Is the Movie Theatre Era Over? Chapter 2: How Big Can We Go?

The post-World War II America was profoundly different than the one that entered that deadly conflict. Recreation and comfort were on the minds of those who lived through the difficulties of depression and the horrors of war. Affordable homes began popping up in the suburbs of big cities. Soon droves of new families were congregating together in neighborhoods made of new cookie cutter homes ordered straight out a catalog. These families bought new items to make their lives easier. Washing machines, dish washers, microwave ovens, and gas-powered lawn mowers to name a few. While this migration happened, the interior of big cities began to be hollowed out as permanent residents fled the cramped apartments for the (relatively)spacious burbs. Downtowns became populated with commuters, coming in from the suburbs to work and then going home at night. Nighttime in a big city, always a little dangerous, was slowly becoming more hazardous. The big downtown movie theatres that had once been cultural symbols began to lose viewers in droves. Thousands of them were eventually boarded up, demolished, or repurposed. Meanwhile, out in the suburbs, new opportunities arose for the recently unshackled independent movie theatre chains.

The great move to suburbs created great opportunity for building developers to create new areas for fun and entertainment for the droves of new families. What was better family fun than a movie? With so much open space to work with, movie theatre companies could think big. Now that everyone drove most places, developers had to account for car parking in large numbers like never before. The easy solution to this problem was simple, just have people watch the movie in their car. There were drive-in movie theatres as early as 1910, but the trend didn't take off until the easy-going days of the 1950s. Drive-ins were the perfect expression of the changes in American society at the time. Gone were the glamourous architectures, orchestra pits, and rows of seating. In were simple dirt roads, outdoor screens, and playgrounds for the kids. The car was also more private, and the darkness needed for showings provided young people the cover to do the taboo. Going to a movie was the ideal date location as it was both public and private at the same time. Surrounded by people to give a sense of safety while dark and cozy to give the privacy enjoyed on a date. This change is not the main change I wish to discuss, but it is a great example of how the atmosphere that consumers' wanted in a movie theatre had now changed. They wanted an intimate place for a date or a fun place to take the family on an outing. Consumers no longer wanted the trappings and the fanfare of old school theatres. The America of the 1950s cared more about ease of accessibility than the overall quality of the product. However, they also wanted more choices. The couple on a date would want to see a much different film than a family on an outing. They would soon get choices in spades when the 2nd big change in theatres swept the country.

The Grand Multiplex Theatre

In 1920, AMC Theatres was founded by the five Dubinsky brothers, all sons of Russian Jewish immigrant parents, in Kansas City, MO. The brothers started out running one theatre and eventually grew to own theatres in several towns in the area. The youngest brother, Edward, took over the business in 1936 after legal fights with his two surviving brothers. Edward changed his name to Durwood to avoid the rampant antisemitism of the time. Edward's son Stanley joined the company after World War II, and convinced his father to build drive-in theatres, beating the craze. After the Paramount case, the company acquired all of the downtown theatres in Kansas City in the studios' divestment of their theatres. When Stanley took over the company in 1961 after his father's death, he had a modest sized chain of ten theatres. The suburbs of Kansas city were booming, and his downtown theatres were struggling. With a new interstate loop being planned, Durwood looked to expand into that wide open space. All of that room at relatively low cost opened up new options. Stanley thought to himself that he could make double the money of the new theatre by adding a 2nd screen, and he wouldn't have to add any more staff. He opened his first twin theatre in 1963 as two theatre buildings standing on adjacent lots. The success of this venture led him to think big. There had been two screen theatres before in America, but the idea of going bigger had yet to materialize. Stanley opened a triplex at the Country Club Plaza, and then followed that up with the 1st four screen theatre in the world in 1966, the Metro Plaza. The success of AMC sparked a revolution in theatres across the country. The multiplex was born.

Graph of Movie Theatre Screens per capita over time

While the number of cinema buildings was plummeting in the US, the number of screens at each one was growing exponentially. The opportunity created by suburb growth allowed the newly unchained independent movie theatre chains to build bigger and more efficient theatres closer to where people lived. They could build their new theatres as cheap big metal buildings, and the people wouldn't know or care. Multiple screens would give the consumer more options. A single theatre could now show a family friendly film, a horror film, a romance, and a musical all at the same time. Theatres could now stretch their fixed costs(maintenance, building costs, overhead, etc.) over multiple films at the same. In addition, they could have a similar level of variable costs(staff pay, lights, utilities, etc.) for four screens as compared to one screen for each hour of operation. That is why theatres now will play movies to empty theatres. It costs them almost nothing additional to do so. The profit margin on theatre tickets became incredible. Money poured into the theatre business, and theatre chains like AMC grew like crazy. Box office revenues shot up along with the number of screens. The consumer responded positively to the expansion in choice by spending more at the box office. There were simply so many movies to catch up on!

By the 1970s, the multiplex model was cemented as the quintessential approach to new movie theatres. Old one screen theatres were yesterday's news. AMC continued to push the limits of this model, peaking in the 90s with a theatre in Ontario with 30 screens! Optimism reigned in that decade as movie revenue just continued to rise despite the continued proliferation of cable TV and the internet. A corporate brochure from Warner Bros in 1998 boasted "In every country where the Multiplex has been introduced, ticket sales have increased consistently year on year, invariably bucking economic trends. … As we look to the future, all the evidence suggests that attendance will continue to flourish as more people throughout the world discover the Multiplex experience and choose the visit the movies more often each year.” However, this model has proven to be unsustainable as we enter the 2nd quarter of the 21st century.

These days social media is full of movie goers' talking about seeing a movie, and the theatre being empty. A film on a week night in its 3rd or 4th week in theatres will be lucky to get 5 people buying a ticket. That is where movies are in the post-COVID world. Every since the pandemic, movie revenues have been anemic, especially adjusted for inflation.

The megaplex model that prevails across the US has created empty palaces of cinema. During the pandemic, many theatre chains took the opportunity to add more amenities to their theatres. Reclining seats, food delivery in the theatre, and additional IMAX screens to name a few. Even these have not brought back the crowds of earlier generations. Theatres have become largely automated with auto-timed projectors and self-serve ticket kiosks. Since the pandemic, whenever I have been to a theatre on a week night, there are maybe two employees and a manager there. Those are some pretty low costs for theatre chains, but they are struggling to gain revenue. Theatres can't keep cutting costs in order to survive. What is to be done? What can save the movie theatre from fading into history? I provide background to the film industry's financial woes and a potential path out in Part 3....