The Power Of Small

 

 

One Saturday while my mother was visiting her father in hospital, my Dad took myself and my siblings to see a performance of clowns which was to take place close to the hospitals. Being in the early 70’s it was kind of a hippy run performance. The storefront was colorful and the performers were very intent on being clowns. Out of the corner of my eye, in the midst of the doting parents and the exuberant children sat an older man with his son who appeared to be in his late 20’s. They were out of place. The man’s son was having the time of his life and the older man sat patiently giving his son joy by taking him to this children’s show. My attention turned away from the clowns and I watched the interaction between the man and his son. The room was pandemonium, but here sat a man who clearly loved his challenged son and abandoned his needs for the needs of his child.

The show came to an end and I quite frankly was one relieved 10 year old. The performers passed out a red balloon tied to a plastic rod to each child. Being a child I received one. I turned and looked at the man and his son. The son had pain etched on his face because he being a physical adult did not receive a balloon. The father seeing his son’s distress was in pain as well. My Dad witnessing this scene immediately turned to me and asked if he could give my balloon to the son. I readily agreed which provided immense relief…heaven help me if one of the guys saw me walking down the street carrying a red balloon.

My Dad took the balloon from my hand and walked over to where the man and the son were. The son saw my Dad approaching and his face exploded with joy. He was given my red balloon. He immediately asked my Dad was he the clown in the show. My Dad, a proud and educated man in an act of singular empathy for the father, said yes. The father looked and said thank you, the pain dissipating from his face. Now satisfied, the son and the father left, the son’s face still beaming and talking about the show and his now prized treasure, the red balloon. Joy and probably a bit of self esteem was created because he was treated equally and he received a red balloon. That kindness and compassion shown by my Dad haunts me still today. The gift was small but to the son and the father it was the world. His day was complete because he had been included. My Dad does not remember the event but it will be with me forever. Pain had turned to joy and I was taught probably one of the greatest lessons I would ever learn. It is in the small where real change exists, it is in the small where we can effect a lasting and permanent effect in a positive way, it is in the small where the foundation of any relationship or economy lives. It is in the simple and the small where true change occurs. As an aside it also showed me what true heroism was, and provided me with a hero who still endures to this day, my Dad.

In early 70’s Universal Ned Tanen inspired by the success of Easy Rider was tasked to create a stream of low budget films to directly appeal to the youth audience. Easy Rider was released by Columbia Pictures on July 14, 1969, grossing $60 million worldwide from a filming budget of no more than $400,000. Hollywood know that young audiences hungered for a new kind of cinematic experience, an experience that Ned Tanen was going to give them…..at a price.

Emerging director George Lucas, after a mis-step with his first film THX 1138 spent the rest of 1971 and early 1972 trying to raise financing for the American Graffiti script. During this time, Metro-Goldwyn-Mayer, Paramount Pictures, 20th Century Fox and Columbia Pictures all rejected American Graffiti , a tale of the Americana and the loss of innocence.

Lucas and producer Gary Kurtz took the script to American International Pictures, who expressed interest, but ultimately believed American Graffiti was not violent or sexual enough for the studio’s standards, hallmarks of that independent studio.. Lucas and Kurtz eventually found favor at Universal Pictures with Ned Tanen, who allowed Lucas total artistic control and the right of final cut privilege on the condition that he make American Graffiti on a strict, low budget. American Graffiti was a youth centered movie that Tanen was looking for dripping with Rock and Roll and innocence. Shooting began on June 26th, 1972 in San Rafael and Petaluma California.

Set in 1962, in an America still making a transition from Eisenhower to Kennedy. American Graffiti evokes that era of American history so effectively that one is filled with both nostalgia and a sometimes regret of the loss of what was. George Lucas and his co-writers crafted a movie so precise in its recreation of that time, but at the same time filled it with enough universal truths to make it accessible to all. The 60’s are distilled so perfectly into this movie, the language , the consuming car culture, the fads, the hoods, sock hops, burgers, rock ‘n’ roll and it ether based narrator, Wolfman Jack.

The film opens at Mel’s Drive-in – Burger City – where the four main characters gather to share this last night together. Steve, the clean cut Class President (played by Opie from the Andy Griffith Show, Ron Howard and now prolific director), is preparing to leave the next morning for a college in the east. His friend Curt ( played by Richard Dreyfuss), the group’s intellectual, whose greatest ambition is to shake President Kennedy’s hand, is scheduled to go with him. But, he’s uncertain if he wants to or should give up one perfectly good life for the unknown half a world away. Terry ( played by Charlie Martin Smith), their slightly younger, pimpled, Vespa riding cohort inherits responsibility for Steve’s magnificent ‘58 Chevrolet, Teryr is a cinematic surrogate for the director himself, and John Milner,(played by Paul Lemat) the high school dropout, drag-racing champ and local legend, stands to be left behind by yet another generation of friends.

Each one is then swept into the adventures of the night. Encounters with holdup men, cops, carhops, a local street gang called the Pharaohs and racing challenges await them together and separately. We are taken to a high school prom at which Herbie & the Heartbeats (played by Flash Cadillac and the Continental Kids) play the hits of the day, to the local necking spot, up and down city streets and finally to the site of the near-tragic race. They are accompanied by girlfriends and a dream girl.

The characters on screen are each fully realized. Unlike most films attempting to touch on so many details of a particular period, one grows to accept and love each character. None is played too broadly for the sake of convenience. The audience can believe everyone; a beautiful accomplishment in itself in these days when technical gimmickry so often obliterates the essential human element in movies. It is the small in the development of the characters that rings so true.

American Graffiti is consistently brilliant throughout. Lucas’ directorial touch is incredibly light, yet loving, unlike the rather heavy handed posturing he brought to the second installment of the Star Wars saga.

American Graffiti reaches it’s height in the aftermath of the big drag race. John is challenged and wins by an almost fatal default (against Harrison Ford no less) but he realizes his time as champ is finally coming to an end. Steve decides to remain in town with Laurie never to reach his potential, Terry grows up a bit and Curt realizes he must go. All meet once again at the airport. Curt’s goodbyes poignant, saying good bye to his friends and to his innocence as he leaves his friends to their various fates and flies off into the blue sky.

It is simple, it is true and as a movie it is magnificent. For me American Graffiti is the best portrayal of what it was to be young and American, before the country lost itself in the mire of Vietnam and Watergate. At a January 1973 test screening attended by Universal executive Ned Tanen, the studio informed a stunned Lucas they wanted to re-edit his original cut of American Graffiti. A very angry Francis Ford Coppola sided with Lucas against Tanen and Universal, offering to “buy the film” from the studio and reimburse it for the $775,000 it had cost to make it.20th Century Fox and Paramount Pictures stepped up and made similar offers to Universal. Universal categorically refused these offers and told Lucas they planned to have an editor of their choosing re-edit the film.

When American Graffiti Producer Coppola’s The Godfather (1972) won the Academy Award for Best Picture in March 1973, Universal decided to back down from it demands on Lucas in order to placate an increasingly angry Coppola, and finally agreed to cut only three scenes from George Lucas’ cut, an encounter between Terry The Toad and a fast-talking car salesman, an argument between Steve and his former teacher at the sock hop, and an effort by Bob Falfa (played by Harrison Ford) to serenade Laurie with “Some Enchanted Evening”. The rights to the Rogers and Hammerstein hits also proved to be expensive. Universal and Ned Tanen decided that the film was fit for release only as a television movie. They were so very wrong.

A series of movie screening of American Graffiti were held for younger studio employees They went nuts, secretary’s and clerks were dancing in the aisles to the rock and roll soaked soundtrack.. These Universal employees who had seen the movie and loved it began a word of mouth campaign on it’s behalf. This pressure forced Tanen to drop the TV movie idea. Grudgingly Universal began arranging for a limited release in selected theaters in Los Angeles and New York. Universal chiefs Sidney Sheinberg and Lew Wasserman heard nothing but positive feedback that the movie had earned in LA and New York. Wasserman threw another 500K to his marketing department and amped up its promotion strategy for it. The movie was released in the United States on August 11, 1973 and became a sleeper hit.. The movie had cost only $1.27 million (equivalent to $7,430,056 in 2017) to both produce and to market, but produced worldwide box office gross revenues of more than $55 million (equivalent to $303,200,900 in 2017) . The movie still has a huge following in both Sweden and France.,

Universal reissued Graffiti in 1978 and earned an additional $63 million (equivalent to $236,378,571 in 2017), which brought the total revenue for the two releases to $118 million (equivalent to $442,740,816 in 2017). At the end of its theatrical run, American Graffiti had one of the greatest cost-to-profit ratios of a movie ever. It was the 13th-highest-grossing film of all time in 1977, and with adjustments for inflation, is currently ranked the 43rd highest. By the 1990s, American Graffiti had earned more than $200 million (equivalent to $374,630,667 in 2017) in box office gross and home video sales.

Fast forward to 2018. In today’s world of movie going American Graffiti would be hard pressed to get a 100 screen release. It is unlikely that it would have ever been green lighted to go into production. If made it would be lost in the jungle that is video on demand. With the burden’s of studio overhead and agents packaging fees, the budget would probably be in the area of 40 million. Marketing would entail another $25 million. So a total of $65 million would have to be expended as opposed to the cost of production and marketing that in 2017 would represented a $7 million dollar investment. They back story of American Graffiti is a really a story of what is intrinsically wrong with Hollywood and in its distribution of movies. They have completely lost the ability to comprehend how to deal with a small story driven movie. They are solely geared to handling the mega movie, the engorged special effects laden juggernauts. They have lost the idea of what Hollywood truly was and because of their mismanagement of the American cinematic tradition they are in danger of losing a whole industry.

It is now imperative that they re-learn the power of small. Small actions, small changes and small movies. It is time to remember the power of taking a common storied experience and celebrate it on the big screen. We need not to think of spectacle and bravado, and begin to go back to celebrate our common humanity. Hollywood is flying too close to the sun with wings held together by wax, and like Icarus they are doomed to come crashing to the ground. Move to the simple….move to the true. Re-introduce yourself to loving movies and re-introduce yourself to the power of the small.

Breaking Free, Breaking Away

 

Never be bullied into silence. Never allow yourself to be made a victim. Accept no one’s definition of your life, but define yourself.” –Tim Fields , British Anti-Bullying Activist

When I was a wee lad, I would often complain to my esteemed Mother that so and so was not playing nice with me. Frankly, I was a bit of a whiner….she would routinely come back with the same line, “If they are not being nice…then don’t play with them.” Simple, succinct, and to the point. It is a lesson that I now try to apply in both my professional and my personal life. Frankly, it’s a lesson that the motion picture exhibition industry really should take to heart. Let’s face it for probably the past decade the movies studios have been acting like neighborhood bullies intent on not interacting and conducting business in a mutually beneficial manner, but dominating every exhibitor they come in contact with. At one time these studios would work with you…but now, not a chance.

The culture of bullying has permeated the corporate culture of the studios, like the hallways of a middle school or the schoolyard, the studios have assumed the posture of corporate advancement by showing the other kids how they could push around someone who really compared to them has little or no power. The people who I remember being bullies in school ended up being bullies in later years and eventually, their behavior would create enough social push back and would be felled by the very sword that they wielded.

The problem is that if corporate bullying is accepted it spreads quickly and invades every aspect of the business. It eats at the integrity of a business ideal and erodes partnerships. I have recently read some of the comments made towards NATO by one of the heads of the major chains and frankly upon reflection, that executive in his actions betrayed himself to be a lowest form of bully. At a time when the industry is in crisis, instead of rallying his peers to the collective defense of the theatrical exhibition industry and achieving a goal of a stronger industry, this not so wise man was making statements eroding the validity and purpose of the main body for advocacy for the motion picture theatre.

In 2016 this executive called out the head of NATO for countering comments made by a FOX executive when he called the window demands of cinema owners “crazy”. The NATO head rightly defended that position. In a total breach of faith and collective good will, this exhibition executive calls out the NATO head in public and a with a show of deep bravado “dissociated his chain with the statements made by the NATO head. In doing so he fractured NATO and effectively neutered that organization at the bargaining table.

Here is the executive’s statement:

The theatrical window is a longstanding industry practice that has benefited studios, theaters and moviegoers. We all should tread lightly and be mindful that over the years, the film industry’s success is a direct result of a highly successful collaboration between film makers, distributors and exhibitors. Change should be taken only wisely. Even so, carefully considered reform is always worth evaluating in any number of areas. Accordingly, AMC is willing to work with Fox and our other studio partners to intelligently do what we can to help improve studio profitability and ensure that filmmakers continue to have the freedom to captivate moviegoers, all the while ensuring that the enormous investment by theater operators can continue to be prudently made and rewarded. This approach benefits studios, exhibitors and most importantly movie fans who delight in watching film as it was meant to be seen — on the big screen. Our aim is clear: Theaters across the continent continue to be superb guest-pleasing vehicles that incomparably showcase movie-making magic.

 We wish NATO had said only that in its statement, which we saw only after its public issuance. Instead, however, NATO’s statement was condescending and gratuitous in its affronts aimed at the CEO of 21st Century Fox. The unnecessary tone of NATO’s response is not consistent with AMC’s view about how business should be conducted. In the clearest possible language, all of us at AMC have nothing but the most profound respect and appreciation for all that James Murdoch, members of his family and his colleagues at Fox have done over decades to delight moviegoers the world over. May our partnership continue in this spirit for decades to come.

It was a blatant attempt at grandstanding and frankly a herculean amount of smooching of the nether regions. It was shameless and in its execution designed to cripple the voice of NATO. I believe it achieved that, and I think it is a deep shame. It was a deliberate act intended to curry favor with the studios, pure and simple.

Most effective organizations, corporate bodies, and families as a matter of effective policy is to always keep disagreements behind closed doors. In doing so they ensure solidarity and focus at least in the eyes of outside parties.

My Father, equally as wise as my Mother, would provide me with some keys words of advice, “It never costs you anything to be gracious,” and another gem “Be fair to yourself but after that make sure you are being fair to others.”

The independents by now should have realized that there is really no future to be aligned in any way to the major theatres chains. In fact I believe it has .become a detriment. I think now is the time for the independent theatre owner to declare both their independence and at the same time their interdependence on one another. It is time to look to forming a collective body which will meet the distinct needs and the distinct future that these independent theatres represent to the future of movie going. It is time to reject the culture of bullying.

Now that the Fox has been takeover by the Mouse, this executive’s sycophantic tome may have gone to waste.

In my experience the surest way to stop a bully in their tracks is a swift punch to the gut. I have a few ideas of how to achieve this.

First of all start listening to my Mother’s advice, “If they aren’t being nice then don’t play with them.”

Have a Happy and Independent New Year.

Things Change

 

 

There is not doubt that the business of motion picture exhibition is about to change,…again. I see it coming as audiences are starting to re-shape their perception of what is movie going and also frankly for what they are looking for in their own movie going experience. Audiences are subtlety abandoning the slick for the genuine, the studio driven for the community driven, and move to an elitist experience to a more collective experience.

This change is coming and it’s coming fast but this time it much different.

The movie business is always in flux, its one constant is change. The first public screening of movies were for movies that for the most part lasted no more than 20 minutes or one reel of motion picture film. The nickelodeon was the first type of indoor exhibition space dedicated to showing projected motion pictures. Usually set up in converted storefronts, these small, simple theaters charged five cents for admission and flourished from about 1905 to 1915.

Probably the first full fledged movie theatre was The Ouimetoscope. Inaugurated on January 1, 1906 at the corner of Saint Catherine and Montcalm Streets, in Montreal, Canada from a converted cabaret with 500 seats and a small screen, it was demolished to be replaced with a luxurious 1,200 seat movie palace that featured air conditioning. Thus began the reign of the movie palace.

The movies expanded from 20 minutes to what we now know as feature length. The Story of the Kelly Gang (1906, Australia) was the first dramatic feature film released (running at approximately 60 minutes). An earlier movie, The Corbett-Fitzsimmons Fight (1897, U.S.) is considered by some as the first documentary feature film (running time is 100 minutes). The first feature-length adaptation was of Victor Hugo’s Les Misérables (1909, U.S.).

In 1927 The Jazz Singer started the movies talking, in 1929 “On With The Show” filmed in two strip technicolor was the first color production in wide distribution. “The Big Trail” starring John Wayne teased audiences with the promise of widescreen movies. In September of 1952 “The Is Cinerama” was released. In 1953 studios began to develop their own strategy for moving into the world of widescreen pictures. Prior to spring of 1953 most movies were shot in 1:137 Aspect ratio also known as Academy. The Fox epic “The Robe” was filmed in both 2.66 (the new widescreen ratio) and 1.37.

Canada was the first country in the world to have a two-screen theater. The Elgin Theatre in Ottawa became the first venue to offer two film programs on different screens in 1957 when Canadian theater-owner Nat Taylor converted the dual screen theater into one capable of showing two different movies simultaneously. Taylor is credited by Canadian sources as the inventor of the multiplex or cineplex; he later founded the Cineplex Odeon Corporation, opening the 18-screen Toronto Eaton Centre Cineplex, the world’s largest at the time, in Toronto, Canada. In the United States, Stanley Durwood of American Multi-Cinema (now AMC Theatres) is credited as pioneering the multiplex in 1963 after realizing that he could operate several attached auditoriums with the same staff needed for one through careful management of the start times for each movie. Ward Parkway Center in Kansas City, Missouri had the first multiplex cinema in the United States.

Since the advent of the movies there have been as many as 80 unique audio formats. From Vivaphone to Vitaphone to Todd AO to Dolby Stereo to THX to Atmos, each promising to be bigger, better and more dramatic.

Flat floors were replaced with sloped floors, balconies were added and then removed or converted into other theatres. Sloped floors were replaced with stadium floors. Traditional Irwin style seats were replaced with rockers and now with recliners. At one time the average auditorium seating was 400 and now its close to 190.

On October 23, 1998, Digital Light Processing (DLP) projector technology was publicly demonstrated with the release of The Last Broadcast, the first feature-length movie, shot, edited and distributed digitally in conjunction with Texas Instruments, the movie was publicly demonstrated in five theaters across the United States (Philadelphia, Portland (Oregon), Minneapolis,Providence, and Orlando). In the United States, on June 18, 1999, Texas Instruments’ DLP Cinema projector technology was publicly demonstrated on two screens in Los Angeles and New York for the release of Lucasfilm’s Star Wars Episode I: The Phantom Menace. In Europe, on February 2, 2000, Texas Instruments’ DLP Cinema projector technology was publicly demonstrated on one screen in Paris for the release of Toy Story 2. The studios as a cost saving to themselves mandated the shift to digital. The embargo to growth that is the VPF was put into place. By June 2010, there were close to 16,000 digital cinema screens, By May 2016, 98.2% of the world’s cinema screens were now digitized.

The martial law like regime of the VPF’s came into being. 3D came and went for the 4th time….4D Cinema was introduced. IMAX was touted as the savior of cinema. Various schemes are being put forward for reserved seating in movie theaters. For decades now that has been the practice in Hong Kong but it is a totally different dynamic and a totally different population density.

Things change, often not for the better or with a manipulative motivation in mind, see VPF. What is constant the base product remains the same. A communal viewing experience. Often technology and changes takeaway the focus from the core product. Many claim that the demise of the theatre is coming due to the erosion of the exhibition windows. It’s more complex than that.

All those billions of dollars spent on improving the movie going experience come with an average ticket price that, adjusted for inflation, is lower than it was in 1976. Forget about the gross dollars, the number of admissions are declining and declining rapidly. That’s not good news. There are paradigm shifts occurring in sister industries,The top-rated television program in 2016 had nearly 27 percent fewer viewers than the top-rated program in 2004. Since 2004, the peak of home entertainment retail revenue, at $24.9 billion revenue has dropped 51.6 percent to $12.05 billion.

Netflix, who this year will make more movies than all the studios combined will see only a $100 million profit on $8 billion of revenue or 1.25% profit. That hamster is on a wheel that eventually will kill it. Amazon will endure because they have re-imagined a virtual mall and movies are just an anchor tenant..

I think there is about to be another shift in movie theatres, some forces driving this are;

The number of movie screens in America has more than doubled in the past thirty years. Our population has not doubled. This has laid the foundation of a false economy based on having theatres becoming anchor tenant of now failing malls. As goes the mall so goes the multiplex. I think the majors are being poorly led and they are always focusing on the sizzle and not the steak. Generation Z and Millennials just want the steak. Big chairs and chicken fingers are not going to consistently boost box office.

The foreign markets growth is being spurred on by local or regional movies, not Hollywood….not by a long shot. Chinese used Hollywood to seed its market and now their box office is being dominated by home grown productions as Hollywood looks in with its nosed pressed against the glass of restrictive trade barriers.

The number of movie tickets sold has remained remarkably flat – fluctuating within a 10% window for the past twenty years. Millennials and Gen Z market share are eroding quickly. The majority of movie-going is being done by folks who make it a habit to go to the movies, any movies. These are a group of people who are committed to and get much enjoyment by going to see movies on the big screen. It is important for any theatre to cultivate this group and grow it. The biggest tool for growing this group is not reclining seats, not chicken fingers…it is the perception of community and the perception of value.

So here are the changes that I think are about to take place which will re-shape the movie exhibition business.

Overstuffed chairs will be a passing fancy, as the mall economy slows to a halt and becomes victim to online retail, mall based theatres will be slowly choked out by their association with a dying mall. The majors will suffer the greatest impact and theatres will begin to shutter on a large scale. A serious Wall Street adjustment will take place for the stock of major chains and their ability to attract new monies will become challenged. A market void will come into play and independent theatres will have a window in which to win over new audiences.

Moviegoers as a result of the rise of Gen Z’s and Millennials will be seeking a truly genuine movie going experience. If the trends rising in Europe are any indication, moviegoers will begin the process of re-discovering the drive-in movie experience. Drive-ins will see an upswing as the retail need for land diminishes and for a period of time the day of the Drive-in will rise again.

There will be a rise in retro marketing, alongside the Drive-in the emerging market groups will start seeking a more genuine more authentic movie going experience. They will seek out the Cherry Bowl Drive-ins and The Historic Artcraft Theatres of the world. They will hunger for it. Retro showing of classic 80’s movies will start attracting a huge audience. This assumption is based what I am seeing take place in Britain and France.

Flowing from the last point is something that many of your reading this might find surprising. The on-demand nature of Netflix and Amazon are eroding the concept of day in date. Some theatres like The Historic Artcraft are building a repertory program that is totally changing the way we are thinking of exhibiting movies. When A decades old picture like Home Alone can out gross the latest Star Wars on a screen by screen comparison, a model is arsing that could really thwart studio machinations.

The days of streaming movies in the home for a $30 fee is coming and with Disney;’s latest business maneuvers is coming quickly. Initially I thought this concept inconceivable, but something changed. My son and I went to see the latest Star Wars installment in Regal theatre near me. Comfy seats, antiseptic theatre and the worst projection I had ever experienced. As I stood at the concession counter and realized that I had just spent $55 for the two of us….an epiphany it me…that $30 is not that far fetched as I might of thought.

Changed is coming and you must develop strategies in order to survive the change. There has always been a tremendous amount of change in this business. I think the quote that might provide the greatest value in going forward, is a line the the Breakspear play “The Tempest”. “What is past is prologue”…. Indeed

I am Curious MoviePass

 

 

 

Companies whose branding that is primarily red , if Netflix has shown us anything is something that should give the movie exhibition business cause to pause. When I first heard of MoviePass, I thought to myself that this was wacky. This does not make a lick of sense, see a movie every single day in theaters, paying only a monthly fee that in some markets is much cheaper than a single ticket. I thought why are they doing this…..what is the end game? At first it was a real paradox, then it hit me…..and then it hit hard.

MoviePass was trying to own the movie going community

At 1.5 million members/subscribers and climbing it is now apparent that they really plan to capture and control that key segment of this, the frequent movie goer. While the theatre owners get full price for the ticket, MoviePass is walking away with a boatload of data. Right now 3 percent of all domestic box office gets purchased through MoviePass, what is striking is that the number jumps to 10 percent when MoviePass pushes a movie. What is also fascinating is that MoviePass is already taking contracts to promote certain movies and these contracts are pretty darned lucrative.

It is projected by the end of summer 2018 that the number of subscribers to MoviePass could reach 4.5 million. If numbers hold, this means 15% of all box office could be attributed to MoviePass and if they promote the movie, 30% of all revenue can be attributed to MoviePass. This is significant, imagine what happens if MoviePass enjoys a NETFLIX like growth. Right now, NETFLIX has 53 million subscribers in the USA. If MoviePass gets one third of that number, it will be the most significant player in the market, at its peak MOVIE PASS could have impacted up to 90% of the domestic revenue. This is huge and this is a big game changer.

Last week during Sundance, MoviePass announced that it was entering the business of distribution. It went and acquired the thriller American Animals for distribution. For our business this is a game changer. Here we have a company that is taking lessons from the NETFLIX playbook and is building a distinct and vibrant movie going community. It will be able to target what movies its audience likes, what movies its audience dislikes and how their influencer programs can impact box office.

The studio should be quaking in their boots because here is a company that can wield great power over the box office and can effectively extricate downstream revenue from the studios in return for the promotion of a certain movie. It also has shown that it can nimbly move from movie payment system into movie studio. This level of vertical integration is something the studios have longed for for years. Here you have a data company who realized that there was an opportunity to build communities of moviegoers prior to that community making an collective decision about a movie.

To paraphrase McLuhan, the medium of MoviePass and the transactions it facilitates is going define movie going in a major way.

AMC is taking a stand against MoviePass. AMC realizes that MoviePass is major threat and a severe loss of market control. While AMC waves it’s arms at MoviePass, MoviePass in response has announced they intend to shift moviegoers away from AMC into other theatres. The problem is that MoviePass is essentially a debit card and it would be almost impossible to block those transaction at the theatre. The card is branded under Mastercard.The problem is that MoviePass is starting to look at reaching into concession revenue. This does not bode well.

MoviePass in a show of force has taken 10 AMC theatres out of the program. They claim that MoviePass represents 62% of those theatres revenue. This is war and it’s going to get bloody…very bloody AMC. This may be the final push for AMC and prompt a strategic withdrawal by WANDA DAILAN, majority owner of AMC Theatres.

In November 2017, MoviePass changed its terms of service to limit users’ ability to deactivate and reactivate the service at will, so they can’t limit their use to summers and the year-end holiday season. The company also offered an even more discounted rate if viewers were willing to pay upfront for a year. The bottom-line, through what amounts to a subsidy, MoviePass is taking pricing control out of theaters’ hands. That is just the start…it will soon take marketing control out of the studios hand. It will influence and demand apiece of the concession revenue, draw people to watch a movie at a certain theatre and in a particularly concerning turn of events, control the community that is attached to your theatre.

Supposedly MoviePass has assembled a war chest through its parent company, Helios and Matheson Analytics Inc. to exist for a period of time subsidizing America’s movie going experience. Cinemark is beginning to shape it’s own subscriber program, I strongly suggest that the Cinema Buying Group do the same for the independents. Only a strong alternative will thwart some of MoviePass’s plans.

There is something that I find troubling though, the majority owners of MoviePass is Helios and Matheson Analytics Inc., they build applications for major companies like Pfizer, MetLife, and Citibank. Their core business right now has 34 employees outside of MoviePass. It almost feels that they are building something for a third party, and building things for third parties is their business. My take on this is that a large part of this exercises is academic. If they do this to the movie exhibition business can they also do this for grocery stores. So I ask myself who could really use this business strategy and the resulting software back end to grow their business.

Netflix and Amazon have been going toe to toe to win the hearts and minds of the video on demand world. Netflix is winning (I don’t know why), Amazon is becoming very aggressive with moves such a producing a series of Lord Of The Rings. It strikes me as very smart for Amazon to acquire MoviePass, then bundle the service with Amazon Prime and have a bundled price for both video streaming and going to the movies. This would ally its self with Amazon’s wish to have a movie economy within its control which goes from cradle to grave. It is project that 80 million American households subscribe to to Amazon Prime. A bundling of MoviePass and Prime would allow members would be able to not only watch Amazon Prime movies online, but also watch newly release at movie theaters across the United States through MoviePass. It also would allow Amazon to firmly overtake Netflix and maybe even allow them to acquire AMC.

We are living in a time of great change and in many ways we are living in a time of war….streaming wars anyways.

Welcome to The ITA

Found in 2011, An association of independent theater owners and movie industry professionals, the ITA is an advocate for its members on a variety of issues. It represents theater owners who have nearly hundreds of screens, pop-ups mand drive-in locations across the country. For more information, visit www.ita-usa.com