Netflix Carving Into Movie Theater Profits

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With their top-quality original content, Netflix is providing more reasons for Americans to get entertainment in their living rooms, and is emerging as a major threat to the movie theater owners. Now, the movie theater owner are trying to find different ways, such as offering of food and booze, to pull people out of their living room, according to a report from CNBC’s Ali Montag.

How theaters plan to fight back?

To give a home like feeling to the viewers and to pull them out of their homes, theaters are planning to serve better food and drink, along with more comfortable seating arrangements, said Matthew Viragh, Nighthawk Cinema’s founder and executive director in Brooklyn.

“We’re creating more of a night out and a bigger experience around that movie,” Viragh said.

Some big national chains such as AMC Theaters and Alamo Drafthouse Cinema have the same idea of introducing bars and food at concession stands, and theaters that serve dinner. Almost a third of AMC theaters now have a bar called “MacGuffins.”

‘Focus on customers’ experiences is the strategy followed by Austin, Texas-based Alamo Drafthouse Cinema, and this is helping them to prepare a new plan for expansion. The company is planning to expand from 19 theaters presently to 30 by next summer. Also, there is another perspective that argues that attendance is highly dependent on the films currently released.

Netflix threat looming over theaters

According to the Motion Picture Association of America’s Theatrical Statistics Report for 2014, movie ticket revenue and sales declined last year nation-wide. In contrast, Netflix, Hulu and Amazon are getting more popular due to their interesting content. Netflix-like streaming services are able to make people want to stay at home to enjoy quality inexpensive entertainment.

In a recent letter to investors, Netflix noted that it streamed 10 billion hours of content and acquired 4.9 million subscribers in the first-quarter of 2015, suggesting more people are interested in watching video from their homes. According to Viragh, this is the threat that is forcing theaters to improve the experience they are offeri8ng moviegoers.

A recent study by Price Waterhouse Coopers also found that 82% of the customer are ready to pay more than a night out i.e. $10 to $20 more, to watch the latest movie.

“The theatrical experience hasn’t really evolved over a long period time,” but it is high time for movie industry to renovate itself in terms of appearance and feel, along with coming up with plans to compete with Netflix like streaming services,” Viragh said.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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