Movie House Madness
The cinematic epic Scream 3 is not going to make anyone's Top 10 films list, unless you include the computer one-handers who express their undying devotion on the alt.fan.neve-campbell newsgroup.
So what does it mean that on February 18, 2000, a Houstonian who wanted to catch the flick had the choice of seeing it at any one of an astounding 53 different screens around town?
Does it mean that Houston is easily entertained? Maybe.
Does it mean that Houston has too many movie screens, all showing the same uninspired lineup of Hollywood major releases? Probably.
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Does it mean that the companies that build and operate movie theaters -- companies that are bleeding money and whose stocks are nose-diving -- might just wake up and realize they have engaged in an overbuilding frenzy that can get only uglier?
No way. In the world of movie-theater chains, it's always the other guy that's overbuilding. Your brand-new megaplex, on the other hand, is an example of strategically filling a little-noticed gap in the market.
Houston, in many ways, is ground zero for the reckless battle of attrition that is intensifying among the nation's theater chains. Moviegoers in few other places have the choice of so many new facilities -- all inevitably described as "state of the art," all equipped with stadium seating and improved concessions -- with more on the way.
In the front lines of this battle, a ten-year-old facility like the 12-screen River Oaks Plaza is a doomed dinosaur. It may be convenient, but come on: It's a "sloped-floor" theater, not a stadium setup, and the lobby is decidedly uninspired, if you're one of those people who seeks inspiration from movie-theater lobbies.
Who's gonna bother to see a movie there when a couple of miles away there's the 24-screen Edwards Cinema, which, according to its Web site, is "A Modern Marvel of Cinematic Splendor," featuring imported marble and a huge mural of Hollywood's greatest stars?
"Houston probably has more state-of-the-art screens than any city in the country," says Mark Pascucci, senior vice president of marketing for Loews Cineplex. "Houston is ahead of the curve, and those kind of screens are the only ones doing business."
In a few years it may be impossible to go to a mainstream movie in Houston without going to a huge "entertainment complex" that will offer countless ways for you to spend your money beyond popcorn and Robin Williams. The ante will be upped repeatedly: Already theaters in some cities offer "VIP rooms," with ever-more-comfortable chairs and personal food and beverage service.
Not every theater chain is going to survive. But right now the only strategy each can think of is to build its way out of its problems. And few cities symbolize the trend more than Houston.
At times it's difficult to remember, but the Age of Theater Megaplexes is no more than five years old. AMC Theatres startled the movie world in 1995 when it opened a 24-screen complex in Dallas (each chain has a different definition for what constitutes a "megaplex" as opposed to a "multiplex," but generally more than 20 screens means megaplex).
The AMC Grand 24 was an instant hit. Moviegoers loved the concept: If a movie was sold out, it probably was starting on a different screen in a half hour. Stadium seating largely eliminated the problem of being blocked by the tall guy in the row ahead of you, and the chairs became models of ergonomic comfort.
Theater chain executives, of course, loved the idea of attracting larger and larger crowds to a single property. Before long, a theater-building frenzy was in full swing.
Nationwide there were 26,700 movie screens in 1994; now there are 37,200, according to the National Association of Theater Owners. In Texas the numbers leaped from 2,000 in 1994 to 2,900 now. NATO doesn't keep figures for individual cities, but the number of screens showing first-run, mainstream movies in the Houston area is now about 430, almost double the count of five years ago.
Why the boom in Houston? Land is relatively cheap and available here, of course; it's easier to find a Houston shopping mall that could use a multiplex than it is finding enough space for one in Manhattan or San Francisco. The population is spread out here, too; there are lots of individual markets like The Woodlands or Katy or Fort Bend County that can support a megaplex.
And Houstonians, of course, have always been lovers of the new. Slap a "state of the art" sign on a new theater, and they'll happily drive by two older facilities to get to it.
Bigger-is-better became the watchword. AMC's Studio 30, on Dunvale near Westheimer, and the Gulf Pointe 30 south of town are as large as any theaters in the country.
An industry rule of thumb says it costs about $1 million per screen to build the new facilities that are going up. That can vary widely depending on location, of course, but being new doesn't come cheap -- if it's not the elaborate lobbies, it's the elevators and extra exits that stadium seating, as opposed to sloped-floor seating, needs to meet fire codes and the Americans with Disabilities Act. The cost of building one of these new palaces can be four times what it would cost to put up a traditional theater.
And theories about what works are still far from settled. A megaplex like Studio 30, which opened in May 1997, in some ways symbolizes the overbuilding crisis: Less than three years old, it's already considered something of a dinosaur.
No one is building theaters that large anymore. Economically, you begin to lose the efficiencies of scale that make megaplexes attractive in the first place; aesthetically, you begin to flirt with making moviegoing more of a chore than the average customer wants.
"You don't want someone to have to walk across two acres of parking lot and stand in a line for tickets with people going to all those other screens, and then have them see the movie in a small box," says one industry observer.
"All our screen builds are 16 to 20 now," says Loews's Pascucci. "We rarely go over 20."
Even AMC's Nolte admits that 30 is as big as the chain will likely go. "We have 210 theaters, and only 11 of them have 30 screens," she says. The theaters in Houston are planned well enough to be successful both for the chain and the customer, she says.
Although AMC and its competitors may have backed away from building 30-screen complexes, they have hardly slowed in their construction programs.
Edwards Cinemas entered the Houston market late last year with two theaters: a 24-screen multilevel facility near Greenway Plaza that charges a buck to park in its large garage, and a 23-screen complex near the West Loop and the Katy Freeway that features an IMAX screen and will soon be part of a huge entertainment mall.
The so-called Marq-E mall will include restaurants, an interactive sporting goods store, a children's play area, a comedy club and a Dave & Buster's-type eatery that features pool, video games and bowling.
While other chains might not have such elaborate plans, all are desperately interested in making patrons think of their facilities as "entertainment destinations" with more to offer than just a film.
"The ideal is to be in an entertainment-themed retail center, with maybe a medium- and a high-[priced] restaurant, a bookstore, maybe a music store," says AMC's Nolte.
Edwards's decision to enter the already crowded Houston market definitely caught the attention of its competitors.
"It's pretty obvious that if you overscreen a market, someone will get hurt," says Pascucci.
Theater chain executives, however, aren't sure that Houston is overscreened. An upcoming wave that may see many older theaters shut down will alleviate much of the problem, representatives say.
"We may be seeing an industry in transition," Nolte says. "Instead of overscreening, it's rescreening that's happening, as the older multiplexes go off-line."
Nationwide, theater chains are closing their older, smaller, sloped-floor theaters as quickly as they can. Loews, for instance, adds 150 to 200 screens a year while disposing of 70 to 100 older ones.
A year ago the head of AMC theaters told Variety that the 7,500 U.S. theaters then operating may be twice as many as the market could bear.
And so, CEO Peter Brown said, the industry should keep building.
"You need to be building all you can comfortably stomach, because the new [stadium-seating] format is one that the consumer expects and they like," he told the publication. "The challenge is to get as many of these built while we take the old ones off."
Many of the "older" theaters, however, are locked into long-term leases. Getting out of those leases can be costly or, if the landlord is uncooperative, impossible. Many chains are waiting for 15-year leases to expire on older-type theaters built in the first wave of expansion ten years ago.
Although theater-chain companies would rather their executives do their talking for them instead of local employees, people familiar with the Houston market say several theaters here are likely targets to be shuttered. Such well-known sites as the River Oaks Plaza (not to be confused with the Landmark River Oaks, the art-film theater that stays out of the Hollywood-blockbuster competition), the Spectrum at Augusta and Westheimer, and the Meyerland Plaza may have difficulty staying open, they say.
Loews owns the River Oaks and Spectrum, and executive Pascucci won't say that the chain plans to close the facilities. "We have people working at them, and it wouldn't be fair to talk about it," he says.
But, he admits, "in general you could say that around the country, the older, conventional theaters with the sloped floors are losing money to the stadium-seating theaters."
Renovating theaters that are more than five years old is usually too expensive, he says. "If it's any older, you usually can't -- you have the location, but you don't have the mousetrap to work with," he says, meaning the facility is too small or outmoded to become a luxury-ridden palace. "For the investment you put into these theaters, they just can't be a neighborhood theater; they have to serve a larger region."
But the growing number of modern facilities isn't bringing economic salvation to theater chains. For one thing, the huge number of screens means that many if not most customers see a movie in the first week or so, when it's least profitable to the chain.
Hollywood studios negotiate with chains seeking to show their pictures; typically the studio will get 90 percent of the ticket revenue for the first week of release, with that percentage sliding in subsequent weeks to perhaps 50-50. The glut of competitors means that if a chain won't agree to the terms for the latest blockbuster -- which can include guaranteeing a minimum number of screens for a minimum number of weeks, even if the film turns out to be a dud -- the studio has plenty of other options in the market.
All this means that even as Americans go to movies in unprecedented numbers, the theater-chain owners are swimming in red ink.
AMC, for instance, had revenues of $285 million for the financial quarter that ended December 30 -- up 10 percent from the previous year -- but still lost almost $9 million in the quarter. The Kansas City-based company has been rumored to be on the selling block for the past year or so, but there have been no takers.
AMC is not alone. Stock prices for all the major chains have taken a beating.
And all the major chains see their salvation in only one way: closing older theaters even before their costs have been fully amortized, and opening newer ones at $1 million per screen.
That's why some familiar theaters in Houston will close. That's why the rest of the country will soon resemble the Houston area, with megaplexes piled on top of one another, all offering the same tepid lineup of mainstream movies.
In the past, theater chains competed by getting their hands on the best movies.
If you wanted to see Chinatown when it came out in 1974, for instance, you didn't have much choice as to where to see it. If for some reason, however, you wanted to see Godzilla when it came out two summers ago, you could have gone to any number of theaters, at pretty much whatever time you wanted.
Ticket prices for first-run movies are generally not a factor in where the public sees a movie.
So the present and future competition among theater chains will be in providing amenities. And there's little reason to think that the battle has been won by installing rocking, plush, removable-armchair seats.
Theaters will seek ever more elaborate ways to attract customers. There will be added convenience -- buying tickets on-line, for instance, with the ability to print them out at home and eliminate the drudgery of even a will-call line.
But mostly there will be added luxury, because that's where the markups are best.
In suburban Chicago, for instance, there's a theater that offers valet parking, leather recliners and waiters eager to serve you a martini, shrimp or even prime rib. It costs $15 a ticket just to walk in the door, and a bottle of beer might be four bucks, but customers are eagerly shelling out. In Washington, a seven-screen complex offers similar amenities in a VIP section of each of its theaters.
Such decadence hasn't made its way to Houston yet, but it surely can't be far in the future.
While it may lag in the competition to cater to the upper, upper crust, Houston is at the forefront in the battle to win the theater wars by indulging the masses. Residents of few other cities get to watch as corporate giants try to outdo each other in defining "state of the art."
"The Houston market is a great movie market, and it's a good time to be a moviegoer there," says Diette Barnett, director of marketing for Cinemark Theaters.
"Houston moviegoers have gotten a great deal -- in Pittsburgh and Cleveland, for instance, they're just now starting to get stadium seating, but in Houston you've had it for years," says Loews's Pascucci. "With movies, theaters all have the same prices and the same movies. It's all about where you want to go to see them."
So perhaps this is the golden age of Houston moviegoing, where a picky public can sit back as a stream of corporate suitors stumble over each other trying to entice customers. If one finds the bottled-water selection wanting at Tinseltown, one can take one's business to Edwards.
If one just wants to see a movie, though, without having to drive out to some traffic-choked shopping mall or "retail destination," if one thinks a regular old movie seat is good enough for a couple of hours, if one doesn't want to pay imported-beer prices for a small popcorn, well, one is shit out of luck.
Soon enough the golden age will come to a close. The older theaters will be shuttered. Some chains may drop out of the market or merge. Going to the movies will become ever more expensive. The choices that a moviegoer now has will go from being too broad to perhaps too narrow.
"It goes without saying that a market can be oversaturated," says Pascucci, "but I think you're going to have to wait two or three years until these older theaters go off-line and then see where you stand."
And so, maybe four or five years from now, when Scream 6 is packing them in, maybe you won't have 50-some screens to see it on.
With less competition, you become more of a captive audience. With fewer theaters, the lines for parking and tickets are longer, the bargain matinees far fewer.
The amenities will be there, of course.
And maybe, as you sit in whatever is the newest design of chair, snapping your fingers for a cocktail, munching on shrimp, you'll stop for just a second as you discover you've just had a $50 night at the movies, and you'll think fondly back.
You'll wallow in nostalgia for the good old days, back at the turn of the century, when supposedly bright businesspeople were pouring millions of dollars into a market that already had more movie screens than it needed, and you'll smile at those crazy times.
E-mail Rich Connelly at rich.connelly@ houstonpress.com
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