Donald W. Reynolds National Center For Business Journalism

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Covering the business of movie theaters

March 11, 2019

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boxes of popcorn at a movie theater
Movie viewers have a choice between movie theaters, streaming services, and other entertainment options. Here are some questions to consider in your coverage. (Photo by Pixabay via Pexels, CCO License)

Netflix is investing heavily in video content, and it reported over the holidays that “Bird Box” was its biggest streaming success to date. Amazon and other streaming services are hot on its heels. Many people have traditionally gone to movie theaters over the holidays, so are theaters having to adapt to compete with streaming or other entertainment options?

National Association of Theater Owners (NATO, a trade organization for movie theater owners) president John Fithian doesn’t see streaming as a threat, according to a Playlist article published last spring. NATO reports that U.S. and Canadian box offices grossed $11.8 billion last year.

According to The Numbers, a movie industry data and research service run by Nash Information Services, U.S. movie theaters sold 1.2 billion tickets (the lowest number since 1995) in 2017, but theater attendance increased to 1.3 billion tickets sold last year. Meanwhile, the American Cinematographer looks at key trends of 2018.

Also worth noting: although movie subscription service MoviePass is struggling to survive, some movie theaters have introduced or are testing similar services of their own (for instance, Alamo Drafthouse and AMC’s Stubs A*List).

Here’s a look at questions to consider in your coverage of movie theaters.

What are the competitors to movie theaters?

Tim Richards, CEO of U.K. movie theater chain Vue Cinemas, reportedly told CNBC that “our competition is not Netflix. It’s not the internet. It is sporting events, it is bowling, it is nightclubs.” What other the popular entertainment destinations for families, couples or groups of friends in your area? How do the ticket prices compare? Are movie theaters in your area partnering with local restaurants or other businesses to offer customers dinner and movie deals?

How are local movie theaters differentiating themselves?

Streaming doesn’t offer the immersive experience of seeing a movie on the big screen, so are movie theaters in your area playing up this fact? Are they beefing up customer loyalty programs or adding special events like sing-alongs, talk-back sessions or sensory friendly screenings (for people with autism and other sensory processing issues)?

How else do movie theaters make money?

Aside from selling individual tickets, movie theaters can also cash in on birthday parties or corporate events, concessions (in some cases, limited-edition menu items inspired by a specific movie), and gift card sales. Are they tapping into these or other revenue streams? And if you can get concrete numbers, how do the profit margins compare for each revenue stream?

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