Movie Theaters Should Think Like Netflix

This piece appeared on the Future of Film blog in April of 2011 and was by far the most successful post (measured by traffic, comments, tweets and likes) during the blog’s first year of existence.  It is a “what if” piece which speculates on how Internet driven innovation could radically improve the movie going experience.  The success of this post highlighted the continued importance of the theater experience to film goers.  People really want to see movies in a physical space with other people.  They just want  innovations that improve that experience. And not in 20 years.  They want to see it now. Sadly that innovation is still very slow in coming.

Movie theaters need to increase attendance. Here is how they can do it.

Over the last two years Netflix has become available on every Internet enabled screen sold in the United States. Desktops, laptops, tablets, TVs, and phones can now be used to view the Netflix streaming service. And if you can’t find the movie you want on their streaming service you can always have the DVD sent to you via the US Postal Service and watch it on your old fashioned non-internet-enabled DVD player.

The consumer price for the service that supplies all these screens is $7.99/month for streaming only and  $9.99/ month if you want to order DVDs. At the end of 2010, Netflix reached 20 million subscribers, up from 12.3 million in 2009.

The only screen that Netflix doesn’t reach is the screen at your local movie theater. Unlike Netflix’s subscriber count, movie theater attendance is not going up. Instead, it is going down. In 2010 US theater attendance was the lowest it has been in 14 years at 1.35 billion tickets sold, 5.4% below 2009. So, in the same year that the Netflix subscriber base increased by 65%, theater attendance declined by 5.4%.

Movie theater admissions should be going up. For filmmakers and film goers, theaters are an essential part of the movie experience. In fact, movie theaters are the lifeblood of movies.

What if we could create a new model for going to the movies at your local theater that is as consumer-friendly as Netflix? Could this dramatically increase attendance?

Imagine this service.

You go to a website or download an application to your device that gets you a list of every movie theater in the United States. From this list you get to pick two movie theaters.

For example, I would pick the AMC Loews Lincoln Square 13 and the Lincoln Plaza Cinemas, both on Broadway in Manhattan. One shows mainstream Hollywood fare and the other shows foreign and independent movies. Both are my local theaters.

The key point is this: each customer gets to create her own access point at any theater across the entire United States. Think of it as choosing your own screen much like Netflix allows you to do.

Then I put in my credit card and agree to pay $10 per month ($120 per year) and receive a movie pass to these two theaters. This movie pass allows me to go to any movie at any time at each of these theaters.

Yes. I did say “any movie at any time.” I have to show up like everyone else and get a ticket, but I don’t have to pay because the movie pass I purchased allows me access.

When I check in to receive the ticket, they log me in and record which movie I am seeing. This allows them to allocate some percentage of my subscription to the distributor of that movie.

If I don’t go to any movies in a given month, the money from my subscription gets split between the two theaters and allocated between all the movies they have shown that month.  In other words, the movie theater and the distributor make money even if I don’t show up.

Now the movie theater has a real relationship with me, the moviegoer. It has my email address, my zip code, my credit card and whatever else I put into my profile. It also knows each movie I attend. This service will allow me to rate the movies I see, so the theater can recommend other movies I might like to see that are appearing on its screens. Sound familiar?

A movie theater subscription service can go even further than Netflix because each theater is located in a very specific neighborhood. Restaurants and shops of every type surround each theater. Theaters also continuously gather people in one place with a common interest.

This service can add a social media layer that appeals to people’s constant desire to connect with each other and connect with services in the neighborhood. Groupon, Twitter, Facebook and Foursquare are all a natural fit.

What does the movie business get out of a service like this?

Let’s do the numbers.

If a million people subscribe per year, $120 million annually flows back through theaters into the movie industry, at 10 million subs, $1.2 billion and at 20 million subs, $2.4 billion. In other words, if done well, it can scale and a lot of money will be generated. And as you remember, Netflix hit 20 million subscriptions just last year.

But is there a company out there that has the expertise to pull this off?  A company that has dealt with all the movie distributors, has expertise in database management, credit card collection, knows something about recommendation engines, deals with vast numbers of movie lovers on a daily basis and knows exactly where they all live.

Let’s think for a moment. Netflix maybe?

About Chris Dorr

I consult with companies on digital media strategy and business development. Clients include Samsung, MTV Networks, Tribeca Film Festival, Shaw Media and Canadian Film Center. I created the Future of Film blog for Tribeca. I have worked in the movie business for Disney Studios, Universal Pictures, Scott Free and in the digital media business for Intertainer, Sony and Nokia. Contact me at chris@digitaldorr.com or follow me at @chrisdorr
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  • Peter B

    This idea has enormous potential, especially with movie theaters gaining more insight into their customers and being able to offer future recommendations. I like the idea that if a theater knows it has a loyal cohort of sci-fi fans, not only could it send out an email blast giving the heads up on Prometheus, but it could also offer special screenings of Blade Runner or Alien in place of a movie that isn’t performing.

    Like you touched upon, movie going will always be a communal experience and if theaters could do more curation, bring together people with similar passions, and foster an experience/community you can’t get elsewhere, people will be drawn away from their homes.The only tricky business with this idea would be picking the two theaters and divvying up the subscription cost per subscriber. Say someone subscribes to the same two theaters you mentioned and they go to the megaplex eight times and the art house twice. These two theaters aren’t going to split the subscription cost evenly (nor would the megaplex want to) and the art house only ends up with $2 for a customer instead of $8.Maybe it would be easier for one subscription per theater or theater chain. That way even if someone does not see any films for a month, a single theater/chain has a guaranteed revenue stream instead of it fluctuating every week.

    • chrisdorr

      Peter, thanks for your comments.  You are right, there are undoubtedly better ways to conceive this subscription idea and yes, as movie theaters learn more about their customers, they can better serve them (and build their own businesses at the same time).

  • http://pulse.yahoo.com/_P4WS74K2ZYNUZK45Y5EJPFXX3M j

    Everything seemed fine until this: ” People really want to see movies in a physical space with other people”. I for one can’t stand going to the movies, everything about it is annoying. Screaming kids, idiots yelling at the screen, people on cell phones, getting up for overweight people to pass by, dirty seats, sticky floors, high prices, long lines etc etc. With huge high def tv’s and surround sound being very reasonably priced these days I’d much rather kick back in privacy in my own  personal physical space and watch a movie at home on my own time any day. You don’t even have to take out a loan for concessions. I honestly can’t remember the last movie I’ve seen at a theater, it’s been years.

    • chrisdorr

      J. Thanks for your comment. I understand your point of view, however I think it is worth trying all means possible to improve the theatrical experience, as I still think many people love it, (of course without all the annoyances you describe).

  • gogilesgo

    Hi Chris,

    I know this article has been online for some time but I just stumbled upon it. A very nice idea and well laid out. Correct me if I’m wrong but is this now what Cineworld (http://www.cineworld.co.uk/unlimited) in the UK do and what Moviepass (https://www.moviepass.com/splashes) does in the US?

    Decent executions on both counts but I think this could be expanded much further. The beauty of netflix is the ability to CHOOSE a movie, not just a movie time, and have it shown on the cinema screen.

    Up until a few years ago the British Film Institute in London ran a (now discontinued) feature called Desert Island Movies. You got to choose any film you wanted – presuming the BFI had a copy in their extensive archive or could locate a print – and it was scheduled for a screening. It cost £70 (approx. $110) which entitled the chooser of the film to 10 tickets. There was a dedication in the film program and the rest of the seats in the theatre were sold at normal price.

    To my regret I never chose a film though I did attend a couple of the screenings as a punter and both were pretty well attended.

    Thought it was a great, innovative idea and am amazed it is no longer extant.

    • chrisdorr

      Hi Gogilesgo, You are correct, it is what Moviepass and Cineworld do. I wrote this post just before Moveipass was announced and many people who commented let me know that Europe had services like this, unlike the US at the time. Thanks for pointing out what BFI did, would love to have a service like that in the US.