Over-The-Top, TV Everywhere Threaten Movie Theaters

by , Mar 15, 2012, 3:38 PM
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IMAX, the movie distribution company with 3D projection and other cool technology, is set to launch a marketing campaign with an “IMAX is Believing” tag. The thrust is IMAX viewing is more immersive, more a “first-person experience, than a third-person” one, said CEO Rich Gelfond.

If you want to see an otherworldly character, go standard. “If you want to go to a movie and become a superhero or get in a fight, then you go to IMAX,” Gelfond said.

The coming campaign, mostly online, is an outgrowth of a test conducted with the latest “Mission Impossible” film last year. IMAX spent about $1 million and took over the YouTube home page, collecting 16 million impressions and giving it a lift in the social-media sphere.

Gelfond, who spoke at an event Thursday, thinks people still go to the theater and ask what’s the difference between the regular version and IMAX display, so the new marketing push could tip the scales.

That may work, but that’s predicated on people going to the movies, which is happening less and less. And that could continue to persuade studios to be more judicious in their R&D investment. The recent flop of Disney’s heavily promoted “John Carter” isn’t likely to help.

Theater owners continue to be concerned about Hollywood’s fascination with online, on-demand viewing. Hardly a day goes by without an announcement about a distribution entity launching a service or acquiring more content. Netflix, Amazon, Comcast, Verizon, Redbox, Hulu have had a heavy presence on the press release circuit – all beaming about streaming.

“The studios have to make a decision,” said Greg Marcus, CEO of the country’s sixth-largest theater chain. “Do they want a movie theater business? And if they want it -- (and) I think they do, it’s a $10 billion piece of the pie -- we have to be able earn a return on our investment … we’re not cleaning up here …

"If they want to move customers from our channel to another channel, they’re going to cause problems and at some point they’ll cause an irreparable problem.”

“It’s getting too easy for the customer to say, ‘You know what, I’ll catch that on video,’” he added.

But as much as Marcus and his fellow operators would like to persuade studios to lengthen release windows and engage in other tactics to strengthen their business, even if Hollywood becomes more interested, it may be a losing battle.

Over-the-top TV options and TV Everywhere could be the biggest threats the movie business has ever faced. The quality of shows from AMC to CBS to HBO has become so engaging and chances to watch cheaply with a simple click-and-play has become so enticing, that a trip to the multiplex seems increasingly unappealing. (As Marcus noted “Harry Potter” and blockbuster animated films should still attract families.)

The new pastime is sitting on the couch and watching episode after episode of “Mad Men” on Netflix or “Boardwalk Empire” on HBO Go. How many spent New Year’s Day with a hangover not watching “The Hangover,” but gorging on season one of “Downton Abbey” or engaging in other catch-up viewing?

“We have always competed with technology in the home,” said Amy Miles, CEO of Regal Entertainment, the country's largest theater chain. “Today is not any different than it was, say, 20 years ago when you were seeing a lot of improvements in technology in the home … over the past couple years, the great news is a lot more of that is happening in the theater.”

Theaters have the captivating big screen and are going all digital and offering “premium” experiences. Yes, the iPad is small, but it's a pretty bright, crisp screen. Hooking up the computer to the massive HD screen isn’t that tough and connected TVs, with the easy access to online streaming services, are gaining scale.

And it’s hard to forget comments made a decade ago by WB founder Jamie Kellner. If memory serves, he mentioned how his cable was out in Santa Barbara, but he still had a great time watching comedy on some fuzzy-ish, broadcast-only connection.

The content’s the thing. Is a laptop that bad?

Netflix, which built its business mailing film DVDs, is betting its future on TV -- be it original serial dramas or loads of back episodes of TV hits (or even flops). Amazon looks to be doing the same. Both have big money to offer Hollywood.

So, with that bounty available and consumer behavior changing, what’s to stop a Warner Bros. or Disney from making a corporate decision to cut investment in film and shift it to TV production?

And, what about those ticket prices? Miles of Regal Entertainment said two-thirds of its patrons spent $10 or less last year to view a film. “You probably have a skewed perspective on ticket prices” if you live in certain urban markets, she said.

But, a Netflix subscription or getting TV Everywhere for free with cable service seem like the type of value that will continue to trouble theater circuits. That may be amplified with gas at $4 a gallon -- which is half what Netflix costs.

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