On Jan. 27, well-known Hollywood director Steven Soderbergh and billionaires Todd Wagner and Mark Cuban will release the movie Bubble almost simultaneously to DVD, cable TV, and movie theaters. Is this the paradigm shift that kills the already-suffering movie theater industry?
In the late 1990s, the building boom that brought communities an abundance of multiscreen theaters ended badly. The number of screens grew more quickly than attendance, ultimately driving names like United Artists Theatres, Edwards Theatres, and Regal Cinemas to bankruptcy court. Today, those three names share a common owner: Regal Entertainment
Regal's formation led many to predict that concentrated ownership of theaters would give owners significant clout in dealing with movie studios. That hasn't happened. In fact, the theaters are losing clout. The total domestic box-office gross fell to $8.8 billion last year, the first sub-$9 billion year since 2002.
An Associated Press/America Online poll last June showed that 75% of respondents preferred to view a movie in their own home. Why not? Best Buy
It may be coincidence, but the theater operators are making some bold moves. In December, CarmikeCinemas
Movie studios like Disney
The low-budget movie Bubble has the financial support to realistically explore a new movie distribution paradigm. The only theaters that show the movie, though, will be those owned jointly by its two billionaire backers. The major theater chains are not interested.
Bubble won't burst your local theater franchise just yet. The reality, though, is that the gap between a movie's theatrical release and its arrival on cable and DVD is narrowing. If the theaters' investments in digital projection and other content work well, they might be able to hold onto what appears to be a declining customer base. If not, even more people may stop asking "What's playing at the movies?" in favor of "What's new at home tonight?"
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Fool contributor W.D. Crotty owns shares in Disney and frequently visits the local Carmike Cinema to escape life's realities. Click here to see The Motley Fool's disclosure policy.