Even in the age of advancing streaming services I find myself regularly heading to my local movie theater. There’s something about driving to my local Cinemark, Alamo Draft house, or Studio Movie Grill that can’t be replaced by a laptop at home. This sentiment isn’t shared by everyone though who look at the wide range of films offered by online platforms and think of the cost savings. Now with COVID-19 taking place, all major theaters are closing up shop for the foreseeable future with some organizations expressing the negative implications behind these shutdowns. AMC, in an 8-K shareholders form published June 3rd, stated that “substantial doubt exists about our ability to continue as a going concern for a reasonable period of time”. While theaters remain closed, major film studios must decide if they wait for a movie theater premiere or skip to an online streaming platform. I reached out to Brian Hood, the senior vice president of operations for Studio Movie Grill, to discuss what’s going on in the DFW movie scene.
Hello Brian, will this pandemic set up a negative precedent for theaters post-COVID or can theaters keep high attendance rates?
These are truly unprecedented times, but not unfamiliar ones for Film Exhibitors. In 1918, the “Spanish Flu” Pandemic not only threatened the theater industry but the youthful US economy. In just 10 months, 670,000 people died in the U.S. and global fatalities were between 50 and 100 million. By early 1919, the Flu had mostly run its course. What emerged from this past crisis was the importance of theater both as a key source of public entertainment and as a measure of the state of affairs.
As for precedent, there is room in the market for the VOD (Video on Demand) space and Theaters to coexist. The economics of film and the investment in production play a significant part in determining how film partners release films to the market. The Theater industry boasts more than 164k screens globally as of 2016, and this offers film distributors a favorable ROI for their larger investments in movie production vs. what VOD can offer.
Tearlach Hutcheson, our VP of Film offers “The theatrical window is the highest amount of money that can be made per set of eyeballs. A studio cannot economically justify investing in a 100-200 million dollar film with intent to go straight to VOD”.
While Mulan has gone partially to VOD, Disney did release this theatrically in China to ensure the economics worked more for them. It is important to note that Film is a global business and not restricted by what happens in the United States.
Market disruption can also be a good thing. When competitive intrusion happens, it forces businesses to innovate and adapt to changing landscapes in a free market. During the COVID crisis, Studio Movie Grill has invested our energy into leveraging technology as a strategic advantage to meet the guest where they choose to experience our concept. Some of these include Kiosks, SMG App, Private Events, Streaming services, and Cinema Intelligence predictive tools.
During the 1930s, popcorn was introduced to movie theaters which attracted large audiences as it was a cheap snack during the Great Depression. Would you say there’s a specific snack, attraction, or item that will push theaters forward post-COVID?
In Theater dining is our secret sauce. We are the pioneers of this space and that is what differentiates us from others in the film industry. Since 1993, we have offered a full menu while featuring first run movies. We have passionately continued to develop our menu offerings with help from local celebrity chefs and by capturing our guests’ feedback on their favorite local and shareable items.
There are now theaters like Moviehouse & Eatery relaunching private screenings where a kid can still have a birthday party during COVID. Do you think private events will be more essential in a post-COVID world and if so what type of collaborations will be the most common?
Private events have always been a healthy part of our business model. Just as the food service business realized increases in curbside and take out, we have seen increases in private events. There is little commonality in how they want to experience movies. The built up demand created by COVID does show one commonality…guests have grown tired of seclusion and separation. Offering guests the opportunity to customize their experience is also part of our spirit in delivering hospitality. Private events have included screenings of home movies, family reunions, sporting events, birthdays, and local film maker’s projects to name just a few. Private events company- wide have doubled in volume and we do expect private events to have an elevated contribution to business post-COVID as well.
From a health standpoint, do you think moviegoers are more comfortable to return to the theater compared to other establishments like bars, amusement parks, and shopping malls?
Yes. Movies are at the core of community and togetherness. The ability to create shared memories and experiences with friends, family and loved ones is how the movie industry has flourished through historically challenging times. Local governments and municipalities releasing COVID restrictions is the first step that allows more guest to return once determined it is safe to do so. As we speak, California theaters are still closed by mandate. In our locations that are currently operating, we are seeing our sales volume continue to grow which speaks to a growing comfort level.
What procedures are needed in place to ensure the health of future moviegoers?
The safety of our guests and team members is of the upmost importance to SMG. In regards to safety, Studio Movie Grill’s Safety and Sanitation protocols exceed the CDC, OSHA and National Association of Theater Owners guidelines.
Our safety protocols include sanitation stations in hallways and lobby areas, social distancing messaging, directional signage, seating separation technology, touchless and cashless transaction ability through our kiosks and SMG App., and digital menus for guests.Our team members are screened daily and based on local mandates, guests are required to wear masks until they are seated. We use only approved CDC sanitation products and have also began using disposable cups for the safety of guests and team members.
Is there a large pipeline of unreleased major films for when it’s safe to reopen theaters or will there be a period of vintage films/anime/independent films?
All the summer movies. Lol. The entire theatrical window has pushed since COVID and now that theaters are re-opening globally, film companies are now looking at the best strategic window to get the best return on investment. “Unhinged” and “Tenet” are the first of the movies to be released. “Unhinged” opens in theaters on Aug. 21st and “Tenet” opens on Sept. 3rd giving movie fans and theaters the first notable releases since the COVID shutdown.
Up till those dates, theaters are featuring classics and past blockbusters that resonate with fans on the big screen. The holidays are historically peak- volume times for movies and with a lot of content with no release dates, so we expect to see many begin to land on dates. We have and always will feature classic, independent, local and reparatory content along with first run movies. Our business is truly the love of movies and community.
