You Oughta Be in Pictures

Today's Movie Theaters Earn Two Thumbs Up for Big-Time Entertainment--and for the Retail Development They've Spawned.

It was a common complaint among moviegoers in the '70s and '80s: They just don't make 'em like they used to.

Movie theaters, that is-not the movies (that's a whole other argument). The opulent, luxurious movie palaces of the '20s and '30s had given way to plain, cinderblock cineplexes containing four to eight little theaters with little screens, little seats, and little soundproofing. Those who complained that it wasn't much better than watching a movie in your living room were wrong; at least your living room had a couch and a clean place where you could set your drink.

But in the '90s, the movie palaces are back-although they still don't make 'em like they used to. Though the new palaces don't shy away from plush accoutrements and eye-popping interiors, these are movie theaters that would make David O. Selznick stop in his tracks-never mind theater builders from 20 years ago. Designs for today's new theaters have done a complete about-face; everything is big-big screens, big complexes, big seats, and most importantly, big fun. Consider:

  • The biggest theater complex in the country-at press time, anyway-is the Edwards 21 Cinemas at the Entertainment Center at Irvine Spectrum in Orange County, California. The 21-screen, 158,000-square-foot, 6,300-seat complex includes an IMAX theater with personal sound environment (PSE; each viewer wears a 3D headset containing liquid crystal infrared lenses and a personal sound system); four 40-by-80-foot screens, and two theaters with arena seating, which offers a steeply pitched floor promising splendid sightlines for all.
  • Regal Cinemas, a rapidly growing theater chain based in Knoxville, Tennessee, just opened its third entertainment complex in a year. The multiplexes feature a 45,000-square-foot, 13-screen movie theater attached to a 50,000-square-foot entertainment center. After customers take in some Schwarzenegger, they can grab a taco or some pizza in the food court; play a round of miniature golf; or swing at some video baseballs-all without setting foot outdoors.
  • Last fall, Sony Theaters opened its nine-screen Lincoln Square complex on New York City's West Side. Although the theater's lavish retro interior design hearkens back to the good old days, the IMAX theater, computerized ticket machines, and sidewalk video screens showing coming attractions are cutting edge.

This is definitely not your living room.

The Video Factor
Movie fans who worried that the boom in video would spell doom for the big screen have nothing to fear. Movie theater construction is accelerating rapidly, says Jim Kozak, communications director for the National Association of Theater Owners (NATO) in North Hollywood, California. There are now more than 27,000 movie screens in the country, up from 23,800 just five years ago.

As the screen count grows, says Kozak, so does the number of tickets sold. "We're reaching a 37-year peak in ticket sales," he says. "The colossal screen growth has really helped sales a lot. The more screens they build, the more tickets they seem to be selling."

Kozak echoes the sentiments of theater owners and designers when he says that video has actually increased the number of big-screen moviegoers. Because of video residuals-as well as returns from cable and overseas sales-"there's a lot more money being pumped into the industry," Kozak says.

"There are more films being made, and that's creating more of an awareness at home," he adds. "We first thought videos would compete with the movie-going experience, but it's been quite the opposite-they actually augment each other. They create awareness for each other's medium, and they've both been growing quite substantially. Videos are creating moviegoers in a way that we haven't seen in decades."

Kozak theorizes that rather than keeping viewers out of the theaters, home videos tend to compete with other home-bound activities, such as watching televised sports or playing video games. "Whereas moviegoing is more like sporting events, concerts-things you do when you want to get out of the house," he says. "The main advantage that movies have-and one reason why they're doing so well-is that they're much cheaper [than sporting events and concerts]."

Creating the Quality Experience
Cheaper, perhaps, but theater owners and designers are determined to give moviegoers the most bang for their buck. This means that theater owners have to be conscious both of what's inside their theater as well as what's around it. The mammoth screens and cushy chairs, as well as the extensive menu of food, games, and shopping, are all aimed at making moviegoing a memorable experience. "We can't put up postage-stamp-size screens anymore," says Tracy Burnidge, owner and president of Mainstreet Theatres in Elgin, Illinois. "Now we've got to do something worthwhile to make people say, 'We had a blast-let's go do it again.' "

In Burnidge's case, it's the theater that's bringing them back. He opened his eight-screen Elgin Fox Theatre in May 1995 and is showing movies to 500,000 people a year, he says. The theater is smaller than the new megaplexes; Burnidge opted toward opulence rather than sheer quantity. The freestanding theater plays on an art deco theme, both inside and out, starting with its curvy pink facade and high-profile pylon sign. The 28,000-square-foot building houses 1,750 seats including one theater with THX sound and a 48-foot screen; other theaters in the building offer deluxe sound systems; wide aisles; spacious, carpeted interiors; and rocking-chair seats. "We went first class with everything," Burnidge says.

It's paid off, he adds-the THX theater alone does 20 percent better than the other theaters. "We have statistics of people who come in once a year, twice a year, four times a year," he says. "If we can make their experience that much better, we can turn all those one-time people into twice-a-year customers and double our business." And indeed, the Elgin Fox has done so well that Burnidge is constructing a 16,000-square-foot addition with six more screens.

Other chains are concentrating on the interior amenities as well. "There's an obsolescence in older theaters," says Michael Levesque, director of marketing at Regal Cinemas in Knoxville. "There was a period of about 15 years where theaters didn't change much. They added auditoriums, but not amenities. Theaters today are considerably different-they have great sound, picture, seating, cafes-even down to cup holders on the seats. Theaters that don't have these things are becoming obsolete."

Levesque adds that this luxury is simply a "response to an aging population-the baby boomers. It's not just teenagers at the theaters anymore-it's an older audience that might buy cappuccino at the movies. That generation drives a lot of things that happen, and they're driving the design of theaters, absolutely."

Amenities, though, do have their price, says Kip Daniel. Daniel is president of Urban Architecture, a Dallas firm that's designed more than 750 screens for Cinemark USA, a fast-growing Dallas-based chain with 1,441 screens in 28 states as well as in Canada, Mexico, and Chile. Rough costs for hard construction on theaters have risen; stadium seating, for example, he says, costs a theater considerably more per seat than for regular seating. "But," he says, "it's driven by what theatergoers want to see."

More Is More
Viewer demand also seems to be driving up the number of theaters under one roof. Irvine's Edwards 21 (nicknamed "The Big One") currently holds the record, but contenders are nipping at its heels. A 30-screen complex is being planned for a winter opening in Ontario, California, and a 25-screen theater is part of plans for a 400,000-square-foot entertainment/retail development in Walnut Creek, California.

Bill Mohr, CCIM, of Catalyst Investment Group in Oakland, California, is developing that project, and he sees the trend toward double-digit screens as "very predictable. The theater operators have watched what the big retail ers have done and they're saying 'That formula works here, too.' "

Theaters, he says, compete on choice. "When the best movies are sold out for the prime times, people get frustrated because they can't go. The savvy theater operator says, 'This is easy to fix. Let's build more seats, but let's build a lot more screens, so if a big blockbuster movie comes out, we can show it on four or five screens. And we'll stagger them by 15-minute increments so that if somebody gets there, and the show that they want to see at 7:30 is sold out, they'll wait until 7:45 to see the movie.' Because people know that a show will start every 15 or 20 minutes, they won't even consider going to a another, lesser theater-they know they're going to get in. So what happens is you become absolutely the dominant theater."

The design of the new megaplexes also gives theater owners more flexibility. Where theaters in 1970s' multiplexes tended to be all the same size, newer complexes vary the sizes of their theaters, showing blockbuster special-effects pictures in the large rooms and reserving the smaller theaters for lesser-known films as well as films that have been around for a few months. This is particularly important, says Burnidge, when theater owners agree to take on less-popular films as part of distribution agreements for more-popular films. "This way, you don't tie up a screen for a whole summer," he says.

External Entertainment
But if 24 screens don't provide enough thrills, many developments are making sure customers are satisfied in other ways. The entertainment complexes being built into and alongside the megatheaters ensure that. Some complexes, such as the one at the Irvine Spectrum, combine the theaters with full-service restaurants and retail stores. "This type of retailing is full of linked trips," says Mohr. "The idea is that you might go there in the afternoon to do something else-buy a book, for example-and then you decide to get something to eat and then go to the movies. Or they might feature stores with a service component-say you could drop off your photocopying and go to the movies. You try to create a band of services that make it convenient for people.

"The focus," he says, "is to make your experience successful-to have positive experiences. At a traditional retail level, they don't compete with regional malls-you're not necessarily going to get depth and breadth and huge product lines. Many regional malls are trying to add this to get people to shop at their other stores, and some have been very successful. But the concept all by itself is capable of standing on its own."

While the theater is important in this model, Mohr says, the key, is "making everybody do a higher business because everybody is drawing for everybody else. Part of what you need to do is look at every single tenant as an anchor," he says. "The traditional regional mall model-the department stores are the anchors, they draw people in, the little shops live off what the big anchors draw-that model doesn't work very well this way. Everybody in there needs to draw from their own trade area."

Others have stuck strictly to entertainment. Regal Cinemas, for example, is developing its own complexes. "We've found that when we built theaters in the past, certain types of businesses, such as restaurants, arcades, and other entertainment venues, surrounded us," says Levesque. "The theater creates a high amount of traffic, which is attractive to other kinds of business-so we started developing those complexes ourselves."

The first complex opened in August 1995 in Chesapeake, Virginia; others followed in Rochester and Syracuse, New York, with more planned in the near future. Each complex is anchored by a 13-screen movie theater. A food court seats several hundred and offers a variety of name-brand fast food restaurants. The 36-hole miniature golf course sends putters over landscaped terrain and around hefty waterfalls. Other diversions include video batting cages and golf games, bumper cars, laser tag, and a children's play area packed with crafts andcomputers.

But the big high-profile component of these complexes, says Levesque, is the motion theater: a small auditorium that's a moving hydraulic pod simulating the action in the movie you're watching. "It lasts from six to 10 minutes, and it's very, very intense," says Levesque. "One of the films is a roller coaster, and when you step off that thing, you feel it. It even includes the wind in your face. The film is outstanding, the sound is outstanding-as far as you're concerned, you've been on this ride."

Hitting the Mark
Developers have to be particularly conscious of location when they're building these kinds of complexes, says Mohr. "To be successful, you need a place where you have a midday business clientele also," he says. "Most of these businesses can't survive simply by being overwhelmed on Friday nights. Your restaurants will die, and all you're doing is building a theater by itself. They have to get a clientele all week long. So it's not something that can go everywhere, and it's not something that can work at a suburban shopping center, unless the center has some traffic in the middle of the day."

Such complexes, though, can work in downtown areas, he adds, which tend to be "pedestrian-centric." And indeed, the Third Street Promenade in Santa Monica, California, revitalized a three-block stretch of that city's downtown area with its combination of theaters (19 screens in all), restaurants and cafes, and book and clothing stores.

Freestanding theaters-sans extra entertainment entities-may offer a bit more leeway in terms of location, but face a different set of limitations. "You've got to have the population within a five- to seven-mile radius," says Burnidge, as well as having a similar distance from competing megacomplexes. But developers are finding plenty of areas, both urban and suburban, where they believe the population can indeed support multiple screens.

The success of Sony's 12-screen Magic Johnson Theaters in south central Los Angeles is proving that urban African-American neighborhoods-which had been previously neglected by theater chains-can support plush megaplexes as well. The 60,000-square-foot complex, which opened in mid-1995, has consistently been one of Sony's top 10 moneymakers, and Johnson has announced plans for similar complexes in Houston, Atlanta, and Detroit. Other chains have made forays into urban minority neighborhoods as well; Cineplex Odeon, for example, has expressed interest in building a 12-screen theater in Chicago's Lawndale neighborhood.

Burnidge, on the other hand, says he wouldn't mind aiming "for smaller markets, where land is cheaper-maybe a six- or eightplex is all they can support. But make it a nice-looking theater and run it right-decent prices, nice systems. You'd bring people to the area and provide entertainment."

Suburban shopping locations have proved resilient as well, if the market mix is right. "A mall location can draw people," says Rick Walker, vice president of Urban Architecture, and, he adds, to a developer's advantage, "someone's already done the demographics." Cinemark, in fact, is building in typical shopping center locations, although not necessarily as part of malls. Because a theater is a destination point, "it doesn't necessarily need primary visibility; it can go behind a mall as long as it has signage capability and a fairly big building that can be seen," Walker says.

Some markets, though, aren't ready at all for the behemoths, no matter what their developers say. In July, Kansas City-based AMC Entertainment withdrew its plans for a 30-screen complex in Burr Ridge, Illinois, after hundreds of residents protested at planning hearings, complaining that the complex would create traffic gridlock and increase crime in the area. After the withdrawal, Burr Ridge's village administrator ventured that AMC might submit an amended proposal for a 24-screen theater.

Planning an Entrance
The building boom isn't limited to big theater chains; there's a fair amount of growth among smaller, regional chains. Burnidge's Mainstreet Theatresprovides a good example; in addition to the Elgin Fox, the chain has two other theaters, a two-screen and a three-screen. "Even smaller independents are getting a little bit bigger," Burnidge says. "We're just finding out where our niches are." In the case of the Elgin Fox, the two nearest theaters in the market were eight and nine miles away, so Burnidge says he simply sought out an area he saw as underserved. "I'm not hurting those around me," he adds, "so it must be a new market."

Burnidge admits that as an independent, it can be tougher to get a theater project off the ground; banks are often reluctant to give start-up loans because the theater owners simply have no control over the product they're selling-the movies. He, in fact, did get a bank loan, helped by the fact that he'd owned his other two theaters for more than 15 years. But he encourages developers and brokers who are interested in working with theater builders to approach the process creatively. It helps, for example, if a developer can hold the note on the land until the theater is up and running, he says, because the theater building itself is so expensive to build and equip. The developer could also finance the shell, he suggests, while the theater handles the interior; a buyback might also be arranged. "Any way you can help the theater get going-these are expensive projects," he says. It can be a gamble, and chains often have better financial backing, he admits, but independents can offer flexibility as well as a chance to work with people in your own community.

Burnidge ended up building the Fox on land for which his father had traded and the previously vacant parcel now has a Boston Market, a McDonald's, a Lone Star Steakhouse, and a number of other eating and retail outlets. Financing, says Mohr, is also generally a matter of knowing how strong the market is and being able to sell the strength of your whole project to the marketplace. "As you get to a very large project like [the development in Walnut Creek], it's a Wall Street-oriented project," he says. Big theater chains tend to be publicly traded companies and have access to capital, so, he says, you can do joint ventures with them as well.

Mohr maintains that, "If you have a great site, [theater builders] will bang down your door to get the site." In that case, he says, "You can broker the site, you can build your own dream team-which is what I've done-pulling together other development professionals to make sure we were the absolute best team we could be." The Walnut Creek project that he's working on has three development companies, and Catalyst Investment Group is a joint venture of two other companies.

Levesque, on the other hand, says he often gets calls from developers-and he's not even in Regal's real estate area. "Individual developers come to us because a movie theater is a hub. If they've got a piece of property to develop, they know that if they get a successful movie theater company to build there, all the other parcels associated with it or adjacent to it will get snapped up."

It might also simply depend on what you've got to work with. "If you're a big developer with lots of sites," says Daniel, "you might be smarter to go to a big company, since they may like to make multiple deals. If you're an individual with one shopping center, it just depends on who's interested in that market."

Whoever's doing the proposing, though, Mohr advises you know your business before embarking on your movie career. He's particularly keen on The Encyclopedia of Exhibitions, published by NATO. The book lists the country's top 450 movie chains as well as information such as the chains' number of screens, total number of sites, the states in which each chain operates, the number of screens added in 1995, the projected number of screens planned in 1996, and headquarters information. (The newest edition of the book, published in August, costs $70. For further information, contact NATO at (818) 506-1778.)

"Like anything, if you invest in learning knowledge about how the business works, youcan quickly become an expert on the market because very few other people are," Mohr adds. "That's when people seek you out to do future projects."

Sarah Hoban

Sarah Hoban is a business writer based in Chicago.