What will movie theaters look like after coronavirus shutdowns?


An employee fills a bag of popcorn in the concessions area inside a Cineplex Cinemas movie theater.

Bloomberg

The days of packing into a chilly, air-conditioned theater at midnight to catch the hottest blockbuster release of the summer are in the past, at least for a little while. 

The summer box office will kick off two months late this year, ushering in a new kind of normal for moviegoers. 

Cinemas have been shuttered since March in an effort to stem the spread of Covid-19 and studios, for the most part, have rescheduled their film releases until they can reopen.

While a number of smaller movie chains have reopened in some states, the majority of the big players are waiting to reopen their doors in late June or early July. That date is based on the current studio release schedule, which sees Christopher Nolan’s “Tenet” arriving in theaters July 17 and Disney’s “Mulan” arriving on July 24. 

“We really had to change the way that we operate our business,” Jason Ostrow, vice president of development for dine-in-theater Star Cinema Grill in Texas, said during a panel in mid-May hosted by technology solutions company Influx Worldwide. Star Cinema Grill was able to reopen locations on May 8 and its decisions offer a blueprint for what consumers can expect once their local theaters are able to reopen.

The experience of going out to the movies is certainly going to be a little different and the new strategies that theater owners are implementing in order to be able to reopen safely could change the way movie theaters operate altogether.

Coming attractions

To start, expect to wear a mask. While health guidelines will vary state by state in the U.S., common Covid-19 measures have included the use of face masks by patrons and staff. Some venues may provide a disposable mask at the front door, but it’s more likely that you will be expected to bring your own mask.

Temperature checks could also be part of the entrance process at theaters. While these checks are not perfect, they can weed out obvious cases of the coronavirus. Some venues have opted to use hand-held temperature readers for scanning staff and patrons, but for larger crowds, that method may not be feasible.

IntraEdge and Pyramid Computer said they worked with Intel on a possible solution, a contactless kiosk that uses thermal imaging technology and has an error margin of less than one-tenth of a degree Fahrenheit.

Of course, there are limits to temperature checks. The absence of a fever doesn’t mean that a person isn’t sick. People can be asymptomatic or just not showing symptoms of the coronavirus and still transmit the disease to others. Also, fever-reducing medication can lower a person’s fever.

In order to get in the door, customers will also have to purchase their ticket online or through an app ahead of arriving at the theater. Venues are actively looking for ways to remove physical interactions and eliminating the need for paper tickets is an easy way to do that.

“We want to talk to every guest, we want it to be a very hands-on experience, but we had to flip that upside down,” Ostrow said.

Online ticket sales also allow venues to carefully control crowds. Currently, it’s expected that theaters will place a 50% cap on attendance when they first reopen, then shift to 75% and then have no restrictions. Having patrons purchase tickets online means theaters can control how many people are allowed into the venue and where they are seated in theaters.

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Customers wearing protective masks sit apart in observance of social distancing measures inside a movie theater as the Czech government lifted more restrictions allowing cinemas to re-open on May 11, 2020, in Prague, Czech Republic.

Gabriel Kuchta

Cinemark, the third-largest movie theater chain in the U.S., said it can be profitable even it if only fills less than a third of its available seating

“Even at peak periods of time in a normal environment, our occupancy levels range from 20% to 30% and we can operate profitably during those scenarios,” CEO Mark Zoradi said.

He added that Cinemark has seen attendance as low as 10% and still was able to turn a profit.

Some locations plan to sell every other reserved seat in the theater, while others plan to suspend reservations and just sell 50% of the tickets per theater. The second option would allow families to sit together and moviegoers to choose their distance from others.

According to a survey of 1,500 customers who had previously bought tickets through online ticket seller Atom Tickets, nearly 43% of people said that having spaced seating in an auditorium was the most important safety measure that would make them feel confident about returning to movie theaters. Heightened sanitation methods and the use of masks by staff and guests were the second and third most popular answers.

The survey was conducted between May 11 and 18.

There are other options for social distancing, too. At one Star Cinema Grill, patrons can even rent out their own theater for a showing. The venue is offering two options. One is a flat fee of $195 for four to 20 guests and $345 for 21 to 40 guests. All food and beverages are at menu price.

The second option is $25 per adult and $18 per child and includes an entree from the restaurant’s menu, a soft drink and popcorn. However, there is a reservation minimum of 10 guests. Rentals, like tickets, must be purchased online.

Theaters that are currently open are showing “library” movies, which are films that have already been released in cinemas. For example, Star Cinema Grill is showing “Back to the Future,” “Mission: Impossible,” “Jurassic Park,” “Jaws” and the Hunger Games films as well as several animated features for kids.

A worker wearing a protective mask sprays disinfectant inside a theater at the K11 Art House cinema operated by UA Cinema Circuit Ltd. in Hong Kong, China, on Friday, May 8, 2020.

Bloomberg

With “Tenet” being the first new blockbuster feature expected to hit cinemas, most theaters will opt to showcase these types of films in the early weeks of July, if they are able to open.

Matthew Baizer, chief operating officer at Flix Brewhouse,a regional theater chain in the Midwest, said that his company could run sustainably for about eight weeks without any new film content. 

Theaters will also allow for longer breaks between show times in order to allow staff to thoroughly clean each theater. This could lead to fewer shows per day.

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Don’t forget the popcorn

Cash will be discouraged at concession stands, with many venues asking patrons to use credit cards or cashless pay options. Signing receipts or even getting receipts may be temporarily suspended in order to keep interactions as contactless as possible. Many venues will offer mobile ordering for food and drinks, as well.

“I think contactless payments is going to be a big thing,” Robbie Sosna, president and CEO of Envision Cinemas in Ohio, said during the Influx webinar. “Obviously, if you have an app and are able to preorder that solves that problem, but in the meantime as we reopen, how do we work without existing hardware?”

Sosna said his theaters use hand-held devices that don’t have the ability to do contactless payment. He’s working with third-party vendors on a solution that can be integrated into their system that won’t be a nuisance for guests and avoids credit card swipes and the use of pens.

You can also expect that the number of menu items at theaters will also be pared down, especially at dine-in locations with full service restaurants.

Theaters are preparing for lower-than-average attendance and are looking for ways to cut costs. Reducing prep time in the kitchen, decreases the amount of labor needed and can save these cinemas a bit of cash while they wait for restrictions to lessen and new films to be released.

Prices will likely remain the same for both tickets and popcorn, but there could be a few exceptions. A number of movie theater owners are looking at how to integrate price-sensitive promotions and combos to lure moviegoers back.

Updating tech and seating

Eventually, movie theaters will begin to raise attendance capacity. This could be because restrictions have lifted or because a vaccine has been approved and distributed.

At this point, technology will be more seamlessly integrated into cinemas. Fewer people will use cash and much of the ticketing will be digitized.

“I don’t know if all tickets will be sold via app or online, but it is certainly the future,” Doug Stone, president of Box Office Analyst, said. “Walk up sales have been on the decline for quite some time. Cash transactions are in significant decline. There is no doubt that technology will play a big part and be highly integrated in the future.”

Last month, Mastercard reported a 40% jump in contactless payments — including tap-to-pay and mobile pay — during the first quarter as the global pandemic worsened. The trend was driven by consumers looking for a quick way to get in and out of stores without having to exchange cash or touch terminals, the company’s CEO, Ajay Banga, said.

And consumers seem ready to adopt this new technology. According to Atom Ticket’s survey, more than 88% of respondents said that purchasing digital tickets and eliminating interactions with a cashier was an important safety measure for movie theaters to adopt.

And of those who had never preordered movie theater concessions before, 61% said they were now likely to try mobile ordering.

“Moviegoers are telling us that they miss the experience of going to the movies and they’re ready to get back, but that the experience needs to look slightly different than before,” Matthew Bakal, co-founder and chairman of Atom Tickets, said in a statement. “We anticipate a rapid acceleration in digital ordering, just as we have seen in other industries, in order to reduce the amount of person-to-person interactions.”

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For some smaller theaters that don’t already have apps or kiosks, the coronavirus has given them a reason to upgrade their tech.

“This is the opportunity to push us into technology faster,” Larry Etter, senior vice president of Malco Theaters, said during the Influx panel. “Malco has been a little slow to react to that … we are certainly going to be looking at as many touchpoints to eliminate as possible and I think technology does that.”

A view outside Cinemas 1, 2 & 3 movie theater during the coronavirus pandemic on May 18, 2020 in New York City. COVID-19 has spread to most countries around the world, claiming over 320,000 lives with over 4.8 million infections reported. (Photo by Noam Galai/Getty Images)

Noam Galai

Theaters that have also lagged behind in adopting luxury seating and recliners may also use the coronavirus pandemic as a catalyst for interior updates.

Luxury seats are larger than the traditional stadium seats of a movie theater and some are even clustered into pods of two seats, making social distancing much easier. Not to mention, these kinds of seats can make the movie going experience more inviting to consumers, prompting them out of the house more often.

“Theater owners have already been rapidly shifting to luxury seating,” Stone said. “If theaters don’t keep moving in this direction, they are pretty much doomed to fail.”

Then there are the movies themselves. It’s unclear how studio productions will be impacted in the long run from shutdowns and new operating set procedures. California’s governor, Gavin Newsom, has been working with film industry veterans and health officials to determine a set of standards for resuming production on the West Coast. Guidelines are expected to be released Monday.

Movie theaters are heavily dependent on the calendar of films that are released. If studios are forced to make lower-budget films because of restrictions on the number of actors and crew allowed on set, that could be reflected in ticket sales.

For now, the 2020 and 2021 slate of films coming from Hollywood is pretty set. There are plenty of titles coming from blockbuster superhero and action films to romantic comedies and animated features.

However, as studios begin to evaluate their own balance sheets, there could be a shift in what films are made and what movies are sent to theaters. While the vast majority of film titles have been pushed to new dates on the theatrical calendar, some have gone straight to on-demand or streaming.

It is currently unclear how lucrative those ventures have been for companies. While Universal has touted the digital success of “Trolls World Tour,” which was released on demand and to open theaters in March, the CEO of Sony Pictures said his studio had yet to find a model that showed that kind of release schedule would be more profitable for its films.

Disclosure: Comcast is the parent company of NBCUniversal and CNBC.



Via CNBC