The Movie Theater Isn’t Taking Your Netflix Addiction Lying Down - WSJ

https://www.wsj.com/articles/the-movie-theater-isnt-taking-your-netflix-addiction-lying-down-11583446007

When some fresh gadgets or smartphone applications appear and cause serious damage to the entire industry, the old guards will rack their brains and blame the technology.

Was a professor at Harvard Business School and later became a consultant,

Instead of accusing this big and bad technology monster. Blame the customer. If your customers are satisfied with your services or products, they will quickly embrace the new technology.

This unhappy customer principle is the reason behind my decision not to go to the movies about ten years ago. For the busy father of this growing family and limited budget, going to the theater is more and more like going to the airport. Finding a parking space is a battle. Food prices are too high; walking towards the narrow folding seats feels like packed in cans of sardines.

I met

founder

During a trip to Europe in 2012, he accepted my suggestion to try streaming video services. Just taste the charm of Netflix and Amazon Prime, you can change our Friday movie watching tradition from a night to a pajama party. We kissed bye by the cinema.

In the past vacation, everything changed, when my wife and I took our five children to see

We put a ticket for $10 ($9 for children) at the Emagine Theater, 10 miles away from our house, to book a stool bed with a built-in heater, ordered pizza and popcorn on the iPhone, and walked in our house. A visit rekindled the love for the big screen.

Recently, I spent a lot of time studying at the Upper Crust Business School, meeting with billionaire founders in Silicon Valley, and presided over panel discussions at large company meetings. It only took me one film to teach me about business: continue to invest or start buying a cemetery.

"It's about survival"

, Is an entrepreneur who turned from an accountant to an entrepreneur

In the 1990s, told me when sitting at his kitchen table last month. In recent years, he has spent millions of dollars on theater renovations, but turned around and spent millions of dollars to update these updates, because innovation continues to emerge.

For example, in Rochester Hills, Michigan, Mr. Grants bought a run-down theater at the beginning of the last decade, spent a lot of money to convert it into stadium seats and those old-fashioned rocking chairs, and then reopened. A few years later, the recliner seat craze began, and Mr. Grants pulled out an almost new rocker. Last month, Emagine signed a contract to buy second-generation recliners for the same theater.

"If we don't continue to innovate, people will vote with their wallets." In other words, they will just stay at home. Last month, I sat with Mr. Grants at the Canton Theater in Emagine, Michigan,

About to start new

screen. A few months ago, the rival Canton 7, two miles away, closed its doors after avoiding various upgrades that turned the cinema hall into a beautified living room.

In the age of streaming video, Mr. Glanz’s close partner Emagine has spent hundreds of millions of dollars to build and refurbish more than 200 screens in four Midwestern states. In addition to those expensive recliners, new projector technology and better audio equipment were installed. The menu has also been upgraded: you can still buy popcorn and Milk Duds, but the theater can now make a lot of money, selling tacos, craft beer and cocktails. The number of visitors has remained healthy, and since 2016, the chain's revenue has increased by 20% every year.

Emagine’s huge investment reflects AMC Theaters and

Since 2014, they have spent billions of dollars to upgrade.

why? Since the middle of the last decade, Netflix’s streaming membership alone has increased by 193% to 168 million, while US box office revenue has stagnated at around 1.3 billion annually. Driven by the steady increase in ticket prices, box office revenue rebounds to between 10.4 billion and 11.9 billion US dollars every year. Americans say they are willing to pay

In a growing list of available streaming services; this is almost the cost of five movie tickets.

For companies that are disrupted by streaming media trends, one of the tricks is not to think like Wall Street, but to think like an audience. For example, a theater with recliners lost at least 50% of its seating capacity. If you only operate during Christmas, New Year, Thanksgiving, or Memorial Day (with the most release dates), that will be a problem. However, if you consider the rest of the year, you will see greater prospects when the capacity utilization rate of movie theaters drops to 5% to 15%.

Mr. Grants’ philosophy requires that if there are fewer seats, better seats will encourage people to pay more and come back more frequently. Therefore, installing and replacing them every few years is the only option. "We would rather provide a great experience than provide anything." Larger theater chains are racing to install such seats in more than three-quarters of their auditoriums. The installation cost for each seat is hundreds of dollars.

In earnings conference calls in recent weeks, theater executives defended the industry's upgrade in a slow-growing industry that is severely affected by factors beyond its control, such as the quality of new films or economic conditions. When asked why Cinemark did not use excess cash to repurchase shares, such as when its shares were considered cheap, the company’s chief said

.

"It is a prudent use of capital to invest in long-term growth and stability through... [return on investment] generating programs designed to enrich our guest experience, increase consumer participation, and increase productivity."

Said Cinemark's chief operating and chief financial officer. Investors are more fickle than movie audiences. Cinemark's stock price plummeted late last month after making a profit in the fourth quarter after failing to meet analysts' profit and revenue targets. (it

In recent days, amid widespread stock market sell-offs, investors are worried that the outbreak of corneal virus may discourage movie fans. )

The anxiety felt by movie theater executives in the face of chaos is similar to the pressure felt by grocers and retailers, taxi companies and hoteliers, sports franchisees, and newspaper distributors. Technology allows the delivery of miscellaneous cargo to your door, sneakers can be purchased online, or ads can be skipped.

Some of these industries can respond by adopting the so-called omnichannel approach. This is the reason behind

,

Time Warner Corporation

With the takeaway app DoorDash.

This strategy does not work for people like Mr. Grants. The core business model is the only business model. Without fanatical crowds to visit the site, the film industry plummeted.

Harvard Business School professor said that because we focus on innovations that grab headlines, such as self-driving cars or iPhones, we might ignore

Required to maintain industry relevance.

Mr. Pisano said: "People sometimes think that improvements in packaging, manufacturing processes or product functions are only'gradual', but they fail to grasp the point."

Published in "Rotman Management" magazine at the University of Toronto. "The way to judge innovation is not whether it takes the headlines, but whether it generates value. The fact is that most of the company's profits come from conventional innovation."

Lounge chairs in the cinema and pre-ordered tickets or cherry mud may not seem tempting, but when the streaming service’s annual expenditure on new shows exceeds the lifetime income of certain theater chains, this is the admission fee.

John D. Stoll at

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Appeared on March 7, 2020, the print version is ".".

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