Big theater chains fumble ‘Interview’
If scorekeepers tracked unforced errors in corporate America the same way they do in tennis or baseball, the stat sheet of the movie theater industry would be a honking mess.
It’s not just that big chains like Regal Entertainment and AMC Entertainment look downright foolish not to show “The Interview” on Christmas Day because of a non-credible threat from hackers that turned out to be (you guessed it) not credible. But in doing so, the chains reminded people that time — and technology — is not on their side.
Faced with mounting public criticism over its decision to cancel the release of “The Interview,” a comedy about two idiots tasked by the CIA to assassinate the leader of North Korea, Sony Pictures reversed course.
But major movie chains weren’t wise enough to do the same.
Google and Microsoft saw an opportunity and agreed to stream the film over the Internet through YouTube and Xbox video game consoles on Christmas Eve, the day before the movie was originally sup-
Not only did Regal and AMC lose out on revenue, they also lost out in relevance.
posed to open. (More than 300 theaters, mostly independent cinemas, did show the movie Thursday — with a box office take of $1.04 million.)
Not only did Regal and AMC lose out on revenue, they also lost out in relevance. In case you haven’t noticed, movie attendance has been stagnant or declining in recent years, and it’s not really hard to see why. Aside from mediocre content, there’s parking hassles, overpriced popcorn and soda, and that dude who keeps kicking the back of your seat during key scenes in “The Hobbit: The Battle of the Five Armies.” (You know who you are.)
Last year, theaters sold 1.34 billion tickets, compared to 1.5 billion in 2004, according to a report by the Motion Picture Association of America. The national average of tickets sold per person (admissions per capita) fell 3 percent in 2013 from the previous year.
Revenue has held mostly steady above the $10 billion mark the past few years. But if you exclude the higher prices for Imax and 3-D screenings, box office receipts would look at lot worse.
Compared with the myriad ways people can seek entertainment, movie chains these days really possess only two advantages: superior video and audio through IMAX and 3-D technology and, more important, exclusivity. If you want to see major flicks like the latest “Hunger Games” or “Interstellar” on opening weekend, you still need to trek to the theater.
Cable operators like Comcast offer on-demand movies the same day of theatrical release, but they are mostly independent films unlikely to generate much revenue in the first place. “The Interview,” however, was a major film that was expected to crack $100 million in sales in North America. Remember, there’s a reason that Sony originally scheduled its release on Christmas — one the biggest grossing days of the year.
Instead, the chains gave away exclusive rights to a potential blockbuster to Google and Microsoft.
Compared with televi- sion and music, movies have actually fared relatively well competing with digital streaming services. But the industry is rapidly changing, and there’s no reason to believe that movies are somehow immune to new distribution technology.
From 2013 to 2018, electronic video will double its share of global entertainment dollars, mostly at the expense of the traditional box office, according to a report by Pricewaterhouse-Coopers consulting firm. Stream- ing services’ revenue will grow at an annual compound rate of 28 percent, rising from $6.6 billion worldwide in 2013 to $22.7 billion by 2018.
“Over the next five years, while big-budget Hollywood movies will still appear first in a cinema, release windows elsewhere will continue to contract and evolve,” the report said. “As new players enter the market and new platforms grow in popularity, traditional distribution models will be disrupted.”
Interestingly enough, the people who most frequently go the movies are also the most tech savvy, owning multiple devices, the Pricewaterhouse-Coopers report said.
So in ceding “The Interview” to online competitors, movie theater chains gave their most loyal customers one more reason to rethink that loyalty.