Streaming Replacing Movie Theaters After All?

The fate of American movie theaters has me feeling like a naive, simple-minded fool.

That sounds like something Stuart Sweet would say about, but it’s not. It’s how I feel about myself after I recently read something about movie theaters. Sadly, these American institutions are quickly becoming a thing of the past. Stuart, of all people, was kind enough to tell me why. I’m sharing his formula for future movie house failure – as well as my thoughts – here.

Tenet Exposed Movie Theater Failure

It’s true. The movie was supposed to kick off a huge return to the movie theater business in the US. IN the end, it was a failure. The big movie theater chains reopened in nearly 70 percent of the country by Labor Day weekend, largely in anticipation of Tenet. (Theaters in the country’s two biggest markets – New York and Los Angeles – stayed closed.) So, how did this highly-anticipated Chris Nolan masterpiece perform at the box office?

It earned about $9.4 million in its opening weekend and a little over $29.5 million over its first two weeks. To make matters worse, it’s earned $214M worldwide to date, and it’s estimated that it needs $450M to break even due to marketing and distribution costs, theater owners’ cuts, etc.

To an average Joe like me, that’s a lot of money. That’s nothing to Hollywood bigwigs, though. Tenet cost $200 million to make, and its initial earnings didn’t pay for half of it. So, what does this mean for the future of movie theaters? It likely means that limited seating capacity and other safety measures don’t seem to be helping ticket sales. People just aren’t going to go to the movies if they’re concerned for their safety.

Stuart’s Secret Cinema Formula

Remember how I mentioned that Stuart has the answer for the future failure of movie theaters? It was part of a reality check he gave me when I whined to him about the sad state of cinematic affairs. In his trademark straightforward manner, he said, “The real culprit here are the licensing fees that studios charge movie theaters.” According to Stuart, studios base their fees on two things:

  1. The cost of creating and hand-delivering the final print. (Prints would only last about 50 showings before needing to be replaced.)
  2. Today’s theaters download movies off the internet so there’s no worry about them degrading, but studios still charge the same for distribution.

This means that theater owners give 85-95% of the actual ticket sales to studios, plus a flat fee for the movie. “That’s why a bowl of popcorn costs $12.50,” Stuart added. “It’s all theater operators have to turn a profit.”

It is What it is, I Guess…

…At the end of the day, it’s always “the money.” The relentless and neverending quest for higher profit margins has ruined a few good things for me. Whenever this is brought to my attention, I end up feeling like a gullible rube. Many of my happiest childhood memories involve seeing my favorite movies at theaters. It’s sad to think that future generations might not have this experience. The only upside is that I was right when I once said “streaming is king.” I just didn’t know how right I’d be.

About the Author

Jake Buckler
Jake Buckler is a cord-cutter, consumer electronics geek, and Celtic folk music fan. Those qualities, and his writing experience, helped him land a copywriting gig at Signal Group, LLC. He also contributes to The Solid Signal Blog.