Today, Explained - How movie theaters might survive

Episode Date: December 12, 2020

On this episode of the Decoder podcast, host Nilay Patel speaks with Shelli Taylor, the CEO of Alamo Drafthouse. Taylor argues the government has failed to manage the pandemic effectively for business owners and explains what the future of theaters could look like in the streaming age. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Movie theaters had a rougher go than most this year. They shut down, then they tried to have a big comeback with a Warner Brothers movie called Tenet, and that didn't really work out. And then news broke late last week that Warner Brothers would be releasing all of its 2020 movies for streaming on HBO Max at the same time they're released in theaters, if theaters are open to show them to begin with. Bad news on bad news on top of bad news for movie theaters. We're talking about movies like Matrix 4. We're talking about movies like Dune in that Warner Brothers slate. This is tough stuff. But Shelley Taylor isn't giving up. She's the CEO of Alamo Drafthouse. If you don't know it,

it's a kind of quirky chain of movie theaters with locations across the United States. Quirky because, for starters, they serve food and drinks to you while you watch, but their theaters also have a lot of character, and that's why people love them. Shelly spoke to our colleague Nilay Patel recently. Nilay is the host of a new show from the Vox Media Podcast Network called Decoder. He's going to be interviewing a lot of big names in the tech business world, and he's already off to a great start with Mark Cuban, Microsoft's Phil Spencer, Khan Academy's Sal Khan, and Shelley herself. Today, we're bringing you the conversation that Nilay had with Shelley, and if you like what you hear, we hope you'll subscribe to Decoder. Here's the show.

Shelly Taylor, you're the CEO of Alamo Drafthouse. Welcome to Decoder. Thank you. Glad to be here. I was just reading your bio and the backstory here. I got to start with this. You became the CEO of Alamo Drafthouse on April 30th. So you have stepped into chaos. I think Alamo actually shut down 41 theaters in March. What was this recruiting pitch like? Like, did they call you and say, Hey, are you interested? Like, was it already in the works? Just, it seems like a wild way to become the CEO of a movie theater chain. Yeah, it is. It does feel wild, but the, it was in the works at Christmas, uh, when Tim and I

met and started talking and, you know, I was just drawn to this incredible brand and this opportunity to, you know, help take something iconic and grow it even larger, right? And then all of a sudden the pandemic hit and here we are. So we've got this little issue to get through that we can go back to the original plans. What was just the first day, April 30th, you show up, you got to introduce yourself to everyone. Like there's usually a script, right?

The new CEO follows, you say something like, first, I just want to listen. There's like, there's the usual stuff. Was it very different this time? Or did you just come up running? A little of both, right? I mean, you do talk about just really wanting to listen and to get to know people. You don't have the advantage of the water cooler in the office and that proximity. But at the same time, there is nothing like a crisis to teammates have been so welcoming and willing to just assume good intent and want to move forward versus having to do some of that initial stuff. So it was pretty fast and no one's kicked me out. We're seven months in and I'm still here and things are going pretty well considering. So I always try to ask everybody to begin about decision-making frameworks. Before Alamo Drafthouse, you were the CEO of a large group of Planet Fitness locations. You were at Disney before that.

Tell me about your general way of making decisions. How do you think about evaluating your choices and then actually coming to a decision? You know, I think it's a couple of things. One is just knowing who and what you are. It's the beauty of everywhere I've worked has had a really clear sense of their purpose and values and the problems that they're trying to solve in this world. So always starting with that framework and, you know, driving from there. I think that one of the things that I took from Starbucks and have valued over the years is that you always put people into that equation. So when you're looking at a decision, it's the stakeholders, it's your customers, you know, it's the people on your team, you know, having all those points of view. And then sometimes it's the broader community,

depending on what the product is. And so I think if you start there and then you put in a good dose of data and a good dose of your gut, usually that's a great way to go. I mean, it's pretty simple. And obviously, depending on the complexity of what you bring in or don't bring in,

but it really is values and people and direction. So the reason I ask that question is because right now you're managing in a crisis where there is a flood of data. You have a very physical plant kind of business. People go to a movie theater and sit down and stay there for a while. How are you managing the influx of COVID information? There's a massively disjointed federal and state response. There's people who are refusing to wear masks. There's right before he came on, New York city closed its schools again. It feels like there's just a flow of information about the pandemic and how it's going and how we're handling it. You're saying there's like add a lot of data, but the data is messy. The points of view are messy. How are you just managing that?

Yeah, that's a great question. And I appreciate, and I really want to reemphasize the lack of coordinated government approach is like crippling the nation. And if there is a message, and I know lots of people are saying this, but if there is a message to our government right now, you know, it is critical that they have a coordinated approach, you know, and the way that we're approaching it is, you know, one, you know, just my own prior experience living and working in China and seeing how this has been approached in the past, you know, helps watching countries that are, you know, and businesses and countries that are making good decisions helps. And then we've just been, you know, just trying to take a very steady approach. And that is with the information that we do know, and that is not constantly changing, and some of that is, but there are a few constants out there, you know, is how can we make our experience as safe as possible from purchasing your ticket to the minute you leave the theater. And we haven't wavered from

that. You know, we've done a lot of, you know, pretty scrappy, fast innovation for online ordering both of tickets and food, you know, how you come into the theater, doing the spacing of people. So that six foot distance we had before it was popular, you know, we said come into the theater, doing the spacing of people. So that six foot distance we had before it was popular, you know, we said that we were going to enforce masks for everybody. We thought about our kitchens, creating a smaller menu so that we can social distance within our kitchens. How do we not breathe on food, touch food? How do we help people exit the theaters? I mean, you just name it. We've taken every single precaution that we can, and we've gone as far as we could. So we've just said, what is the safest stringent possibility?

And yes, there's going to be this constant influx of information. But until there's something that comes in that says differently, we're not going to waver. And that's just been our approach. And I don't know, with all the variables variables out there how anyone can do it differently. Is that a set of advisors and team members you needed to build? I feel like most movie theater chains didn't have a lot of epidemiologists on staff before COVID.

But now all of us are, you know, we're all looking for that expertise. We're all looking for those guidelines. How have you built that muscle and that skill to evaluate those decisions? Well, we do have a really great source of a lot of people who are willing to help us, whether it's our PE firm, Ultimate Capital, gives us a ton of information and advice, whether it's our insurance and brokers on that side bring in a ton of advice. And then, you know, we've got strong relationships with the University of Texas UT, you know, and the information that you can get, you know, publicly. So, you know, we've probably done what a lot of people do. We don't have a ton of money right now. Our resources are very skinny. So we've had to kind of do it yourself as best as possible. And, you know, we'll continue to

probably operate in that method. But it comes back to that need for a coordinated government approach to this. And the government really could be doing a better job at providing clear guidance that does not consistently change to businesses and quite frankly, is equitable to businesses. What do you mean by equitable? Just small examples. In some cities, we're not allowed to open or we can open, but we can't serve food, yet the restaurant next door can serve food. That just doesn't make sense in how you operate. What's the logic? And set a simple, clear set of criteria that everyone operates off of. Because part of the problem is this, the noise and the confusion that goes out to our customers

and our guests. You know, it's safe here, but it's not safe with you. And people can't discern that, you know? So it really should be agnostic to the business, what is safe and what's not, to the best that we know today, right? Yeah. Asking for a lot, probably. Well, you know, there's a new administration.

We'll see how it goes. Yes. One of the things about the pandemic that I've heard from many CEOs, executives, is that this has accelerated trends that we already saw coming. In some cases, those trends are positive. We've seen a massive acceleration in e-commerce.

Everyone already saw that coming. We just turned the knob up. There's been a pretty loud conversation for years about the future of movie theaters. And some of that has played out in different ways. Like rom-coms don't really get made by Hollywood, but every other Netflix show is like basically a rom-com. And so we've just seen the dynamics of the industry change. I've always thought of Alamo Draft House as being slightly different than your average gigantic chain movie theater. You have food, it is an experience, you're running old movies, people come there as a social event. Do you see it as this is accelerating the trend that was already coming? Or, you know, you started by saying, we'll just get back to work when it's over.

Do you see this as an aberration on the plan that you already had for your company? Well, I mean, so yes, the world is accelerating in many ways. What won't go out of style is community and social experiences. And so I think while the industry was ripe for disruption and we're seeing that, Alamo's secret sauce really, right, is creating these communal experiences for people, bringing the community together to laugh, cry, gasp, whatever, but have fun together. And that won't go out of style. And so for us, it will be going back to the secret sauce of what makes us special. And it is, you know, coming into, you know, we show over 2000 films a year. It's more than double what other chains show because we, we bring in a really thoughtful, you know, slate to, to our audiences.

And that's what they want. They want more than just the big blockbusters, you know, and then we do create great food, you know, and sometimes that food ties to the, to the film, which is really fun and, and all the different experiences that we do create. And so that won't go out of style. I do think what's accelerating and things that were on our list is we wanted to do the mobile food ordering in advance where if people wanted to figure out what they want to eat and order that with their tickets and not have to do that in the theater, we wanted to do that. So we brought it forward, you know, and, you know, Alamo on demand, that was something that was in our hopper of a great idea of how do we curate really different streaming opportunities for our audiences that the big streamers aren't

and probably will never do, you know, so we have brought things forward. And I think as we move into the future, there'll be some other things that we think about. But the core won't change, you know, that community, that experience and creating something that you can't get at home. That won't change. Won't go out of style. We're going to take a break. But when we come back, I'll ask Shelley about what goes into creating the physical experience of seeing a movie at Alamo Drafthouse. The seats, the screens, the food, and those light bulbs. Support for Today Explained comes from Aura. Aura believes that sharing pictures is a great way to keep up with family, and Aura says it's never been easier thanks to their digital picture frames.

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and available just in time for the holidays. Terms and conditions do apply. All right, we're back with Decoder. Alamo Drafthouse's build itself is more than just a movie theater. It's an experience. So I wanted to ask Shelly about how she thinks about the basic parts of operating a movie theater and where it goes from there. I spend a lot of time talking to tech CEOs and they ship me a phone and they're like, it's great. And that's the end of it. And certainly they have lots of people working in offices and they have a physical plan to manage,

but your product is a physical experience for people. So I'm curious, how do you think about, you know, seats? Like we're going to have to install some seats. Like what is the decision-making process to like choose the seats in the theater and maintain them over time?

Like, do you go to competing theaters and sit in their seats and maintain them over time? Like, do you go to competing theaters and sit in their seats and think, well, these are better than mine. I got to, we're going to have to improve them. Like that's a set of decisions that I think rarely get foregrounded, but it seems clear that you have to think about them all of the time. Yeah. So Tim Leaguer, founder, I don't think he went to competitors and said, I mean, you know, some degree, what are they doing? I mean, he's said, I mean, you know, some degree, what are they doing? I mean, he's created kind of the, you know, cinema eatery experience, but you know, what he

does is like, he's such a huge super fan. Right. And he's like, how, how do I want to experience this? And one simple detail that you wouldn't necessarily notice is the space between the screen and the first row. Like, I think we have eight to 10 feet on any other theater, meaning like we go back. So we could have squeezed in another row or two, but we said, no, like we want to make sure that even if you're in the front row, that is a seat worth having. You know, when we look at beer on tap and again, it's just, you know, all these details. But when we look at beer on tap, we go to the local market. We're like, what is important for this community? And we buy local beers. We still have, you know, some of the traditional beers that you would expect.

But we think about all those things because we're like, if you're going to spend the money, I mean, if you're going to go out of your house, come to the theater, all of that and spend the money, like, what do you want? You want something where someone who loves movies has curated it and thought about all that. And it's like our pre-show and no texting and no talking. Like, hey, you spent a lot of money. We know you don't want to hear all your neighbors next to you. It's all those little details that Tim has spent, you know, and the company, but, you know, Tim is the visionary, has put into, you know, creating this experience. And, you know, even in COVID, we've thought a lot about that. Like, how do we, you know, we're not, we're still making our pizza from scratch, quite frankly. We

haven't changed what makes our great quality great. How do you think about the technical side of just showing a movie, right? That's changed a lot over the past decade. You're talking about sound, our projectors are amazing. I mean, they've come a long way. They're a very expensive piece of equipment. What we do do differently than most of our competitors is that we're changing our bulbs out regularly. And we don't wait for them to get to the end of life. And that seems like, and it's very expensive. They're thousands of dollars for one of the bulbs. But it makes a huge difference in the quality of the screen and that film that you see. So we do a lot of things like that.

And it is technical, you know, and we have some of the best people in the industry who work for us, you know, that guide us in that and stay on top of it. Definitely not where I can speak fluently yet. Just to be clear, you're the CEO. It's April 30th. You start, you're like, okay, show me the PNLs. And someone's like, well, we've got this COVID problem. Also, here's our light bulb cost. That's a real, and you're like, this is higher than the industry and we're good with it. Well, yeah. I mean, I'm super super curious right like i i was like i want to see you know even if we're not showing films like take me up and show me the projector you wouldn't

geek out and say you know show me all this stuff so i i you know i've spent time in theaters i've worked a few shifts not enough but i'll get out and do more um and trying to learn it rapidly you know but our focus really is on survival. It's working with our banks. It's working with our landlord, landlords, you know, all of, all of that. And then quite frankly, trying to take care of our people, you know, in this situation, that's a lot to do. You've never, I'm sorry.

I'm so focused on the light bulb thing because it's such a, it's such a good stat, right? Like we spend more money on light bulbs because we care, but there's never been an instinct to say, Hey, we could, we're in a crisis. We could save a ton of money if we just run our projector bulbs longer. Yeah, no, that's not our, that's not our goal. You know, I think there are places where we can improve our P and L and we are finding those and making improvements across the board, but it won't be in the experience and it won't be how we treat people, whether it's our teammates or our guests, that's not where you save money.

You save money on how you negotiate contracts and all the costs behind the scenes that don't touch people. That's where we need to be more disciplined and where we haven't had to focus. And quite frankly, now we are, had to focus. And, you know, quite frankly, now we are like the spotlight's there, but it will not ever be on quality. So tell me about negotiating those contracts. In reading before the interview, it sounds like

your landlords are working with you. They're developing new cost structures. Do you think that that is a, well, tell me what some of those are. And then do you think that that will last through the pandemic that landlords are working with theaters because we know these are different times than normal. And then we have some landlords, quite frankly, who they just don't care and they just want the terms as they are today and are very difficult. And so we've got the gamut and everyone does,

but the conversation that we're having, whether it's with landlords, whether it's with banks, vendors, this isn't like a poorly run business. And I speak for thousands of businesses across the United States right now, not just Alamo. But there are many businesses like us that were super healthy until March. And now all of a sudden, we're in a crisis situation. And bankruptcy is not the solution. Like bankruptcy is the solution for needing to

shed off a bunch of your real estate assets or assets. And that's not necessarily the case. And so the way that we're going to change our economy or jumpstart it again, when we come out of this and elements, you know, aspects of the economy, some, you know, tech is thriving, right? Or some tech, but for service industry and those that are impacted by people physically walking in the door, it has to be burden sharing from all, everyone, from the banks, your debt, you know, your debtor, your creditors, to your landlords, to your vendors. But you as the business have to burden share too. And right now we do have people that think it should be all about the business. It's an impossible scenario. And so I think for everyone, you know,

to look out and say, how do we, again, this isn't about win-lose because if it's a win-lose, the nation loses. It needs to be a win-win for everybody right now. And it's just not going to be a great win-win for a while. But if we can survive 18 to 24 months, the economy will come back. We know that. We are resilient as a nation, but we do have to find that path. Are you, in addition to doing the corporate work that you're talking about with contracts, with vendors, have you engaged on the political side? Are you out to the states you're in? I would say, are you out to the federal government, but that seems quite messy. Is that work that you're doing as well on the policy side? So I would really leave, like NATO and John Fithian, and they are doing a lot of that

heavy lifting and we are thankful for their leadership in that, you know, lobbying and having- NATO is the National Association of Theater Owners, not the defense organization. Thank you. And it's a good thing you said that. My first week on the job, I'm all, you're calling NATO? Give me a break. So, yes. And now it's part of my lingo. But yeah, so they've taken a huge leadership role. But we too have, you know, been talking, you know, Tim talked to, was on the phone with Nancy Pelosi's office. I'll be on the phone with the city council in San Francisco. You know, I've talked to local lawmakers here in Texas. You know, we are having those conversations because again, and when we have these conversations, it's not just about Alamo

and what we matter and we care about Alamo. It's really trying to help everyone think about the broader business community and how do we move forward together? Like that is critical right now. Over the summer, one of the biggest controversies in Hollywood was whether or not to release Christopher Nolan's Tenet into theaters during the pandemic. Big news for the movie business. Warner Brothers' Tenet from Christopher Nolan. It was set to be the first big theatrical release post-COVID in August. It's being pulled from the release schedule. Warner Brothers saying it'll share a new release date for later in 2020 shortly.

The movie eventually came out and no one went. Tenet was supposed to be a huge hit, but as of right now, it's only generated $57.4 million in box office sales in the U.S. and Canada and $300.4 million globally. And it's going to come out digitally on December 15th. So I wanted to ask Shelley about what that data point told her about the timeline of reopening and really about the future of movie theaters. Well, first of all, just a huge thank you to Jeff Goldstein and to Warner Brothers for a studio to take a chance, right? And I think it wasn't, I think there's a couple of things that were happening. One is there's a lot of noise in the marketplace, even today, where people do not know if movie theaters are open or not. So not even if they're safe, they just don't even know it's a possibility. And trying to cut through that noise has been really difficult. And so when I look at it, I don't see it as there was a message in it. I see it as the industry works in a certain way, and we just didn't have some of those

key elements. One is enough, and not because of Warner Brothers, but because there's just so much noise, but a clear message out there to people that theaters were open and that they're open in a really safe way and in a fun way. You know, like the messaging that we did come out with as an industry was a little dry. Like we're safe because of, you know, a professor telling you versus come back to the theater. We've been super smart, but you're going to have fun. So we've got to get better at that. And then no movie is going to stand on its own. It's kind of like you don't want to be the only restaurant on a block. You want several. And it's the same with the movie slate. You've got to have a number of movies out at one time to draw in audiences.

And so again, Warner Brothers was huge in taking that first step. And shame on everybody else who pulled their movies out at the last minute and didn't follow through. And so for the studios, we've got to have a coordinated movie slate again and a coordinated message of we're open. And not just Alamo, but all movie theaters. It's really hard in the industry when you hear that certain chains are shutting down and not open. It sounds like we're all closed. Well, we're not. What kind of audiences are you seeing come in now? I know you've been doing some private rentals to families and groups and so on. I know that's been a success. Are you seeing just sort of the day-to-day traffic to the movie theater that you were expecting? Well, the private theater, so first of all, super proud, right? Like again, stood that up really quickly on with no budget and small resources. So huge kudos to my team and all the people that did it. And the private theater is super fun. It's turning out to be about 55% of our revenue. Wow. Yeah. I mean, you think about

it, you pick the movie, you create your own community and you come together and get to have this great event for shockingly a pretty affordable price. And prior to working at Alamo, I would have never thought it was possible. I could rent a theater route. Like that just felt beyond anyone's means. So we've, we've proven we can do that and create this great experience. We still have a lot of just general showings and people coming and have been asked this a lot and we haven't put a ton of energy around it. But anecdotally, I can see a wide variety of people. You've got the Alamo fans, you've got a pretty wide age range. It's not just millennials or whatever, you know? So I think it's just movie

lovers and people who, you know, are wearing masks have found a way to be safe and are picking a few things they want to do. And movies are one of them. By the way, when I was in high school, one of my friends, her dad was the manager of the local theater. She had a birthday party and it was the coolest thing. So you're right. I mean, that's, it's one of those things that everybody dreams about. It's cool that you can do it, but you're not getting first run movies such as they are anymore. That's Jurassic Park and the Goonies and older movies in that experience. What does that tell you about the, the value of the experience of going to the movies versus the novelty of the blockbuster movie coming out? Well, it goes back. I think we need both, right? I don't think it's an either or. But I do think that it speaks to the fact

that people are looking for experiences and that we truly have been for a while and I think into the future or an experiential economy. And so the fact that people can come and find their favorite movies, they can create their own parties and dress up, you know, or do something fun around it is critical.

First-run movies and blockbusters are still going to be important. People want new content and they want to come and see, you know, that huge, you know, that film, you know, think about the filmmakers. They're putting their life into telling these amazing stories, you know, that film, you know, think about the filmmakers, they're putting their life into telling these amazing stories, you know, spending a ton of money. And they want that to be on a big screen, big sound, you know, with a large audience. And people want to see that too, because it's great at home, but it is not the same at home as it is in the big theater, you know? So I think it's both. I think the private theater will easily carry into the future.

We think there's something there. You know, we're going to continue to work with that product and see how it evolves and grows. But we need both. And that will be probably one of the changes for the industry as it evolves. It won't be either or it won't be ors, both. Well, because I'm looking at kind of the you know the big film studios disney warner they all have their own streaming services now they're very excited about them disney puts out mulan they try a new pricing model on top of their existing

subscription went okay maybe they'll do it again obviously warner has hbo max they're like whole company is pointed at that product. Do you think there will be a shift to releasing stuff on the streaming services at maybe a high price and in theaters at the same time? Yeah. So, first of all, we take a lot of hope in watching the fact that more and more blockbusters are being held and waiting for theatrical. If that were the case, you know, there's a whole bunch of movies that could have easily been put on a streaming immediately. And I'd like to think it's, you know, that the studios understand, the filmmakers understand, there's a lot of lost revenue if you skip theatrical. And there's a way to probably do both, have incredible theatrical

and then go on to streaming. And to shortchange that process probably doesn't make sense. Do you think that theater owners, and I realize Alamo is a very different kind of theater chain and kind of the big ones that have held back some innovation on the studio side, but do you think the theaters have held back some of that consumer innovation? Like I have always thought to myself, I would just pay a hundred dollars to watch this movie at home and rent it for, you know, just for a night. But I, there's no way I'm going to go to a theater to watch this like mid market

movie. Just like, let me watch it here now and I'll be done with it. That has never happened. The theaters have always been opposed to it. The theaters have been opposed to Netflix going out to awards because they stream the stuff. Like, there's just been a lot of that noise here that seems like maybe it'll come out of the pandemic and those questions will get resolved. But what is that relationship between sort of theater owners and the studios as the studios try to innovate and quite honestly use this moment as leverage to get some things they've always wanted? I think there's a couple things. I think first of all, if theaters and studios think that the battle is between us, then we've lost all of us. The battle is with

COVID and the battle, you know, ultimately is how to best serve your guest. And so, you know, first, like coming together to fight COVID and then get into this new world, I think is going to be important. And when we get into it, it's to me, it's silly to think that there's streaming or theater. There's this or that. Content is coming at us faster than ever. No one knew that YouTube would be huge. I mean, just take whatever innovation over the last 10 years with content, and people are consuming more content than they've ever consumed. So I think the question is, how do studios and theaters continue to say, what are the best ways that we can serve our guests and create incredible experiences for storytelling? And so, yes, we may be different, but we also do not want our

fellow theaters going out of business. We need them. We need theaters, and we don't want to be the lone survivor. That doesn't make sense. But I think it really is unifying around how do we serve our guests? And, you know, for us, the secret sauce is incredible experience. We take every little, we sweat every little detail. We think about the napkin. We think about how clean our theaters are. We think about, you know, the popcorn. I mean, we think about the quality of the sound.

We do an incredible amount around our screens and sound so that that experience is always perfect um and then we're going to continue to innovate of you know whether it's in the theater or whether it's at home but it's going to be both and people are still going to come to the theater i mean that's just i can't imagine a world without a theater i really can't't. When you say we need theaters, you said it a few times. In the post-pandemic landscape, it feels like one potential outcome is there's theaters like Alamo, which are curated, which are more cultural events, and there's big chains that show Marvel movies and little else on 45 screens.

Does that seem like the most likely outcome, or do you think the big chains will have to change even more? Yeah. I mean, everybody wants that crystal ball, right? Yeah. You know, I think that, I think that everyone will have to evolve and change to some degree. And I think as much as this sucks, the pandemic and, and I, there's very few, if any silver linings, cause the damage it's done to people. And I don't want to undervalue that in any way. But at the same time, as much as this sucks, it is a microscope on our business. And for each of us to look back and say, everything from how know, select real estate and how do I build out and what are those costs involved and are there ways to be more effective and efficient?

Can I think about the size and, you know, type of footprint for a theater differently? Think about how big an auditorium should be. You know, in some places we're probably over-screened and other parts of the nation were probably under-screened. You know, so thinking about all of those to the unit economics, and again, without hurting your quality, there's a lot of lessons to be learned in that. And we certainly are learning them. And we'll move forward with those lessons. And, you know, probably everybody has to, but, you know, I can speak to the big chains and what they're going to do or not do. We're going to take one more break, but when we come back, we'll talk a little bit more about the future of the physical theater experience

and whether we'll see Alma Drafthouse pivot to outdoor drive-ins. We're back. I have a few more questions for Shelley about how to keep the movie theater experience relevant during and after the global pandemic. I feel like one of the things about the internet and streaming services is that we have one sort of national cultural moment all the time. Everyone's just, here's the thing that's on Netflix. We're all going to talk about it. It seems like theaters have a big opportunity to create regional experiences and regional moments in a way that has really gone under examined, right? That we just don't do that a lot anymore.

Is that something you're thinking about leaning into? Do you have regional curators or does that happen at sort of the top of the draft house? Yeah, it's a mix, right? Like, I mean, you have people in the region who know that audience best and are creating experiences and our roadshows are a great example. You know, we've done things like, you know, Jaws on the water where, you know, you do an outsource outside screening of Jaws and everybody's sitting in a lake on the water. I personally am terrified thinking about being on the water watching Jaws. I don't know how people do it.

But, you know, we've done all sorts of things like that, you know. And so that is something that we've always leaned into. Again, it really goes back to the origins and the vision of Tim of, you know, creating experiences and really being the best damn, you know, cinematic experience possible. So, you know, we've always leaned into it. We always will, you know,

and it will continue to evolve as our guests' desires and needs evolve. So there's been a flood of drive-in movie theaters popping up. I went to a drive-in movie the other day. Actually, they held Jaws and people came in their pickup trucks with inflatable pools in the back, which was pretty good. Is that something you're thinking about? We'll just stand up a bunch of drive-ins and that'll be it? Yeah, that's a good question. You know, there's a lot about creating a really good,

you know, screen and sound experience at a drive-in. It's just still not fantastic. And we thought, we really did. We thought a lot about, do we go do this for the temporary or do we stick to kind of our, our, our traditional model of, of our theater and focus there. And we've, we've chosen to stick with the traditional model versus kind of run after what we believe are short-term fixes. Yeah. My local drive-in was definitely being run off of a MacBook. Like we saw the desktop and we saw, saw the mask over and double-click on the movie. And I was like, I don't know about your licensing situation. That doesn't seem right. hit. You came in, you had a plan. What was the vision before the pandemic, before you entered crisis mode?

What was it that you wanted to accomplish in your role as CEO of Alamo Draft House? Yeah, you know, our goal was to continue to expand and grow and to do it in a way that we never lose our soul. You know, because a lot of times size and scale means that you have to give up that specialness or make it a commodity. And so the goal was like to really scale snowflakes and to continue to provide the most incredible cinematic experience possible and continue to evolve it and really give voice to as many films and filmmakers as we possibly can. And I don't think that goes away. I think it's just going to change, you know, or maybe take a little bit longer before we get solely back to that. But that's still, you know, the goal.

When you say scaling snowflakes, you mean each individual theater is a unique experience that needs to be managed independently. Yeah. I mean, right now when you go to an Alamo, in fact, it cracks me up. People have no idea that we have more than a couple. They're like, what do you mean there's 41 Alamos? You know, that's my community theater. That's where I go and I see my friends and everybody knows me. And, you know, so that, that experience, you know you know, and finding the economy of scale, that's hard. Like, you know, to scale and keep that soul where everyone thinks there's only one Alamo. And that's what we want to do. And I believe that you can do that.

What do you think the most critical elements of getting scale right but still making it feel small? Because I always, just very personally, I always think of The Verge as a big thing that feels small, right? Like I think our audience, they know who we are, but we have bigger ambitions. So what do you think are the key elements to making it feel small, even as you get bigger? Yeah, you know, so it's always a cost issue, you know, of how do you do that? And so I think the way you do it is you know what your secret sauce is, you stay focused on that, and then you scale the hell out of your back of the house, your accounting functions, your supply chain, all of that stuff. You bring technology in and make it as effective and efficient as possible so that you have

the money, the time, the mind share, the resources to create those individual experiences so that when you do go to Alamo in LA versus Alamo and, you know, Dallas or, you know, Winchester, Virginia, you know, you have like that local feeling. And that's what we, you know, that was our goal and, and, and we'll continue to be. Well, last question. It's a hard one. I apologize. But what is the, I don't know if anybody has the answer, but I'm curious. I'm asking everybody. What's the next sign you're looking for, for your business that we will be sort of on the right track? Is it the vaccine news today? Is it a more coordinated federal and state policy? What's the indicator that you're waiting for that says, okay, we can get back to

the plan? I think that, you know, yeah, I agree. This is a hard one. But I think there's a couple, you know, first of all, I do think the announcement of the vaccine gives me incredible hope. What's not being talked about a lot are the therapeuticals. And I think that is huge. You know, so combination of vaccine, therapeuticals, and then a, you know, coordinated government approach, that kind of from a macro perspective is what we need. And then from an industry perspective, we need to have the slate come back in totality, meaning, you know, we need a coordinated slate again. And it's not one movie pulls out, but rather the whole thing moves. If it needs to move

out to April, it all moves out to April, but they don't, one studio doesn't leave another studio hanging or whatever like that, that can't continue. So when those two things happen, you know, I will, we will have a ton more confidence of moving forward. And I'm pretty hopeful that that is, you know, April-ish timeframe. I do too. Well, Shelly, thank you so much for joining us. It was a great conversation. Thank you. And it was a pleasure to be here. Thanks again to Shelly Taylor for taking the time to talk today and thank you for tuning in. I hope you enjoy it. As always, I'd love to hear what you think of the show. I'm at Reckless on Twitter.

You can email us at decoderattheverge.com. If you enjoyed the show, please share it with your friends. Subscribe wherever you get your podcasts. If you enjoy the show, please share it with your friends and subscribe wherever you get your podcasts. Decoder is a production of The Verge and part of the Vox Media Podcast Network. It is produced by Sophie Erickson. Our audio engineer is Andrew Marino, and our music is by Breakmaster Cylinder. We will be back on Tuesday with another episode. We'll see you then.