Are Movie Theaters On Their Way Out?

By David Outten


Week after week, BoxOffice Mojo reports that theater revenues are down from last year.


Is it that the movies being offered by the major studios are just not as good as in past years or are there other factors? 

Yes, there are other factors.

One of the sea changes in the entertainment industry is the astounding price difference between Netflix and Red Box and the movie theaters.

You can come out of your local grocery store with a box full of six microwave popcorn packets that cost you $1.50 and rent a recently released movie for $1 from a Red Box machine.

You can go home, sign up for Netflix, and pay $9.99 a month for hundreds of movies on demand and some of the latest releases sent to your door very quickly by mail.

Netflix is even putting a dent in cable company revenue as people dump cable costing $50 (and up) a month in favor of the $9.99 fee.

Netflix and Red Box have practically killed Blockbuster.

Add to this Apple’s growing interest in providing media for television through the Internet. Don’t be surprised by a new Apple subscription service that competes with Netflix. Apple is currently building massive server facilities for streaming media.

The family of four that wants to see CARS 2 can spend nearly $100 for 3D tickets and concessions in one trip to the theater. Before Christmas, they’ll be able to get the movie from Netflix for a pittance. Add to this the growing size and quality of home theater systems and the home choice looks more and more attractive.

In the digital age, you don’t have to buy VHS cassettes, DVD’s or anything that comes in a package. You can bypass both the movie theater and Walmart. The only thing that keeps Netflix from offering 100,000 movies on demand is rights. They have agreements to provide some movies digitally and others through a mail-in DVD rental service.

The future is clearly digital. The mailing of DVDs won’t last much longer than Blockbuster’s stores. The question is, “What will the digital age do to theaters?”

Theaters have survived the advent of television, video cassettes, DVDs, and the dawn of the digital age. As long as people want to get out of the house in search of entertainment theaters will have the opportunity to compete with sports, parks, concerts, and museums. Movie ticket prices remain less expensive than many other out-of-the-home forms of entertainment.

The major studios have long had a near monopoly on theaters and DVD sales and rentals. The digital age threatens to level the playing field some. The cost of entry has long included the cost of making thousands of film prints and spending a fortune on advertising. The digital age removes even the cost of producing DVDs.

Theaters are not the only old media outlets with declining audiences. The major television networks (whose programs are provided by the major studios) have been battered by cable and the Internet. Newspapers and magazines are in precipitous declines. More and more advertising is shifting to the digital world of the Internet.

The digital world will be harder for the major studios to dominate than the physical world of theaters and store shelves. The major studios currently jockey for the limited number of theater screens available each week. Theaters are reluctant to show truly independent movies and anger the major studios when the major studios bring in 98% of their audience.

The digital media world is not as open to mafia-style tactics. Anyone can host a server capable of streaming entertainment. Amazon, Apple and other major players allow almost anyone to provide books, songs and podcasts through their ultra-popular outlets. YouTube is famous for being open to all.

Hollywood will probably continue to provide the entertainment most popular with the majority of Americans, but the method of delivery will no doubt be more and more digital on demand.

For theaters to survive they need to offer audiences compelling reasons to come. First, and formats, they must offer what more people want to see. Sex, vulgarity and immorality are not the key to box office success. Wholesome, high-quality entertainment is.

MOVIEGUIDE®’s analysis of box office results shows that if the major studios reduce offensive content and include more of the Christian moral values the majority of Americans hold, they will attract larger audiences to theaters. They will also attract larger audiences in the digital marketplace.