Theater Owners: 3 Ways to Thrive in the Age of Digital Distribution

With streaming services offering cheaper, easier, and more convenient ways to consume content, movie theaters are struggling to compete for Americans’ entertainment time (and dollar). As a soon to be graduate of Northwestern University with a strong interest in the changing media landscape, I have found two articles highlighting some of the trends in movie distribution and attendance.

The first of these articles, Can Netflix Have It Both Ways With Its Planned Purchase of the Egyptian Theatre?, was written by Matt Donnelly for Variety. As you can guess by the name, the article covers Netflix’s possible acquisition of one of Hollywood’s landmark movie theaters, The Egyptian. As Donnelly explains, this proposed purchase is just one of the latest developments in the streaming giant’s increasingly complicated relationship with the film industry. Just recently, The Academy voted to uphold the ruling that any feature-length film can be considered for an Oscar as long as it has at least a weeklong theatrical run in LA. This ruling operates in favor of Netflix, making it more alluring to A-list filmmakers such as Martin Scorcese who are already drawn to the benefits (among them creative freedom) awarded by the distributor. The possible purchase of the Egyptian Theater is part of Netflix’s plan to have it’s original movies play in theaters across the country at the same time as or soon before they are released on the platform. The problem is, most major movie theater chains like AMC and Regal typically demand a 90 day play period before films become available through streaming platforms or digital video rental. Agreeing to such traditional play periods would defy Netflix’s assertion that “day-and-date releasing is the way of the future.” By refusing to compromise on reduced play periods, theaters could be losing out on high-quality cinema. This refusal would also come as a disappointment to filmmakers such as Scorcese who value the creative flexibility afforded by Netflix but still expect large theatrical releases. It would also disappoint consumers who appreciate the theatrical viewing experience. Whether or not Netflix’s acquisition of the theater ultimately goes through, movie distribution will continue to be disrupted as streamers create higher quality original content.

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The second article, 'Avengers: Endgame' Might Be The Last Movie To Break The Opening Weekend Record (Box Office), written by Forbes senior contributor Scott Mendelson, forecasts the box office successes of major movie franchises. Given seasonal movie attendance records, franchise-best debut box office numbers, and upcoming franchise installments, Mendelson surmises that Avengers: Endgame could mark the end of the modern blockbuster era. He attributes this predicted plateau of box office records to two main causes: many of the large movie franchises are coming to a close in the near future (Avengers, Star Wars), and there is more fragmentation than ever before “in terms of what [movies] people watch and how they watch [them].” The current business model of the movie theater industry is one that relies heavily on blockbuster revenue. If Mendelson is correct in his assertion that the blockbuster boom is coming to an end, the movie theater business could be in big trouble.

Based on my understandings of these articles, knowledge of the entertainment industry, and education at Northwestern University, I have come up with three recommendations for how movie theaters can succeed in this time of change:

• Experience > Convenience - Remind audiences of the immersive movie-going experience exclusive to theaters, an experience that cannot be re-created from your living room couch.
• Capitalize on Limited Releases - Appeal to today’s fragmented market through eventized screenings of films with limited theatrical releases.
• Competition is an Asset - Remember that streamers are fostering a new generation of cinephiles, your best customers.

With these three action items in mind, movie theater owners can thrive in the age of digital distribution.

Kendall Young is a senior at Northwestern University where she studies Radio/Television/Film and Integrated Marketing Communications. She is fiercely passionate about the changing television landscape and is an avid believer in using the power of data and audience analysis to inform creative decisions. In her free time, you can find her listening to true crime podcasts with her dog, Kylie.