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March 2009


Cinema Paradiso

by Michael Castellon

How the best little cinema house in Texas is reinventing the movie experience.

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Alfred Hitchcock once famously declared “a film can be called good when it’s considered worth the price of dinner, theater admission and the babysitter.”

But the value of a night out at the movies, once considered a deep-rooted American tradition, has changed since Hitchcock’s day thanks largely to the Internet, video games and a host of other distractions.

The value of cinema is increasingly murky due to economic concerns faced by many Texas families. The average U.S. ticket price in 2007 was $6.88, compared to $5.39 in 2000, which has raised consumers’ expectations of their overall movie-going experience.

Now, theater owners are working hard to win customers by using new concepts that bring value to the great American movie experience.

A New Hope

The future of cinema may lie in Texas. For proof, look no further than Alamo Drafthouse Cinema, where moviegoers are served green chili mac and cheese, fresh-baked chocolate chip cookies and burger and pizza options that pay homage to film (“Royale with Cheese” burger, “My Big Fat Greek” vegetarian pizza).

The concept is light years away from the traditional experience of sticky floors and cramped seats, which has forced many potential customers to take refuge in home entertainment rather than a night out at the movies.

Founded in 1997, Alamo Drafthouse has nine locations throughout Texas and one in Virginia. Three cinemas remain under control of the original founders.

It’s Showtime

Business at the chain is strong. Same-store sales for Alamo theaters that have been in operation for more than two years increased 14 percent in 2007. Average gross sales were more than $5 million for 2007.

Alamo theaters reached financial success during a time when many theater owners are taking a big economic hit (the number of U.S. cinema sites dropped from 6,550 in 2000 to 5,545 in 2007), and the entertainment industry is showering Alamo Drafthouse with accolades, as well. Entertainment Weekly has called it the No. 1 theater in America, and Washington Post film critic Ann Hornaday called it one of the finest places in the country to watch a movie.

“The average U.S. ticket price in 2007 was $6.88, compared to $5.39 in 2000, which has raised consumers’ expectations of their overall movie-going experience.”

“The economic situation for us right now is hard to gauge,” says Zack Carlson, a lead programmer for the chain. “Historically, during times of economic uncertainty, entertainment doesn’t suffer. We’re hoping that holds true for us into the future.”

Movie theaters may not be especially susceptible to economic downturns. In fact, data suggests they thrive. During the last seven recession years, box office sales and admissions increased over five of them, according to data provided by the National Association of Theatre Owners. A total of $9.6 billion on 1.4 billion admissions made 2007 the second record year in a row for box office and admissions growth, which may signal that no matter the bad times, Americans will always turn to movies for a hopeful distraction.

Other large chains also are further developing their concepts. Plano-based Cinemark USA Inc., one of the nation’s largest movie chains, is expanding the overall movie experience for its patrons to meet higher audience expectations at its more than 400 theaters in 38 states. Cinemark is launching new theaters with stadium-seated auditoriums, wall-to-wall screens and improved legroom between seats.

“We’re introducing new concepts to personalize the movie going experience,” says James Meredith, vice president of marketing and communications for Cinemark. “In many of our locations, customers have the ability to bypass box office lines and purchase tickets online before they arrive at the theater, and enjoy cafeteria-style concession stands that offer self-serve opportunities with great selections.”

Cinemark also offers special discount pricing initiatives aimed at different segments of the population, such as seniors’ day and early bird specials.

Economic Downturn

For now, Carlson remains optimistic that Alamo Drafthouse’s fresh concept will bring it through bumps in the economy.

“We’re going to keep providing the best movie experience money can buy,” he says. “I feel if we keep doing what we do, we’ll be good.”

Meredith agrees. “In the past, the movie theater industry has performed well during economic downturns,” he says. “Movie theaters still provide the most affordable out-of-home entertainment option. During difficult times, customers like to lose themselves in a great film and escape for a few hours.” FN

TOTAL U.S. AND CANADA BOX OFFICE GROSSES

year(In billions of dollars)    
2000
 
$7.468
2001
 
$8.125
2002
 
$9.272
2003
 
$9.165
2004
 
$9.125
2005
 
$8.832
2006
 
$9.138
2007
 
$9.629
2008
 
$9.780

Source: National Association of Theatre Owners

For more data on the theater industry, visit www.natoonline.org. Check out the Alamo Drafthouse Web site by visiting www.originalalamo.com. To find a Cinemark location in your area, visit www.cinemark.com.

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