Theater Owner Begs Hollywood Not To Give Consumers What They Want

from the can't-compete,-huh? dept

It's always kind of amusing when you see a business owner make obviously false statements as they try to justify why everyone should be worse off, just so they don't have to adapt their business model. It's especially amusing in the movie theater business, where we keep seeing theater owners complain about shortening windows between theatrical release, and when a movie can be viewed at home. As we've noted over and over again, every time a movie theater executive makes such a complaint, they are effectively admitting that they're too clueless on how to compete. Even though they have huge theaters with great sound systems and seating, they're admitting that they either don't want to or simply cannot compete. If that's really the case, they don't deserve to be in business.

RickMan points us to the latest such example, written for the Hollywood Reporter by Gregory Marcus, the CEO of Marcus Theatres, where he runs through a whole series of fallacies in trying to convince Hollywood not to keep shortening film windows. Let's pick through a few:
I just saw Johnny Depp at the grocery store.

Dressed as the Mad Hatter, he was in the Redbox machine available for $1. All I could think was what a shame it was that this wonderful movie was being so terribly devalued.
First of all, it's not devalued. Price and value are not the same thing, and it's economically wrong to claim they are the same. Furthermore, it's not "devaluing" something if the market is pricing it more efficiently and accurately. Just because one part of the market artificially inflated the price through exclusionary and anti-competitive practices, don't blame the market for more accurately pricing things.
Windowed release patterns are brilliant. Release a movie to different outlets over time so it can be sold to the same person multiple times. First see it in the theater, then buy or rent it, then catch it on cable or TV. Shorten the window and risk losing the ability to sell the product multiple times.
When trying to convince the world that your system is better, it helps not to flat out admit that the system you like is the one that forces people to pay multiple times for the same thing. The reason windows are collapsing is because more and more people realize such windows are ridiculous and make little sense. And when that happens, they start routing around the legal ways of getting the content, and get it through unauthorized channels.

The real problem here, of course, is that Marcus is either too afraid or too confused to know how to compete. Even if all movies were released -- in an authorized fashion -- for free, I would bet that a smart theater owner could thrive. That's because a smart theater owner would recognize that people go out to the movies for the overall social experience. The better the experience, the better you can do. Everyone can always eat dinner for less money at home, but they go out to eat at restaurants for the experience and the ambiance and the fact that others do the work and take care of the details. The same is true for movies as well. But Marcus, here, is suggesting that his theaters are run so poorly that no one would want to come. That seems to be a problem for the board of directors of Marcus Theaters in reviewing the guy who is in charge of their strategy. It's got nothing to do with release windows.
Please don't say, "We need to give the consumer what he wants," because the historical implication was, "or your competitor will provide it," not "or the customer will steal it." The proper response cannot be to cede to the thieves' demands and earn less along the way.
If you don't realize that file sharing sites are competitors, you're never going to be able to adapt.
If I were the studio execs, I would focus on catching and punishing thieves and look for less destructive opportunities to grow my business.
Yeah, because so far, that's only served to draw more attention to file sharing and increase the rate at which it's done.

I'm sure it sucks to be in Marcus' position, where the old artificial scarcity he milked for profits is shrinking ever so slightly. I'm sure it must be tough to have to adapt and give people more reasons to actually come out to the theater. But his arguments make no sense for anyone other than himself. Shortening windows (or getting rid of them completely) provides more benefits to the consumers, and it's a move that the studios should have done long ago. It gives them more bang for the buck in terms of their marketing efforts, and it better segments the market. That theaters are unwilling to adapt to compete in a changing market is a problem for those theater owners alone.

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  1. icon
    Mikael (profile), 27 Jul 2010 @ 10:00pm

    Re: never again

    They don't want you bringing in your own food for a variety of reasons. The main reason is that they make almost no money on the ticket prices. They make the majority of their revenue on concessions. I used to work at a Rave Motion Pictures theater as a supervisor and a projectionist. I was told that for a $9 ticket they maybe get $0.30 of it. Ever wonder why you're not allowed to uses passes or discount tickets for the first two weeks of a movie release? It's because the theater has to make back what they paid to show the movie in the first place, and then provide a profit to the movie company that provided the film.

    The Rave theaters are pretty good, but could be better and are only getting worse. I was one of the first employees of the one I worked at and it was the best theater I had been to in a long time. The two biggest theaters in it were 400 seats, thick cushioned chairs with padded arm rests, tiered seating (never staring at the back of someone's head), and at least 2+ feet of leg room. The concession prices weren't that bad with combos and free refills on the large drinks and popcorn. They used hot cheese on the nachos and took zero shortcuts with any of the food.'s a different story. They raised the ticket prices without giving anything "extra" to justify the price raise. They stopped using fresh, hot cheese on the nachos in favor or pre-packaged cheese cups which makes a huge difference if you love your nachos. They started to sell pizza slices and other foods like chicken strips which are really no more than very over priced quick cooked finger foods that suck. I gave those a shot and was very disappointed. The employees aren't that great anymore and the ushers don't really try to keep "disturbances" down during movies.

    When I worked there I cared about my job and making sure people enjoyed their movie, which meant that I made sure people causing problems were promptly kicked out. Anyone under 17 without an adult in an R rated movie was kicked out. People don't understand that theaters get fined for that. They also get fined if someone pirates a movie in one of their theaters. They have "signatures" in the movie that are detectable even in a video recorded version that identify where the movie was recorded. This is why if you come in with a backpack you are probably going to be thoroughly searched.

    I haven't been to a RMP theater in a long time because I now go to the Movie Tavern chain that's around here. The particular one I go to was made from an older theater so it's not as fancy as the newest ones, but it's still pretty damn good. The evening movie tickets were $6, but when they added all digital projectors they raised it to $7 which is still pretty good. You have a bar in front of your seats in the theater to set your food/drinks/feet on during the movie. You can order your food before going into the theater and they bring it to you. For just a little more money you can go to one of the newer Movie Taverns and be seated in nice big leather seats, have someone come to your seat to take your order, and even call someone during the movie (via call button at your seat) to come take your order if you want something else so you don't even have to get up. The only time I really drink there though is when I'm with a group of friends since they have a discounted price on a 5 bottle bucket of beer lol

    Oh and after 6pm there is NO one under 17 allowed in the theater without a parent. Ids are checked and it's enforced as well.

    Even if a movie was on DVD I would still end up going to at least a Movie Tavern to see it. The ticket prices aren't bad at all and the food is worth it's price too. Plus, I don't have to worry about making any of the food myself :D

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