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Hi everyone. I'm currently a college student and thinking of opening a theater after finishing school. But my ideas are very different from other theaters. So I'd like you guys to tell me if they could work.

I want the theater to have a small number of small rooms. Just four screen rooms, 30 to 50 seats per room. To save money, the projectors would be consumer, off-the-shelf digital projectors made for small screens. There would be no concession stand, customers would be allowed to bring their own food, and the theater would be located in a supermarket strip mall across the street from a housing complex.

Why do I think this stuff is a good idea? First, assuming I could get permission to to show content, the studios would save distribution cost without me asking for handouts to pay for expensive hardware. Being digital, I could schedule movies the way TV networks schedule shows, many get shown only once a week, and even popular ones get shown only once a day. So even with a small number of screens, I could show many different movies.

How could I survive without selling food? I would ask the studios to let me keep more per ticket. It wouldn't hurt them too much because they'd be saving a lot on distribution. I'd encourage customers to buy food from the nearby supermarket, where the food costs 66% less than at a concession stand. Plus, the supermarket has a lot more variety than even the largest concession stands have. Customers would see the value in this and attend more often. The studios may only make half as much revenue per ticket, but they'd sell 3 times as many. And what I'd lose in concession revenue I'd make up for in per-ticket profit and ticket volume.

Where did I get these ideas? I consider all the forms of home entertainment to be the competition and inspiration, and I want to compete by matching its efficiences by co-opting a lot of its features. And that includes shortening the drive - hence the neighborhood strip mall location - and surviving without selling food. After all, the home entertainment sellers don't just survive without selling food, they thrive.

Part of my inspiration came from attending Anime Festival Orlando, where anime DVDs were shown to the public with the publishers' permission, and there was an atmosphere you don't get at movie theaters. People brought their enthusiasm and knowledge about shows with them when they attended. I'd like to create an atmosphere like that in a theater.

So there's the ideas. Fire away!

[This message has been edited by Dean_Siren (edited November 12, 2006).]

stay in school!

This can't be for real, right?

I'm rolling on the floor laughing my ass off! This is hilarious!

I'm afraid that your idea would require the complete cooperation of the studios and distriubutors, and they are notoriously fixated on the 'bottom line.' Maximum profit is their reason for existance (not movies) and it is highly unlikely that they would tolerate anby reduction in their profit to help you get your idea off the ground! Since they own the copyrights to the films, you cannot show ANY DVD or other source without their permission, which is given in the form of a standard contract which guarantees them the vast majority of your ticket sales on a sliding scale.

We were all idealistic when we were in school as you are, but you must be realistic to realize that even if you could find financing to build your cinemas even without food sales, it is still the owners of the films which call most of the shots by contract -- assuming that they choose to acknowledge you at all. The only new model of exhibition they would be interested in would have to START with their increased profits, not yours.

Jimor's right on the "money" here.

Your proposal bases the success of your business on the backs of the studios. They have no motivation to trade their profits for your success. Believe me... there are many marginal exhibitors out there, with a lot more on the line than you do, who wish they could talk the studios into taking a few percentage points less.

Food sales is an obvious part of the theatre business. That idea won't work... and I suspect you'd get pretty tired of cleaning up the chicken bones, dropped pizza and spilled beverages after awhile.

Come up with a plan that works for your community, makes you some money AND at least meets the minimum demands of the studios and you've got something to consider.

I know I sound idealistic, but I got my encouragement by reading the autobios of America's most successful entrepreneurs in tech, entertainment and business. First Jim Clark and Steve Jobs, finally Michael Dell and Sam Walton. It was Walton who said in his autobio that both retailer and supplier make more total profit by selling more units at lower margin per unit. Fortune magazine ran an article about how Wal Mart and Best Buy have more and more sway over movie studios, and Jeffrey Katzenberg was kissing Wal Mart's butt in 2001 in order to get good placement for Shrek DVDs. When was the last time the studios kissed your butt? Do they even kiss the biggest theater chains' butts?

Food aside, let's talk about the equipment part. It was the studios who were pushing theaters to go digital so the studios can save $2000 per movie. Theaters didn't want to make the switch because at those large screen sizes, video projectors cost at least 4 times as much as film projectors. That cost isn't coming down, because big projectors are the most complex, and with only 120,000 big screens in the entire world, and only 35,000 in the USA, there isn't an economy of scale, compared to home equipment which is mass produced in millions of units. A mini-screen theater made of off-the-shelf consumer parts would offer a sensory experience that's only slightly better than what people have at home, but it would give the studios the savings they want without driving us broke.

I do agree that studios don't care about theaters, and they shouldn't. If I was a studio, I'd resent the fact that at the theater, my customers were spending more on food than on my movie. I'd resent the fact that theaters are transforming into restaraunts where the movie business is an afterthought. If I was a studio, I'd dump such a conflicted channel so I could focus more on direct, efficient channels such as Netflix, iTunes, Best Buy and Wal Mart, where my product is the main thing, and not simply a hook to get customers to spend more money on something else. The anime publishers in USA don't even bother with theaters. I may sound idealistic, but the theater biz in its current form is fatalistic.

We've pretty much agreed that changes in technology and business models are so rapid that theaters in their current form won't last. So let's be candid. What do you imagine as the replacement for the current theater biz?

[This message has been edited by Dean_Siren (edited November 13, 2006).]

[This message has been edited by Dean_Siren (edited November 13, 2006).]

Hi Dean/ Let me say this as nicely as I can: you don't sound idealistic to me. You sound highly opionated without a lot of experience or knowledge of the subject you're talking about.

What do film companies need theatres for? For the exact purpose that food distribs need restaurants, and clothing manufacturers need shopping centers, etc. etc. It's called a supply chain or a distribution channel and of course there's mark up at every level. It's a symbiotic relationship. One hand washes the other and you tinker with established chanells and relationships at great risk to all no matter what end of the stick they hold. Theatres provide a huge service for film companies far beyond the gross and rentals we pay. Big movies at the theatre translates into big money at the TV and Cable and pay per view and DVD sales, etc. etc. We are all part of a chain.

What's going to replace theatres? Nothing for the forseeable theatre. There hasn't even been a glimmer yet. Unless you count video gaming, DVD, TV, Cable, Pay per view, Tivo, the internet, satelite, and who knows what else.

Rather than simply suggesting ideas like this I always encourage people to put their money where their mouth is: start it up. Build it and see if they will come. And all those people demanding popcorn and soda: tell them to pound sand.

Oh geez.... back to work.

---

Michael Hurley
Impresario

Well, I don't expect to start with first run movies. I figured I'd approach the publishers of indie movies and anime, since they don't get much of a theatrical run and are more agreeable to low-revenue public screenings. Other small-biz advisers I've spoken with also say I should start with niche movies. Again, part of my inspiration comes from anime convention screenings.

Mr. Siren,
No one here is trying to rain on your parade (as Barbara Streisand put it to song so memorably in "Funny Girl"); it is just that we hate to see anyone get burned by people who are often less than noble, as in the film industry. Maybe you are thick skinned enough to withstand getting brushed off or even laughed at by studios and banks, but if you were to invest your own painfully earned funds or those of friends and family, and lose, it might crush you. But if you can risk your own funds and know that you can withstand a complete loss without being crushed, then go ahead! More power to you.

It is only that those here speak from their own painful experience dealing with the system that exists, and knowing the cold, profits-first attitudes of the conglomerates that control the business world today. I feel that Mike is too optomistic as to the future of studios versus theatres, but then he has several such to keep running and we all hope he continues to succeed, but I agree with you that the future of traditional cinemas is dark and the options for them are few -- except perhaps for a few 'Showcase' cinemas near major cities. If DVDs and other things don't eventually cause 98% of the audience to stay home and profit the 'studios' that way, then maybe your business model will be the wave of the future, but it can be very risky for you to invest now in this day of transition to who-knows-what. The entrepreneurs you spoke of discerned niches they could develop because they were NOT dependent entirely upon someone else's product (film/video) as you would be, so their risk was much less -- that would not be the case for you! Best Wishes.

I intend to get my startup money from an angel investor. I've been told that banks only invest in established business models, which mine isn't. And I don't have enough money on my own to do this.

But those other entrepreneurs had plenty of their own overseers to deal with. Sam Walton at first was limited by the Ben Franklin company, from whom he franchised his stores. Apple today has to wrestle with the music labels and TV networks to get content for their iTunes store. Dell faces markups from Microsoft and Intel if Windows and Core Duos aren't in enough PCs. And then there's Blockbuster Video and Netflix. They've always had to deal with the movie publishers.

I'm sure I face many challenges ahead, probably many I don't yet think much about. But I think this shakeup in the theater biz will mainly help make my strange new ideas work. Even six years ago, studios and theaters were too content and successful for my ideas to work.

[This message has been edited by Dean_Siren (edited November 14, 2006).]

<BLOCKQUOTE><font size="1" face="Verdana, Arial, helvetica">quote:</font><HR>Originally posted by Dean_Siren:
Well, I don't expect to start with first run movies. I figured I'd approach the publishers of indie movies and anime, since they don't get much of a theatrical run and are more agreeable to low-revenue public screenings.<HR></BLOCKQUOTE>

Please please check to see if you have an indie orientated audience before setting up.Do a big survey of people in your area. The Indie market is difficult as most people want main stream films with big stars..If your area can support it then go for it.
Second run films are barely worth bothering with these days because of the short time frame to dvd. People who don't see a movie first run tend to just wait that 3 months and get it on dvd. I know second run places have been sucessful, but its a lot harder.

I know this post hasn't been commented on in a while but my only 2 cents replies to your comment that companies that sell TV's like Best Buy don't sell food and they still make plenty of profit. Those companies (I work for Best Buy so we'll focus there) have 10 times the margin on their TVs than theaters have on their ticket sales. Theaters survive on their food sales because that's the golden goose. It's what drives the margin, tickets are just what drvies the sales of the food.

And yeah, people do have all kinds of home entertainment more widely available to them than ever before, but for many people still, nothing compares to the big screen, in a room with more controlled lighting, sound quality, and especially the sociability factor. It's a lot harder to get a bunch of friends to come over, sit down, and watch a movie ...comfortably... seated in your living room.

Oh, and btw, we (Best Buy) do sell pop and candy and such, but make no profit on them lol.