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What's Going On With Commercial Big Movie Theaters?

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Written by: Ryan Kresser
Date: August 30, 2001

Recently, commercial Big Movie theaters have been showing normal, 35mm films on their Big Movie screens...

  

Category: Columns

What's Going On With Commercial Big Movie Theaters?
And what does it mean for the future of Big Movies?

There’s been a lot of news lately about IMAX Corporation’s low stock price. There has also been a lot of media commentary about the general financial woes of big theater chains like Sony/Loews, Edwards, etc., who operate both normal (35mm) and IMAX or other Big Movie screens. In recent months, these commercial theater chains have been showing 35mm, Hollywood films on their Big Movie screens more and more, especially in the evenings. Edwards recently announced it was closing its six IMAX screens entirely, only to announce shortly thereafter that it’s re-opening at least four of those screens with a different make of projectors.

What does all of this mean?

Unfortunately, there’s no simple, sound bite answer that would be quite accurate. The bottom line: for a variety of factors detailed below, the commercial Big Movie segment hasn’t taken off as quickly as hoped, and is now sort of regrouping. Producers and commercial theater chains are trying to figure out what exactly fans really want to see on giant, commercial Big Movie screens, that can be economically produced and marketed at a profit given the limited number of those commercial screens (about 150 worldwide). Due to economic realities, for the moment, the next best hope for commercial Big Movies seems to be re-purposed Hollywood product.

As an aside, one should keep in mind that for the purposes of this article, we are talking specifically about commercial Big Movie screens, which now make up about 45% of all Big Movie screens. (About half of those commercial screens are at “stand alone” or destination theaters, with roughly the other half anchoring megaplexes of normal movie screens, and a small percentage in theme parks.) The institutional, museum/aquarium side of the Big Movie world (still making up 55% of all screens) is alive and well, thank you – much bigger than it was ten years ago, with most of these theaters generating great revenues for the non-profit institutions in which they reside. In fact, the museum segment of the industry has been growing more or less steadily, worldwide since the advent of IMAX giant screen technology in the early 1970s.

The explosion of commercial Big Movie screens is a recent phenomenon. Around the middle of 1996, IMAX Corporation made a concerted push in a new direction. Up until that point there had been one IMAX theater in a multiplex in the US, but over the next year and a half, nine North American commercial theater chains signed contracts to build 52 IMAX theaters. Subsequently, the building of these commercial screens began to upset the balance of this mostly museum-oriented medium – and it looked like further big changes to the status quo were imminent.

Then came the commercial theater chain woes: both in general, and with regard to IMAX and Big Movie screens in particular.

In general, commercial theater chains overbuilt during the mid and late 1990s. Anxious to compete with newer multiplexes, many of which contain special oversized screens and larger theaters with stadium seating, chain operators built too many new venues, so that experts say there are now 5,000-10,000 excess 35mm screens in the US. Without enough business to support all these new screens, theater chains have been unable to recoup their huge, multi-million dollar investments in these new facilities. As a result, several major theater chains in the US have declared bankruptcy, or defaulted on payments.

As “crown jewels” in the nicest of these new multiplexes, giant IMAX screens were the most costly amenities for theater operators to install, of all. Naturally, the theater chains had high expectations for these new Big Movie theaters, or they wouldn’t have invested so much to have these super-auditoria constructed and signed long-term lease deals for the equipment and its maintenance. Though many individual commercial IMAX screens have performed incredibly well, generating over a million and a half ticket sales in a year with per-screen averages much higher than any 35mm theater (due in part to more seats and more-often shows), even this hasn’t been enough to lift some overstretched commercial theater chains out of their financial troubles. And many commercial theaters haven’t performed well at all. Operators have blamed the lack of commercial IMAX films produced, and the general lack of marketing support for the mostly documentary Big Movies that have been available (unlike museums, most commercial theaters aren’t used to doing their own local marketing, as film studios usually promote 35mm films to the hilt).

Which brings us back to IMAX Corporation’s stock price. There are certainly other factors at work (including perhaps the impending shift to digital technology in all things, which makes the future of a company that dominates an analog-technology niche uncertain), but as far as the stock’s connection to the commercial theater woes, consider this: IMAX basically has three core businesses. It builds, leases and sells hardware (along with the use of its brand name); operates a handful of theaters; and produces or distributes a handful of films, each year. The majority of profits come from the hardware side and theater equipment leases, not the films and owned-and-operated theaters. When theater chains who’ve leased IMAX projectors and sound systems don’t have any money, IMAX doesn’t get paid. Hence, less prospective profits, and the stock plummets.

But back to the theater chains’ point of view. When IMAX sold 3-D projectors to these commercial theater chains, it made a specific promise to help provide commercial, 3-D product for their IMAX theaters to show. The problem: when Big Movie producers factor in the added production and distribution costs for 3-D IMAX films, the math doesn’t work (i.e., even with a successful film, you won’t make your money back). Hence, there were only two 3-D titles released in 2000 – one of them an educational science film.

Alas, so far there hasn’t been much commercial 2-D product forthcoming, either. Apart from the production challenges (real and perceived) of creating dramatic films with bulkier, louder IMAX cameras, expensive film stock, short film loads, and giant screens that are unforgiving in their exposure of poorly done re-creations, one reason there has been such a lack of commercial product in the marketplace is that top Big Movie-makers, wary of the uncertainty of the new commercial theaters’ drawing power, have stuck all along to making traditional, educational Big Movie fare for institutional theaters.

Even with the number of commercial screens approaching half, producers have been loathe to gamble on this new, unproven market, knowing they’ll certainly be shut out from the traditionally strong, institutional half of the market if they make a purely commercial film, since the museums won’t book anything that isn’t educational. Not to mention the fervent opposition to anything not G-rated from many in the traditional IMAX world. On top of the prospect of being shut out of the institutions, according to industry newsletter The LF Examiner, many distributors report that it generally takes three commercial theater bookings to match the revenues generated by a single museum booking. (In addition to benefiting from museum foot traffic, institutional venues often book films for longer runs, and show them more times per day than commercial screens.)

Because of all this, even when a purely commercial Big Movie is booked on a large percentage of commercial screens, without access to the other half of the market, the producer still loses money. On the other hand, if a producer makes a good, traditional, educational IMAX-format film, they have access to free funding from educational and scientific grants, they’re likely to get lots of long-term bookings in museums, and, with no other, more commercial product in the marketplace, they also get booked in the commercial theaters. Of course the fact commercial Big Movie theaters are now showing 35mm films is cutting into this latter prospect. But business-wise, to date, this has proven to be just about the only way to go.

(Note: nWave Pictures has broken this mold and produced purely commercial 3-D films not aimed at museums. But they’ve always re-purposed these films as ride films in amusement parks, and have even re-sold them to normal-sized 3-D theaters, for example in Asia.)

All that said, no one can convince me that the broader commercial world hasn’t always thrived on bigger, louder, and clearer. The added thrill potential of giant Big Movie screens – and their ability to immerse people in an entirely new kind of sensory experience – ensures in my mind that some Big Movies will one day be cutting-edge dramatic, Hollywood films.

How soon this happens remains to be seen. Though the technology supposedly now exists, no one has yet blown up a live-action film to full IMAX size and clarity – and even this wouldn’t be the same as shooting a Hollywood-style film expressly for the giant screen. Recently named head of IMAX’s film division Greg Foster is trying to move the medium in a more commercial direction by facilitating new Hollywood-style (though G-rated) film projects, like the re-purposing of the animated Santa and the Snowman, and a live-action “Race to the Pole” reality film. While some say it will be many years until images captured with high definition video cameras can match the clarity of IMAX pictures on the giant screen, James Cameron and Disney are both currently filming Big Movies using digital cameras (an underwater film, for Cameron; The Black Stallion, for Disney). And Disney will follow up its Big Movie release of Fantasia with the animated giant screen version of Beauty and the Beast, next year.

Barring a breakdown of society as we know it, the museum part of the IMAX theater universe will always uphold educational standards and G ratings for the Big Movies they show. And these films will continue to be some of the coolest, most exciting “educational material” on the planet! The commercial entertainment world, on the other hand, will never be constrained by such parameters (barring a total ascendancy of the religious right). The only thing really holding back the production of full-blown commercial Big Movies is money – or the fact there doesn’t seem to be much if any to be made in this realm, yet.

I for one believe that as soon as someone manages to create something truly extraordinary and commercial for the giant screen, it will become a huge phenomenon, and jump start the format. Defenders of the G-rated rule for IMAX films will cringe, but imagine seeing a film like Platoon in 3-D IMAX: audiences would have to be treated for post traumatic stress syndrome – and the buzz would be huge. (Again, some educational filmmakers might be upset – but in my opinion moviegoers who’ve been dazzled by commercial IMAX films would be all the more likely to take their kids to a G-rated Big Movie at a museum. It's true that with more commercial product available, and giant screens in more places, the museums won't have as much of a "wow" factor to draw people in. Producers of documentaries for museums will have to keep people excited as the best ones do now: by making compelling, cutting-edge films that can't be seen anywhere else. And of course, the institutions can always make their screens even bigger, and the 3-D or holographic experiences even better, keeping ahead of the commercial world's curve. Just like filmmakers, institutions have always had to stay on the cutting edge of innovation to remain relevant - which led them to build giant screen theaters and let Big Movies develop in the first place.)

At the moment, nothing so revolutionary seems to be in the works. So for a while, fans will continue to enjoy the great experience of the mostly documentary Big Movies they’ve come to love, while the medium inevitably moves forward like all things: in a combination of baby steps and unexpected, bold strokes that shatter conventions and open up whole new worlds for people everywhere.

As, in one way or another, Big Movies always have.

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