According to Rentrak, which analyzes trends in the entertainment industry, U.S. movie theater attendance fell 6% last year to its lowest level since 1995. Box office gross revenue fell 5.2%, to $10.3 billion, over the same period. Streamers may be stealing time from moviehouses, and the latter are turning to IMAX (NYSE:IMAX) to help turn the tide.
Some industry bigwigs have been predicting this for a while. Two years ago, legendary directors Steven Spielberg and George Lucas predicted seismic shifts in how movies are distributed. Spielberg said we'd see theaters charge big premiums for blockbuster fare in order to subsidize lower-trafficked films. Lucas argued that theaters would mirror Broadway and drastically increase prices while keeping known winners in the cineplex much longer than they stay now. (Generally 10-20 weeks, at most.)
While it's too early to say who's right in this debate, there's growing evidence that the movie distribution business is changing. But will it kill the cineplex in the process? Only if the blockbuster goes away.
Bigger benefits when visiting the big screen
Most chain operators see the future as Spielberg and Lucas do. For example, AMC Entertainment is in the midst of spending $600 million to retrofit theaters with couch seating. Others allow for seat reservations and have bars serving alcohol. Still others, such as the privately held Alamo Drafthouse, allow for in-seat dining on chef-prepared fare, turning churn-and-turn cineplexes into premium moviehouses.
Big studios are also getting behind the thesis, none more so than Disney. Filmmaker J.J. Abrams has made no secret of his interest in putting widescreen IMAX shots into Star Wars: Episode VII-The Force Awakens. Next year's Captain America: Civil War includes 15 minutes of IMAX footage while brothers Anthony and Joe Russo will be filming both installments of the Avengers: Infinity War two-parter (due in 2018 and 2019, respectively) in 100% IMAX. In each case, audiences will be asked to pay a premium to experience these movies as intended.
Welcome to the billion-dollar club
We should also see more IMAX-friendly, billion-dollar blockbusters over the next five years. According to Box Office Mojo, 21 films have grossed over $1 billion in worldwide ticket sales. Of those, 14 have screened in the last five years. Common sense says that we'll see the trend continue, especially now that Jurassic World has joined the billion-dollar club.
The dino drama set a new opening weekend record, grossing $208.8 million in the U.S. and another $315.6 million abroad. Previous recordholders include Marvel's The Avengers ($207.4 million domestic) and Harry Potter and the Deathly Hallows, Part 2 ($314 million internationally). IMAX theaters played a huge role in Jurassic World's record performance, contributing $44.2 million in worldwide grosses from just 363 screens.
The message? Even if audience traffic isn't what it was, plenty of diehards show up to support blockbuster fare. Remaking movie theaters to accommodate these deep-pocketed consumers -- and then charging a premium for the privilege -- only makes sense, which is good news for IMAX.
In the meantime, just as Netflix has made anytime-anywhere TV a reality, blockbuster marketing and fear of Internet spoilers has turned opening weekend into an event of its own. Audiences set aside time and money to make sure they don't miss out, just as those of us who grew up in the 80's knew when to be in front of the TV to catch our "primetime" favorites. Appointment TV has given way to appointment movies.
For the cineplexes that make their destinations worth the wait -- supplying a wide-screen experience in a roomy setting -- the profit is there for the taking.