Game Design, Programming and running a one-man games business…

The movie industries broken business model

I don’t understand the people who run movie theaters/cinemas…

In the year 2016, I have a bloody good 40″ TV in my living room. It has a perfect picture, and with Blu-ray, its as good as the movie theater. I have multiple hi-fi speakers and a subwoofer, and don’t really miss surround sound. Also I have a lot of stuff the movie theater does not have:

  • A pause button
  • Complete control over volume.
  • Complete veto on who I watch the movie with
  • Complete scheduling freedom
  • Total control over lighting and temperature.
  • My cats can be with me.
  • Zero travel time, zero parking issues
  • Reasonably priced food
  • The best seats in the house.
  • Probably cheaper.
  • Ability to fast-forward the trailers and ads.


By any conceivable measure, watching a movie in my living room is a superior experience to going to a movie theater. The movie industry still tries to get me to go with the two tiny…tiny..advantages they have:

  • A short (and shrinking) period of exclusivity
  • 3D!

As someone who is stereo-blind, the second advantage is a disadvantage. The first….well thats all they have. Frankly, its not enough. 3D is generally not making movies better, its been adopted to help combat piracy, in the ridiculous assumption that movie piracy is a bigger threat to the business than the adoption of high-speed streaming, fiber-optic to the home and cheap big flat screen TVs have been.  How could they do a better job of all this? Here is what I would do…

Take a lesson from ‘secret cinema’ and make going to see a movie an EVENT, not just an inferior experience…

  • I’d dress up the movie theater staff as characters from the big new hit movie
  • I’d sell memorabilia, toys, t-shirts, posters, everything…associated with the movie at the theater. Surely this is a no-brainer?
  • I’d have a bar…a decent bar, with cocktails and drinks named after movie characters, big screen TVs showing ‘the making of’ and other fan-content so people can get hyped with a pre-movie drink.
  • I’d massively encourage cosplay. Best outfit on each screening gets their ticket price refunded + posters & swag.
  • I’d increase the price of the ticket. This is an event, not just a movie.
  • All seats are premium seats, All seats are comfortable and adjustable.
  • Give everyone the option to pay extra and take a blu-ray of the movie away with them the moment the movie ends.


Maybe that wouldn’t work, maybe it makes no business sense. But as someone who went to secret cinema (expensive) to see Dirty Dancing (not a movie I care about) and had an AMAZING time, and would easily pay double to go again… I look around me and I see movie theaters that are almost always 90% empty, and secret cinema going from strength to strength. People want experiences now, not just an inferior viewing of a movie.

You always have to give people a reason to buy your product. The movie theater has virtually none right now.


11 thoughts on The movie industries broken business model

  1. There’ve been quite a few new small theatres opening in the US using the all seats are premium seats / the bar is a full service bar parts of your model. Those appeal to upscale consumers, but are priced away from the mass. And most of the rest of your points might be appealing to geek culture but could easily turn away the mass audience.

    For people who don’t have as nice a home setup as you, going the cinema can still be an event. The normal-price showings in the US do seem to be dominated by low- to mid-income attendees.

  2. Totally agree with your assessment of the living room vs cinema. It’s painful to know the only trump card they hold is a period of artificial exclusivity. If movies were available at home day and date with the cinema I’d never go again, which reveals the fundamental lack of appeal of the offering.

    I followed the news about Sean ‘Napster + Facebook’ Parker’s latest startup (Screening Room) with some interest, but it rather predictably looks like the forces of the status quo will crush it if they can.

  3. My personal take is this:

    A setup like yours is very far outside my means.

    Going to the cinema in a special occasion, like a date, or personal celebration is not.

    there are cinemas with special service and bars for people like you, they are expensive and offer a better experience.

    Run of the mill cinemas catter to people like me.

  4. From what I gather a lot of the ills can be placed at the feet of the movie distributors. Either from directly dictated terms or knock-on effects from distributors ensuring theatres can’t profit off ticket sales alone. E.g. I hear it’s increasingly common for opening week blockbusters to start at 0% of ticket sales going to the theatre (only rising to 50% weeks later).

    1. It’s exactly as Kowh says, cinemas are squeezed by distributors into contracts where they hand over most of the profits in the most profitable period of a film’s release. They can’t refuse the contract because then they miss out on the blockbusters that bring all the people, so that have to rely on ridiculous mark-ups on extremely cheap unit-cost concessions (popcorn) to make any money, reinforcing their reliance on blockbusters.

      I reckon if you bought popcorn and a drink the staff wouldn’t even care if you had a ticket anymore.

  5. Exclusivity is enough. If people want something then they’re willing to pay to jump the queue. Why else do people pre-order digital downloads of games when they could just get the same thing cheaper a few months later? And as long as there is money in this exclusivity, there’s money to divvy up between film-makers and cinemas. It may not be the majority of the revenue these days, but it’s too large a chunk to leave on the table.

    Film-makers are actually lucky in this regard – they can show their ‘recorded product’ in a sort-of-exclusive manner and still make decent money. Musicians, for whom the equivalent is a gig or a tour, don’t get this luxury because they have to drag the band from place to place and can only be in one town at one time. This is part of why the movie industry hasn’t been decimated like the music industry was – both have seen problems with sales of their recorded media but cinema showings are more cash-efficient than gigging is. (The other part is that the movie industry has a much better deal with on-demand/streaming services than the music industry does.)

  6. Advantages of the classic cinema also include :
    * a reasonnably dating venue
    * a time-proven distribution channel that locks piracy out

    My view, though, is that you are globally right. My ideal viewing experience does not include walking 20 minutes, queuing and having noisy assholes in the same room.

    Outcomes include :
    * the “movie+” experience you describe, with bar, maybe food, …
    * the “alt-movie” experience where intellecutal films are followed up by a debate, or whatever
    * cinemas will keep being viable in urban areas, selling confortable access to premium video content. But this part of the market will shrink from its peak 20 years ago

    1. In my experience it’s the other way, it’s not uncommon to see bootleg DVDs that were recorded by somebody who snuck a camera in a cinema, and there’s also the part about movies getting leaked straight from the places that make the copies for the cinemas (the watermark is easy to blur out, and often people don’t care about it). So if anything, keeping cinemas around makes it *more* prone to piracy, not less.

      So really the only advantage left is the dating one, and that’s only because choosing one’s home for dating is considered lame, the whole point is to go out :P And in the end there are still other alternatives too.

  7. Obviously home theaters are better than public theaters. But we only think that because we’re old. Younger people look at the two choices, and also consider the mating opportunities of each one.

    And they might not even be aware that they’re doing this. The limbic systems in our brains take all sensory input, adds emotional responses to it (fear, pleasure, good, bad…), then 300ms later sends it off to the rational part of our brain to think about.

    This isn’t entirely my idea, I’m borrowing it from The Advertised Mind by Erik du Plessis. A book that a very wise man (with a little TV) suggested I read.

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