Texas is home to a wide variety of exhibitors, from the eye-catching locations of multinational players to the iconic independent venues that have served local communities for generations. Over the last couple of decades, Texas has also hosted a concentration of the nation’s leading dine-in cinema concepts, helping kick-start a nationwide trend based on the innovations nurtured in its own backyard. This year’s edition of CinéShow, the annual convention of NATO’s Theatre Owners of Mid-America, held in Dallas on August 27–29, acted as a reminder of the region’s longtime ties to exhibition and its culture of innovation. The event, celebrating its 20th anniversary, brought together an impressive roster of executives from some of the country’s most high-profile studios, circuits, and vendors.
The hot topics at this year’s edition all revolved around the industry’s potential direction in the coming years. Representatives from the newly formed Independent Cinema Alliance were on hand for an open discussion that addressed current concerns regarding the Department of Justice’s proposed review of the Paramount Consent Decrees. On a more immediate level, CinéShow’s panel sessions looked at the ongoing impact of the spread of dine-in cinema and digital ticketing on the industry.
Joining the convention from his home base in Scotland, Webedia Movies Pro’s SVP of Global Exhibitor Sales & Marketing, Malcolm MacMillan, summarized the digital-ticketing trend succinctly highlighting the elevated market-share of third-party ticketing aggregators in online ticket sales: “In Europe, exhibition is very much focused on self-ticketing; managing their own data and relationships with clients. In the United States, we have a very different direction.” According to MacMillan, U.S. exhibitors have begun to diversify their efforts, moving away from “a simple case of just selling tickets online, to selling experiences—selling a brand.”
That shift is reflected in the investment exhibitors have poured into their theaters. A stroll through CinéShow’s sold-out trade show floor, featuring over 70 different vendors, gave evidence to the multiple options theater owners have for bringing an extra dimension to their cinemas. MacMillan noted that in today’s experience-based economy, these new directions can act as key differentiators in maintaining a competitive advantage, “premium seating and dine-in drive high conversion rates—much higher—to the e-commerce average in this industry,” he said.
While trends like dine-in and alcohol service have gained visibility nationwide, some caution that these concepts shouldn’t be seen as a one-size-fits-all option for interested exhibitors. “I’ve toured around and seen a lot of situations that haven’t worked out,” admitted Flix Brewhouse CEO Allan Reagan. Flix has embraced a cinema-brewery model, with each location featuring its own in-house brewery and beer experts. “Say you see a corner in your lobby and think it would be a great place to put a bar. It’s in the corner, it’s out of the way, and you figure a little bar can make you a fortune. You’ll find out fast that’s not a place that people are going want to hang out. It’s really important to understand traffic patterns and how they’re actually going to use the facility. Are they going be able to have a drink in the lobby, in the lobby bar, or a bar above the lobby? Or are you better off getting them a beverage at their seat inside the auditorium?” Flix Brewhouse, founded in 2011, is set to finish 2018 with three new locations—and plans for a further national expansion through 2019.
Mexico’s Cinépolis—which operates cinemas in 13 countries, including two Texas locations—has firsthand experience in using a measured, region-specific approach when it comes to alcohol service. “We’ve been very successful in some countries, usually in more developed places like the U.S. and Spain,” said Eduardo Acuña, the circuit’s head of Americas, before warning that it has also failed to connect in other markets. “There are other countries in which it’s not even an option; in the Middle East it’s against the law to serve alcohol. In India and most parts of Latin America, it hasn’t worked as well.” Acuña cited the varying costs and strict regulations that are associated with alcohol service at a cinema—rules that carry large fines and that can be vastly different even within one country. “Alcohol is a great business, but you have to think of it as a business, not as an extension of food and beverage.”
It’s a challenge shared by their corporate compatriot, and competitor, Cinemex, which first entered the U.S. market in 2017 under the brand name CMX Cinemas. Newly appointed CMX CEO Jose Leonardo Marti joined Acuña onstage at a CinéShow panel organized by the Theater Management System provider Cielo. Marti shared his circuit’s own concerns in expanding across borders, not only when it comes to alcohol but for its dine-in operations as well. Entering a new market like the United States, CMX was cautious in how it pursued its expansion. “Wages in Mexico are substantially lower, and so is the price of a ticket. Rent, leases—they are also substantially higher in the U.S. than in Mexico,” said the CEO. “It’s a very different market, substantially more competitive than it is in Mexico.” Due to these factors, CMX grew in the U.S. by the strategic acquisition of circuits like Cobb, which included CinéBistro locations that were custom built with the correct infrastructure for cinema dining.
In general, the diversity of exhibitors vying for moviegoers’ time has made exhibition in the United States extremely competitive. Distinguishing your brand from the rest of the pack has become crucial, a factor that Dallas-based circuit Studio Movie Grill acknowledges, especially in Texas’s highly competitive dine-in cinema scene. Studio Movie Grill has been able to stand out from competitors by adopting what CEO Brian Schultz calls a “conscious capitalism model,” using its business activities as a platform for social good. “That’s behind all the decisions we make as a team; from our local communities to our vendors and investors. It makes it pretty easy to create a brand that’s defined and has a perspective.”
It’s not simply about competing with other circuits or engaging in an arms race of theater amenities—finding the right real estate has become the latest battlefront for circuits looking to expand their operations. As retail destinations struggle across the country, developers have increasingly set their sights on movie theaters as a viable alternative to big box stores. “When it comes to shopping malls—with all the important retail players going away—they understand that experiences like moviegoing aren’t going anywhere, we’re going to endure,” said Cinépolis’s Acuña. “Developers know this, and every time a big box store disappears, everybody is talking about putting in a theater. Retail is about buying products, cinemas are about getting an experience.”
In the United States that experience begins online. Whether it’s on Google or social networks like Facebook, digital platforms have become a highly influential source for trailer views, show time discovery, and ticket purchases. According to research conducted by Webedia Movies Pro (parent company of Boxoffice Media), 90 percent of today’s moviegoers begin their cinema journey on the web. It’s one of the main focus areas for digital ticketing start-up Atom Tickets, now entering its second year in the market. “Social media is the whole reason why Atom exists,” said Max Lynn, director of corporate development at Atom Tickets. “Our co-founders were trying to go to a movie and couldn’t get through the pinpoints of texting, calling, emailing—just to organize a four-people trip to the movies. When we surveyed the landscape, no one was really doing social with movie ticketing. That’s an inherent part of the DNA of our mobile platform. We use Facebook today and we’re looking at the different social platforms out there to see what’s next. Whether it’s Instagram, Snapchat, wherever we see customers spending time—that’s where we’re going to integrate next.”
Webedia’s MacMillan sees that integration as part of cinema’s move toward an “everything, everywhere” model, “exhibitors spreading their net as wide as they possibly can so people can buy tickets through them or the third parties who they work with.” A growing part of the third-party conversation are subscription services like Moviepass and Sinemia, which have in turn helped popularize the concept among exhibitors themselves. “Moviepass—for all the good, the bad, and the other—shook the anchoring everyone had,” said Atom’s Lynn. “People are more open to more ideas now that the consumer has spoken about being interested in something other than the traditional model.”
For an independent exhibitor like Barak Epstein, president of Aviation Cinemas—which currently operates the historic Texas Theatre in Dallas, subscription is still an unproven concept. While larger circuits like AMC and Cinemark have already rolled out their own in-house offerings, Epstein is taking a wait-and-see approach to how a third-party solution can help his theater. “We’ve been agnostic about it,” he said during a panel conversation. “We tell our customers that they need to use [Moviepass] at their own risk. We can’t tell them whether or not a movie we’re showing is going to be available on their service at any given time, or if they have the right amount of money loaded into their system to pay for the ticket. We have zero control over that. If it’s working, we’re happy to say, ‘Sure, use it!’ I’m not sure if we’ve seen a massive increase [in attendance] from it.”
That isn’t to say that subscription is the only alternative in the industry. Rather than rolling out a competing subscription product, Atom Tickets opted for leveraging its relationship with exhibitors and outside companies to create discount days for consumers. A partnership with T-Mobile, for example, enables $4 tickets for users—with the phone carrier responsible for paying the difference to the exhibitor. “It’s a great way to bring new, incremental customers to the ecosystem. We’re a conduit to that, bringing that benefit to all our exhibitor partners.”
Flix Brewhouse’s Reagan considers tech innovations in e-commerce and loyalty programs as catalysts for continued growth. “Technology is a big part of it, and I think we’ll get better as our industry adopts some of the tools that companies like Apple and Amazon or the hotel industry use to track and service their customers,” he said. For MacMillan, the true potential of big data’s promise is, simply, control. “That’s the real issue, the control of your customers’ journey,” he stressed. “If you are a progressive exhibitor, you want to control that from end to end—including the ticketing. That’s where you’re going to get improved conversions, performance, and a greater level of security. It’s about bringing customers back into your brand, making sure your data is being used to your advantage.”
Whatever the future holds, it is becoming increasingly clear that the potential of consumer data and the power of a cinema’s brand will go hand in hand. The age of the cookie-cutter multiplex is over. It has been for years. And while subscription might be an unproven factor in this market (at least at this early stage), the prevalence of loyalty programs among exhibitors of all sizes points toward a future where data and knowing one’s customers will be a central part of any theater’s operations.