The Decibel - Why movie theatres are banking on ‘go big or go home’

Episode Date: August 21, 2024

Going to the movies is getting more complicated. When you want to pick a showing, you now have a growing list of premium options, from IMAX, to 3D, to ScreenX, all offering different experiences at different price points.The Globe and Mail’s film editor Barry Hertz joins us to talk about what these developments tell us about the state of the movie industry and the future of a trip to the cinema.Questions? Comments? Ideas? Email us at [e-mail]

If you've been to the movie theater lately, you might have noticed that there are more options than ever. Just buying a ticket is complicated. It's not just a regular screen or IMAX anymore. Now there's 3D, 4DX, D-Box, even something called ScreenX. And all these choices tell a story about the movie industry itself. The Globe's film editor, Barry Hertz, is on the show today to explain why screens keep getting bigger, why there are fewer films to choose from this summer, and what the future of going to the movies might look like. I'm Maina Karaman-Wilms, and this is The Decibel from The Globe and Mail.

Barry, thanks so much for being here. Thank you very much for having me. So we were just chit-chatting before the interview officially started, and you were kind of horrified to hear that I have not been to a theater to see a movie in a long time. It was the most horrifying thing I've ever heard about a movie theater that didn't involve an actual horror movie. Yeah. Yeah. I have not been to a movie theater since 2017. So it has been a while.

So I actually want to start by you catching me up a little bit of what's going on with these new formats. There's something called PLF. And I did not know what this was before we started looking at this episode today. So what is PLF, Barry? Right, right. So since you've been to a theater, they've introduced all kinds of amazing. The movies are in color now. They got sound.

No, but PLF is kind of the era that we're currently at. And I would say it started kicking off in earnest pre-pandemic. But since then, it's really kind of kicked into overdrive. So PLF stands for premium large format. And broadly speaking, this means any kind of auditorium with best in class, supersized sound image comfort. This can mean something like IMAX screen, where it's a very kind of proprietary network of technology and seating, to something like Ultra AVX in your local cineplex, or Laser Ultra in a landmark, or something called ScreenX or 4DX. There's all kinds of things involving the letter X and it's very exciting and it's very big and it's very fancy and it can be very expensive.

Okay. And we are going to talk about the business side of this, but let's just define a few more things here because I'm familiar with IMAX, but you mentioned 4D and ScreenX. So what are these things? So 4DX and ScreenX are both systems that originate from the same company called CJ4Dplex out of South Korea. And they are owned by South Korea's largest movie theater chain, which in turn is one of Asia's largest exhibitors. Basically, 4DX is a very specific, very premium experience, probably the most expensive kind of single movie ticket you can have, in which you are in something like a motion control seat. So the seats move? The seats move. You will have environmental effects thrown at you like water and wind and bubbles and lightning.

It's basically like you're back in time a little bit into the smell-o-vision, tickle-o-vision kind of matinee setting of the 1950s and 60s. It is proven very popular, especially with the new movie Twisters, which saw a very big uptick in 4DX sales because people really want to experience this movie as a ride. And that's what this essentially is. Okay. Okay. So that's 4D. That's 4DX. And then there's ScreenX.

ScreenX is something that you'll be seeing a little bit more of in the coming year, certainly at theaters inside of Canada, because the company that makes them just signed some deals with C to, and then you have a kind of side panel screens along the theater to create a kind of 280 degree viewing experience. So at certain points in a movie, these side panels will be on and there will be kind of peripheral vision content to make the experience that much more immersive. So during an action scene, during a chase scene, you'll have whatever is going on in the center screen there, but then you'll have what you would imagine to be seeing outside on the side view mirrors of a chase, so to speak. So it's kind of like it's more of an immersive experience. You got to look to the left and right a little bit then? It is. I mean, it's not designed for you to actually pivot your head to those angles because more often than not, the content there is not

really quite in focus. It's meant to be a little bit blurred. So it doesn't distract too much, but rather kind of access what, you know, proponents of this technology like to call VR without a headset. OK. OK. And I guess we could also just call reality. But no, it's called ScreenX. So Barry, you've obviously watched movies in the ScreenX format, right? What was that like? It was, I found, needlessly gimmicky and annoying. One of the films that I saw was Migration, which is a children's film. And I only really saw it in that format, to be honest, because it was the only Showtime that fit with my kids' nap schedules that day. And there I was.

But there's lights at the corner of your eye, and the screen pops up intermittently. And while my kids seemed to enjoy it, or certainly was amused by it, I found it just exhausting a little bit. I tried it again by myself when I went to go see Godzilla Minus One back in the winter. And again, I just found myself kind of wishing to be in a regular traditional experience because it was a distraction from the action that's going on around you. And I just found myself frustrated and I actually left that show early and ended up waiting for the later IMAX show because I thought that would just be a much better experience. And I was right. It was so good on IMAX, even though this was a movie that was shot for IMAX versus shot in IMAX. So it didn't have that true depth of picture.

It was just, you know, really, really cool. And is the process to make a movie for ScreenX, is that drastically different than another format? Yeah, it's quite different because to make a movie for ScreenX and to utilize those kind of side viewing panels, you have to have collaboration between the ScreenX operators and the filmmakers and studios. So ScreenX has technicians and digital artists who put together those kind of peripheral content with instruction and collaboration between the filmmaker themselves so that it's not just slapping on third-party arts onto someone's work of storytelling. It's much more of a teamwork process.

Okay. And how much – obviously, I have not been to a theater in a while. So just remind me, what are the price comparisons here compared to like a regular showing? I mean, okay, a typical showing at a downtown Toronto multiplex for a standard screening for an adult will probably run you about $15. Add-in 3D or add-in ScreenX, you're looking at closer to $18, $19. I believe a 4DX ticket is about $24. So it adds up. If you're taking a family, it adds up fast. Is this a business calculation from the theater's point of view? How does this work? Yeah. I mean, they need to maximize revenue at every turn. There is a narrative, of course, that theaters are in recovery mode since kind of the heights of the pandemic. And, you know, there is a narrative, of course, that theaters are in recovery mode since kind of the heights of the pandemic.

And, you know, that is true. People are certainly going more to theaters this year, a severe lack of product in the theatrical marketplace, which is a knockdown effect of the labor action from Hollywood last year. So we're seeing about 30% fewer titles this summer season than we were in the summer of 2023. 30% fewer movies. Wow. 30% fewer movies. So that's 30% ostensibly fewer customers. So the exhibitors, you know, they need to basically wring as many dollars out of their visiting guests as they can. experience, which has the kind of double down effect of hopefully drawing people who wouldn't be coming to a movie otherwise, potentially, and maximizing the revenue that you get from those habitual moviegoers.

So how does this break down then in terms of what theaters are offering? Like how many screens these days are showing PLFs versus just traditional movies? I mean, you know, if you were to look at the show times of, you know, standard multiplex, How many screens these days are showing PLFs versus just traditional movies? for the baseline cost and not with the ads on of 3D or an IMAX option or a ScreenX option or an AVX option, which, again, goes to a certain quality of presentation, certainly, but then it does present the illusion of choice, perhaps, in these premium offerings. Sometimes there is no offering but a premium offering, depending on one's schedule and free time. Do we have a sense of how much business and movie theaters are being made up from those premium offerings versus just like the traditional showings? Yeah, we have a pretty good

sense because box office revenue breakdowns every weekend offer a pretty good window into just what is contributing to those revenues. Inside Out 2, for instance, about 50% of its opening box office revenue worldwide came from PLF screens, including IMAX. Basically put, if you were to take a traditional screen and a PLF screen on one opening weekend, you would find more people in that PLF screen than a traditional one.

We'll be right back. Barry, you touched on it a little bit, how theaters had been struggling. Of course, we've been through a pandemic, an affordability crisis. It puts a lot of pressure on this industry. Is this why we're seeing these premium format movies? Or I guess, yeah, can we think about why this is happening at this point in time? I mean, I think it is. It's, you know, it's a survival mechanism.

It's innovation. Theaters have always been trying and often succeeding in innovating when they perceive a threat to their sector. This is really not so much a different step than what movie theaters took in the 50s and 60s with the introduction of Panavision and really wide screen formats, because that was something that could not be replicated on the kind of square box of a television at home. So this is all about offering a different kind of experience than you could replicate for yourself. What is the financial state of the movie industry? Do we know? I mean, that's a question worthy of a franchise itself to explore. You know, do we break it down? Are the studios still making money? Yeah, sure. But what are they making money on? It's on exploiting intellectual property and franchise to the hilt. Are we going to be seeing the crash of several movie theater chains in Europe and the United States? Likely. AMC is constantly teetering on the edge of bankruptcy. Cineworld is shutting down almost a quarter or restructuring a quarter of its sites in the UK. There was a report from the Network of Canadian Independent Exhibitors from the other month that said the majority of independent Canadian movie theaters were operating at a loss at the last end of the

fiscal year. So we're in an era right now where I think it is safe to say, and I've said this even before the pandemic, that I don't think we're going to see many or any movie theaters actually get built in Toronto any time in the future. They might be redeveloped or restructured or something like that. But if someone out there in Toronto can imagine somebody actually putting a shovel in the ground to build a new theater, a new multiplex or a single screen, I would love to meet that person and find out what is fueling their optimism. Because the idea is basically you're not going to make money on that at this point in time then. No, I mean it would be a backwards form of investing.

So that's why you see this retrofitting for the multiplex screens that do exist to offer some kind of differentiated experience that will hopefully please the regular crowd and draw in new audiences. So you talked about all these theaters basically operating at a loss, maybe potentially going bankrupt, these chains. Is that because the audience is just not there? Is that the core reason? No, I think there's many different reasons.

And we should be careful not to generalize it too much. The U.S. has a very specific problem in that they're a very over-screened industry. They built up too many multiplexes too fast in the aughts and 2010s. There was a vast era of overdevelopment. Canada does not have as severe a problem in that regard. But as one sector goes, the domino effects, you can see how they affect everything else and it is not such an isolated problem geographically basically you know as we've seen people have many more viewing options these days and they have many more ways in which they can pay for that. Streaming, I think, as much as we can kind of say it hasn't become the

nirvana that was promised at the start of the pandemic, because we've seen so many competitors to Netflix come along, try to rip that crown from their head and fail. And we are going to see an era of mergers and acquisitions in the streaming marketplace, I feel, in the next few years. But it has totally changed the way audiences approach and think about entertainment consumption. And it is no longer a given, or even half a given, as you would know from your experience of basically shunning the movie theater for almost a decade, that they have to go out to experience something. Wrap all that in if we want to get into the nitty gritty of the theatrical window. Movies are moving from the big screen to the home screen at a much faster rate than ever before. It used to be something like three, four, five, six months you had to wait for a movie to play

in theaters and then be available to rent or buy. Today, that can be as short as three or four weeks, sometimes even less. In the last few minutes we have here, Barry, let me ask you, I guess, some broader questions about what this really all means for this industry, because these new formats are here. Do you think this is kind of heralding, I guess, a new era of cinema? Like, is this going to drastically change how we go to the movies or is this not such a big change? I think, you know, anybody who can say one way or the other which way or what is going to change the industry should be investing in the stock market and be a billionaire right now because they would absolutely know what's coming. Nobody really knows what's coming. Nobody really knows what's coming. I would say this is an interesting prong in a very long battle that is being waged to keep audiences coming out to theaters. Will it completely revolutionize the industry? I don't think so. I can't say for sure,

but just like 3D was helpful for a time and there was certainly a trend where everything was being converted post-production into 3D conversion process and making sure the images were being conceived for a 3D presentation. Are any audiences out there clamoring for 3D or are they like, oh, okay, this showtime's in 3D. I guess I'll go to it because it works with my schedule. And you talked about how cinemas are operating on often really thin profit margins, maybe even losing money as well. What does this mean? Like, how long can they continue to operate in that space? Well, they can continue to operate in that space so long as they can convince private equity to push money into it and face the losses.

You know, Regal, I believe, in the U.S. just got a $250 million private equity injection to revitalize their spaces because a big complaint, especially, and this is much more prevalent again in the U.S., is that outside of major urban centers, the user experience of a theater can be dire. I do feel that Canada is quite lucky to have really very high standards in terms of presentation with our multiplexes and our single screens as well. But to answer your question of how long can this last? Until the money runs out, until the stockholders don't revolt, you know, until there are no more mergers or acquisitions to be had. And then we close up shop. You know, a big problem, though, because it's not just you close down a theater and then you move on. A lot of these theaters are real estate anchors.

They're in malls. They're in big box kind of outlets, locations. They are driving people to the retail that surrounds it. And if you put a hole in that, you're affecting a lot more than just the moviegoers. So it's not as simple as a thing as closing a restaurant and hoping another restaurant moves in. These are very specific spaces. Barry, this was really interesting.

Thank you so much for taking the time to be here. Oh, thank you. Please go to a movie. I'll let you know if I do, but was really interesting. Thank you so much for taking the time to be here. Oh, thank you. Please go to a movie. I'll let you know if I do. Okay. No immediate plans. That's it for today. I'm Mainika Raman-Wilms.

This episode was produced by Kevin Sexton. Our producers are Madeline White, Rachel Levy-McLaughlin, and Michal Stein. David Crosby edits the show. Adrienne Chung is our senior producer, and Matt Frainer is our managing editor. Thanks so much for listening, and I'll talk to you tomorrow.