Why Movie Theaters Don't Care About You

If I haven't already lost your interest with my post's title, then bully for you for being brave. This post might only appeal to Chris, but I hope it appeals to everyone who goes to movies.

Regarding the fine post by Chris following the Monday Night Football game, his points about movie theaters are pretty close to dead on. I specifically liked the part about how they try more to minimize cost, as opposed to trying to maximize income. There is no greater truth in the movie exhibition business. How else to explain that the average employee in a theater makes well below $6 an hour? How else to explain that inventories are done on individual lids and straws? Now, for your reading pleasure (or torture) I would like to list the top five reasons why customers don't matter to movie theaters. Should you need any assurance that I know what I'm talking about, know that I spent over 8 years in theater management, including three years working with Chris at a large multiplex (as First Assistant) and two years as General Manager at a 10-screener.

5. Theater inbreeding: As Christ pointed out, theater chains know that even if you get pissed off at one of their locations and vow to never return to that theater, the chances of the new theater you start patronizing being another one that company owns are very good. In addition, the 5-mile rule (also something mentioned by the esteemed Chris) is in full effect. This rule states that no two theaters (competing or otherwise) can show the same film if those locations are within five miles of each other. So if you get pissed at Bob's theater, and vow to never return, you may also be unknowingly vowing to miss out on some of your most anticipated movies. You may have to miss the next Spiderman or the new Batman altogether, or face returning to the location you're angry at.

Another facet of the inbreeding is the emergence of AOL/Time Warner-like mergers in the business. For instance, Regal Cinemas, United Artists Cinemas, and Edwards Cinemas are all owned by Regal. So if you live in California, where 75% of theaters are either Regal or UA or Edwards, even if you get pissed at Regal and vow to stop giving them money, you're next theater of choice is probably still filling the coffers of the same parent company.

4. Movies motivate people, not theaters: Theater chains like Regal or Carmike know all too well that customer loyalty in the theater business is practically non-existent. This is for one reason: people choose their theater based on the movie they want to see. This means that there are very few customers who, on movie night, go to a specific location they like and hope to find a movie they'll enjoy. More than 90% of customers in a theater on any given night are there to see a specific film. Often times, such as times when the 5-mile rule is in effect, this means they'll go back to a theater they've been unhappy at if their desire to see the movie is high enough. Regal tried several different loyalty programs during my tenure there, and nearly all of them failed. And that's because customers are much more loyal to studios (Pixar) and directors (Spielberg) than they are to the building they sit in to watch films by those studios and directors. Now, in a city the size of Nashville, it's easier to avoid a specific location that has upset you, because there are a handful of other theaters showing that movie....but you may have to drive across town to do it, and even then you're likely still patronizing the same parent company. The bottom line is that loyalty to an individual cinema complex takes a serious backseat to the customer's desire to see a particular film.

In my college town, where I started in the business, there were three theaters....two Classic Cinemas theaters (where I worked) and one Cinemark. If you got mad during a visit to one of the Classic Cinemas theaters, and vowed to stop patronizing them, your only choice was to start going to Cinemark. Unfortunately, all three theaters were within five miles of each other. So if you made that decision, you'd be missing out on exactly half of the movies that came out. Of course, you could drive the 45 minutes to the nearest town with a theater each time you wanted to see a movie, but I'll let you do the math on how likely that was to happen. And the end result was that even the most aggravated customers at Classic Cinemas were still likely to remain Classic Cinemas customers. So the voice of the customer mattered very little to both companies in that town.

3. Most people don't get that upset to boycott a theater. When I was in radio in Chicago, I learned a little known fact about angry customers: less than 2% of all customers in the retail world provide feedback to a specific company. This leaves 98% of customers, who basically never say anything to the company about how good or how bad their visit was. And of that 2% that do provide feedback....a whopping 91% are negative. What does this mean? Well, it roughly means that the only people the company ever hears from are the ones who want to complain. And that unavoidably leads to apathy on the part of the company doing the listening. "Oh, another complaint...whoop-de-doo. Big deal."

Most angry theater customers are too easily bought off with a free movie pass. As a manager, this is an area in which I am nothing short of an expert. Angry customer? Offer them movie passes. I guarantee you they'll be made happy by it, and they'll return to your theater over and over and over. I only met one or two angry customers whose anger did not subside after receiving free passes.....one was drunk and belligerent, and the other ended up suing the company. And chains like Regal and Carmike love movie passes...because it's a way to get customers in the door without having to pay any extra amount to the studios from whom they rent the films.

2. Movie theater patrons are stupid. You heard me right. By and large, film patrons are dumb. The vast majority of them don't notice film and sound problems. If I had a dime for every time I explained away a film problem to a customer by using unadulterated jargon-filled lies.....well, I'd have thousands of dimes. Something wrong with the sound? "That's just the modulator, and it's impossible to fix on our end, they'd have to make a whole new print of the movie because the soundtrack was recorded in too narrow a format." Would you buy that crap? No? Chances are you already have. Most people react the same way to confusion...they shut up and walk away.
And customers line up in droves to purchase $5 Cokes and $7 popcorns. Why do so many people willingly overpay for this crap? Because they don't consider it a movie going experience unless there's popcorn and Cokes. I shake my head at that notion. But it's supported by evidence at sporting events, where patrons gladly shell out $9 for a beer.

On a side note: I could do an entire post about how soft drinks in the U.S. are the most marked-up product we Americans buy. It costs about a penny and a half to fill a large cup with Coke...and that's if the company serving the Coke actually buys the syrup. With movie theaters, the cinema companies are paid by Coke to serve their product. Coke actually pays millions a year to Regal (and supplies the syrup for free by reimbursing the chain after syrup purchase). So Regal is selling you a paper cup....for $5. That paper cup, because it's purchased in bulk, costs Regal about half a nickel. So you're paying 166 times the cost to drink that Coke, and for me...it's just not that refreshing after knowing that.

1. Financial pressure. Theaters, if you didn't know, make all their money from concessions. The cost these days for them to "rent" a film to show to their audience has been driven to Everest heights by the studios. In most cases, in addition to a rental fee, the theater must pay close to 94% of box office take back to the studio. In many cases it's closer to 100%. There's only one area, then, for a cinema to make money, and that's concessions.

Now, somewhere around 9% (give or take about five percent) of movie customers purchase concessions. This means that for the other 91% of customers, the theater's not making any money off you anyway...as they'll pay back your admission fee to the studio. So if you decide to leave and never return to that theater....the odds are in their favor that they'll never miss you even in the least. The only ones they miss are the ones who spend big bucks on the popcorn. But the fact that John Doe decides to buy his tickets at Carmike instead of Regal gives absolutely no one at Regal reason to lose sleep. His 8 bucks would have gone right back to Sony anyway.

The profit margin in the business is so slim you'd be surprised. In fact, more than 50% of Regal's individual theaters lose money for them. Read it again, and let it sink in. In each city where there are multiple theaters, there is usually one or two (Opry Mills for Nashville) that make money for a company like Regal. And its profits cover the losses of the other theaters. I know this because as a GM I had close to total budget control (outside of film booking) and every month I saw the bottom line. They don't pay minimum wage because they're disrespecting their employees...they pay minimum wage because they can't afford to pay any more. And they don't charge $5 for a Coke and keep raising the admissions cost because they're extra greedy....they do it because they have to in order to stay afloat.

With profit margins this slim, and with the majority of customers skipping the concession line...there's just no economic sense for the company in caring about the customers' wishes. That's really a shame, but it is the truth. And only a major overhaul of the studio/exhibitor relationship will fix it....and that, of course, will never happen.