How to Save Movie Theaters
So what are theaters to do to survive? With hardcore movie enthusiasts staying home for their nice home theater, and the people in the middle staying home because the movies that are coming out stink - theaters are drying up.
Lets consider their options. They could take the anti-customer route (it seems to be working for the MPAA/RIAA). First, they could raise prices - there is a segment who will see movies no matter the cost. Second, they could have more advertising - more crappy trailers & ads they force you to sit through. Maybe even advertise on the movie itself - see the hero reach for a Coke in "King Kong, brought to you by Microsoft". For obvious reasons these are terrible ideas - the segment that will see movies no matter what is far too small. People resent being advertised to - our time is precious, if you waste it we won't come back. Surprisingly, until now this is largely what theaters have done - more ads and higher prices (for tickets and snacks).
The other option is the pro-customer route. They could improve the experience. Offer nicer amenities - softer seats, more leg room, reserved seating, larger screens, lower volumes (anyone else's ears ring after a movie?), no more ads, cheaper snacks, or better snacks (a theater near me lets you take any food you bought from a nearby restaurant into the movie). Certainly this will eat at profit margins, but it seems losing customers is doing the same. Optionally they could lower prices and offer the same amenities. That is the idea for the $1 theaters you can still occasionally find.
Theaters could price discriminate - $15 for King Kong but only $5 for Benchwarmers (and only $2 for Silent Hill). The film industries long standing resistance against this has been that it signals to customers what movie is garbage and what movie is good. So what? Don't critics, rottentomatos and a dozen other sources already do that? If that is really a problem, just scale prices to cost of production - films that cost $100 million to make, cost $15 to get in, those that cost $10 million, cost $5.
There is a more clever type of price discrimination they could also use - charge based on where you sit in the theater. The best seats cost $12, the worst cost $5. I think this would be rather clever if it was enforceable, who would take a date to the $5 seats? You could easily see who is a cheapskate by where they sit, and that might be enough incentive to buy the more expensive seats. Of course they could bill this as - "Now - get whatever seat you want, no lines!" so people don't think they are just getting bilked.
Another type of price discrimination could be declining prices. When a movie premiers, that first weekend charge $12, two weeks later charge $10, and so on until the movie gets pulled.
None of these ideas are revolutionary. None are totally infeasible. But other than lousy movies and home theaters, what is driving this shift away from public theaters? Here is my opinion -
When the printing press came out, the churches freaked out - why go to church when you can have the bible at home?
When the player piano came out, musicians freaked out - why go to a real concert when you can have a concert in any bar?
When the radio came out, musicians freaked out - why buy music when you have it sent to you for free?
When the internet became popular, retail stores freaked out - why go to a store to buy something when you can shop from home?
When p2p came out, the RIAA freaked out - why buy music when you can get it for free?
Essentially this is the same thing.
Now that home theaters are becoming more and more common, movie theaters are freaking out - why go to the theater for $10 when you can stay home for $5 (plus a large initial investment).
But, people still go to church, concerts, they still go to stores and buy music and they'll still go to theaters. Theaters are only losing a bit of their movie goers, not everyone wants to wait 6 months to see a movie and fewer still have nice home theaters to watch them in.
I think this is just a push towards the long tail. The long tail just means that the mainstream super-hit is becoming less of a money maker and the movie/book/song way down on the distribution is becoming more valuable. Movie megahits do seem to be in bad shape - nothing has come out worth watching since Christmas with the possible exception of V for Vendetta (which I've not seen). Last year there wasn't much either, the children in Narnia were infuriating, Cinderella Man was campy, Batman Begins was hokey - there were some good ones, but not many.
To survive, I think movie theaters are going to start offering good independent movies. Some of independent movies have already done well when put in theaters - Blair Witch, Big Fat Greek Wedding, Life is Beautiful. If there was more financial incentive to make independent movies, we might get more high quality ones. There are already great independent movies being made, recently I saw and liked - "Paradise Now" and "Everything is Illuminated." I've heard great things about "Good Night and Good Luck." "Eternal Sunshine and the Spotless Mind" was another great pseudo-independent movie. Good independent movies are out there, and if more theaters started billing them, there would only be more created.
I think this is one of the few ways to stop the movie industry from its oncoming death spiral. Currently, the movie industry makes more than 70% of their revenues in DVD sales and other after-theater releases. But movies are getting costlier and costlier to make, and they are marketing to an increasingly fragmented audience. One who has to chose between alternatives that are getting better and better (which the exception of TV) - while movies seem to be getting worse. Cheaper to make movies with directors who are more visionary and have more control, sounds like a winning combination to me.
There was a great independent theater near where I used to live, if I'm right about the push to the long tail, it won't be suffering as badly as the mainstream theaters. I don't know how they are doing, but they're still around, and that is encouraging.