but dinner theaters are popular around here with the seniors. I told my neighbor what I was considering. She was ready to buy tickets she was so excited (unscientific market testing).

You'll note that the big players in my area are Regal (26 screens total, 20 are stadium seating w/ digital sound) and AMC (12 screens @mall). I'm wondering if these two corporate "black holes" would suck up all the first run product with their superior gravitational pull. I've located a commercial corridor along one of the main Interstate connector roads which would place me about 4.5 miles (as the crow flies) from each of these big players. Might be potential there.

Thanks again for the courtesy!
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