Theater On Demand

Something I wrote about in 2006 has now become a very timely cultural and business opportunity. As the Wall Street Journal reports, The Future of Movie Theaters Is More Than Just Movies:

The Covid-19 pandemic wreaked havoc on the movie-theater industry, forcing cinema owners to reimagine how their spaces can be used. Many are now experimenting with what they call “alternative content,” meaning entertainment and presentation options that aren’t Hollywood blockbusters.

The Hollywood studios’ recent push toward streaming, and reducing or eliminating the exclusive “windows” available to movie theaters to show new film releases, heightened the concern among cinema owners that Hollywood may not be a reliable partner, and that they need to innovate to survive.

Since the onset of the pandemic, many theaters pivoted to offering private events in which a group of friends and family, or a team of colleagues, book their own screen. …The success of these private events, which helped many cinemas stay in business through the pandemic, led them to rethink their business models.

I wrote this in 2006 about a business model I was contemplating:

Will the movie theater become extinct?

…there is a way the Internet can bring an entirely new value proposition, one that perfectly exploits the unique advantages of the theatergoing experience. Just as the Internet is enabling new richness of consumer choice in the form of video on demand (VOD), it can also enable “Theater On Demand” (TOD). TOD is not quite the same fully individualized service, but it does have many of the same individualized features.

Say you are a Netflix user …Imagine you also had a “Theatrical Wish List” of all the movies you would like to see in a theater. Maybe you want to see them in a theater because they need the immersion of the giant screen, or maybe you want to share laughs or thrills with a crowd — or …a bunch of friends and/or other groups of like-minded people.

What if Netflix enabled such Theatrical Wish Lists for millions of users, obtained information on when they were generally free to go to a theater, and had deals with thousands of local theaters to schedule showings (of both current and old releases) on digital projectors? All they would have to do is crunch some numbers to figure out what to show when, send emails to interested viewers, and then manage the scheduling of the viewers, the theaters, and the digital movie showings…

Such a Theater On Demand service could radically improve the economics of the theater business, making it work much better for theater owners, movie studios, and moviegoers. It is a change that is badly needed to save the industry, and to preserve our ability to see movies on a giant screen.

Obviously this same Theater on Demand service could include all kinds of video, as well as hybrid multi-location and live/virtual events, as the Journal article suggests.

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For those who have interest — especially those looking for an entrepreneurial opportunity — here is the full unedited text of an article I drafted in 2006, but never published (based on ideas first documented in less readable form on 7/29/01):

Theater On Demand:
How the Long Tail of the Internet will save the Movie Theater

(Drafted 3/13/06)

Will the movie theater become extinct? Theater attendance rates are declining — total US admissions fell 8.7% in 2005, the third straight yearly decline. The quality, affordability, and convenience of the home viewing experience is increasing dramatically, with broadband delivery and big screen HDTVs. Efforts to protect the theaters exclusivity, to enhance their appeal, and to create revenue from other kinds of events are having only marginal success. There is serious reason to be concerned that those of us who enjoy seeing movies on the big screen will have far fewer options.

But there is a way the Internet can bring an entirely new value proposition, one that perfectly exploits the unique advantages of the theatergoing experience. Just as the Internet is enabling new richness of consumer choice in the form of video on demand (VOD), it can also enable “Theater On Demand” (TOD). TOD is not quite the same fully individualized service, but it does have many of the same individualized features.

Say you are a Netflix user, using the Netflix Recommendations service to find and keep track of all the movies you are interested in (or are likely to be interested in), and the Queue of movies you want to rent on DVD. Imagine you also had a “Theatrical Wish List” of all the movies you would like to see in a theater. Maybe you want to see them in a theater because they need the immersion of the giant screen, or maybe you want to share laughs or thrills with a crowd — or maybe you want to go with a bunch of friends and/or other groups of like-minded people.

What if Netflix enabled such Theatrical Wish Lists for millions of users, obtained information on when they were generally free to go to a theater, and had deals with thousands of local theaters to schedule showings (of both current and old releases) on digital projectors? All they would have to do is crunch some numbers to figure out what to show when, send emails to interested viewers, and then manage the scheduling of the viewers, the theaters, and the digital movie showings. You might be told that you and your friends could see Clockwork Orange on Thursday at 7. Someone else might be told they could see Raiders of the Lost Ark in a no-kids showing Sunday or Monday at 10. Or you might be able to see Jules and Jim on Tuesday at 9.

Such a Theater On Demand service could radically improve the economics of the theater business, making it work much better for theater owners, movie studios, and moviegoers. It is a change that is badly needed to save the industry, and to preserve our ability to see movies on a giant screen.

Is the Movie Theater Dying?

Do people really want to drag out to a theater when they can see the same movie at home? It is increasingly clear that for many movies, much of the time, many people do not. Home viewing continues to gain advantage as HDTVs become cheaper and more common, and as broadband delivery of movies via video on demand (cable, satellite, or Internet) eliminates the hassles of renting or buying DVDs. The new release window that gives theaters exclusive access to new movies is under pressure, and studios are eyeing the economic advantages of shortening or eliminating the exclusivity of that window, and moving more immediately to VOD and DVD. The recent release of Soderbergh’s Bubble, tested doing just that.

But the theater does have important and unique advantages. It offers a different experience that can be immersive and communal in a way that home video cannot. Only the very rich can build a home theater that rivals the immersion of a big screen (and that is not going to change any time soon). And even the rich cannot easily create the community experience of shared laughter, cheers, or gasps. We may not want that for all movies, all the time — but for some movies, some of the times, it is an experience most of us would not want to give up. Have you ever been stunned by a home video viewing experience the way a compelling movie can leave you stunned in a theater?

Theaters are beginning to convert to digital projection to reduce costs and increase flexibility. That might help some, but that alone does not solve the problems of the industry. The problem is how can we make the economics of that experience really work well over the coming decades?

The Revival Meets The Internet

To revive the movie theater in this new, digital, Internet-age we need an entirely new variation on the “revival.” Movie revivals have always been a niche, a “long tail” phenomenon, and once again the Internet can enhance that.

First consider a conventional revival. A recent example in Manhattan is “The Ziegfeld Theatre’s Hollywood Classics.” This series exploited the last of the city’s grand screens to showcase some of the classic movies that most require the big-screen experience — films like Star Wars, Indiana Jones, Lawrence of Arabia, Doctor Zhivago, 2001, and The Lord of the Rings. This is a great offering of an experience that cannot be duplicated in any home, but how many people knew about it?, how many could make the scheduled times?, and how many wanted to see those particular movies? The economics of the long tail of conventional revivals is just not rich enough to be more than a niche business. (And most conventional revivals are far less mainstream in their appeal.)

But Netflix, Amazon, and others have shown that on the Internet, the long tail can be very big business. The Internet can aggregate demand so that even niche items find their market, and even niche items can be stocked “on the shelf” and distributed at low cost. Build a platform that serves many niche markets efficiently, and you build a mainstream business of thousands of niches. This is the age of the long tail of the demand curve, the millions of items that are less popular (and perhaps less current), but still of interest to some niche that can find them on the Internet, reducing the importance of the small number of blockbusters (the short tail of the demand curve).

(For those not familiar with the idea of the “long tail,” it comes from the shape of the demand curve that results from plotting a curve of demand by item, going from most popular to least popular. To the left are a small number of items that are blockbusters, but to the right is a very long tail of a huge number of items that have very low demand. When added together, that long tail can still come to a large number of sales. According to Chris Anderson, who popularized the idea for the Internet age, one quarter to one third of Amazon’s sales are from books that are not in the best selling 100,000 titles, and thus unlikely to be stocked in any store.)

In the case of TOD, the Internet can change the game by aggregating demand for all the people in a given area that want to see any given movie — anywhere on the short or long tail — at whatever time is most convenient to a critical mass number of interested viewers. Revivals need no longer be limited by the imagination of a producer who figures out what to revive, and hopes he can somehow reach enough people who will be interested and able to go.

· Much like the Netflix “Queue” of priority of movies you want to rent on DVD, you could have a Theatrical Queue Wish List of all the movies you would like to see in a theater — any movie at all.

· You could also specify the days and times you are generally free to see movies (and could also specify the days and times you would be most interested in seeing a given movie).

· A Web-based scheduling system could look at all of the Wish Lists in a given region, and aggregate a list of all the movies that a number of people want to see, and find times that they can see them. It could then see what theaters are available with digital projectors, at what times, then schedule the movies and alert the moviegoers.

· Advanced scheduling features could draw on social networks to put together groups of friends, or people of like interests, who might want to see a movie together. It could manage pricing to encourage advance commitments, but still allow for late decisions and walk-ins (much as the airlines do).

With such a service, neither the moviegoers nor the theater-owners are limited to current releases, or the risky game of picking revivals that draw enough fans. Almost any movie can draw some following, some time, if enough potential viewers can be reached and scheduled efficiently. A Web scheduling system can reach a mass population of potential viewers, find out what they are interested in (and help them find other things they might be interested in), and manage scheduling and venue selection to find the right size theater, in the right place, at the right time.

Such a TOD system could coexist with conventional scheduling of new releases, so that some programs and times are scheduled for new releases, and some for TOD. As the scheduling systems gain sophistication, they can allow for advance sales and reserved seats, while also providing a suitable level of reserve capacity for walk-ins. They can shift programs from one screen (at a given theater, or in a given neighborhood) to another, as initial estimates of attendance are found to be too large or small. (With digital projection and digital delivery, the constraints of what movie is shown on what screen at what time are gone.)

If you schedule it (to meet their desires), they will come.