These are dark days for movie theater chains. The 12 highest-grossing films took in a mere $51.5 million in domestic ticket sales over the Labor Day weekend, the worst box-office tally during the holiday weekend since 2000. The crummy showing comes a week after multiplex operators had their worst weekend in more than 15 years.
There are a lot of things working against the industry these days. High-definition TVs keep getting cheaper, improving the value proposition of staying home. Streaming services keep growing their catalogs with compelling content. Studios are also narrowing release windows, trying to make up for the lack of ticket and DVD sales by offering up their content digitally while it's still fresh in the minds of consumers. You also have the decaying state of retail where many theaters are located. If folks are shopping online, they don't need to be at the mall, making it more burdensome to plan a trip to the movies.
Wall Street sees the writing on the red curtain-covered wall. Leading multiplex operator AMC Entertainment (NYSE:AMC) has seen its stock plunge 57% this year. IMAX (NYSE:IMAX) -- the provider of premium-priced enhanced screenings -- has taken a 37% hit in 2017. Investors seem to think the theater house is on borrowed time, but it doesn't have to be that way. The benefits of the shift to digital projection systems and making a night at the movies more of an experience are the keys to saving celluloid exhibitors.
Digital projectors offer flexibility
The big push a decade ago was for multiplex operators to switch out their systems from old-school reel projectors to digital platforms. It was a win-win, as studios didn't have to ship out costly film reels, and theater operators didn't have to deal with the shortcomings of physical reels. A big selling point in going digital is that multiplex operators can offer more varied content, but right now, the industry's just scratching the surface.
Theater operators have turned to live events. Screens have been set aside for live broadcasts of WrestleMania, operas, and UFC championships. The boxing bout between Floyd Mayweather Jr. and Conor McGregor rang up $2.6 million in ticket sales through 532 screens two weeks ago, an average of nearly $5,000 for the fight that would've topped several packed screenings of a traditional release.
We're just getting started. Digital delivery opens the door for more more content, but also for enhanced projections that change over time to generate repeat viewings of hot releases. There's no reason subsequent screenings can't offer alternate endings or additional footage, extending the shelf life of blockbusters.
Survivors will become one-stop entertainment shops
This brutal summer isn't going away anytime soon. Analysts see revenue and earnings at IMAX sliding for all of 2017, and that's with the benefit of screen expansion for the cinematic super-sizer overseas. AMC Entertainment is trying to slay the MoviePass dragon, but the killer is already inside the movie house. A night at the movies needs to be more special, and the industry is taking small steps in that direction.
If you haven't been into an AMC theater in some time, you may have missed its transformation. Many of its locations now offer pseudo-gourmet food offerings and even a bar with film-inspired specialty cocktails. We're seeing more chains embrace full-service dining menus where orders are delivered to your seat.
With both restaurants and theaters struggling to bring back the "dinner and a movie" outing, we're seeing multiplex operators try to offer it all. There will be initial hiccups, of course. Movie houses can't merely phone it in when it comes to quality, and they obviously can't command the same kind of mark-ups that they do on concessions. However, making a trip out to the movies seem like more of an event is the key to redefining the experience. The industry is competing against the tempting notion of binge-viewing at home and ordering in food -- two things that get better and easier with every passing quarter -- and multiplex operators that want to live need to raise the bar before pallbearers do.