Business

A really big show

New theatres offer a total entertainment experience

MICHAEL POSNER August 11 1997
Business

A really big show

New theatres offer a total entertainment experience

MICHAEL POSNER August 11 1997

A really big show

New theatres offer a total entertainment experience

MICHAEL POSNER

Business

Never mind Tom Cruise or Julia Roberts. Forget about Spawn, The Lost World and Conspiracy Theory. As likely as not, the next big attraction at your neighborhood movie house is likely to be the theatre itself. After almost a decade of inertia, Canada’s cinema chain titans have embarked on a building program worthy of the heyday of MetroGoldwyn-Mayer—complete with state-of-the-art digital sound systems, curved screens (for better viewing), plush tiered seating, and as many as 12 films to choose from.

Famous Players Inc., a subsidiary of U.S. entertainment goliath Viacom Inc., is spending $75 million to add 136 new screens—it now has 521—in Canada by the year 2000. Its archrival, Cineplex Odeon Corp., controlled by American conglomerate Universal Studios Inc., has an even more ambitious expansion program underway: 200 new screens to add to the 681 currently in Canada as part of a $145-million North American expansion by the end of 1998. Another powerhouse, Kansas City-based AMC Entertainment Inc.—the continent’s largest exhibitor by revenues (1996: $911 million)—has tabled a dramatic battle plan for penetrating Canada: mammoth 30-screen megaplexes in downtown Montreal and Toronto, with other sites to come. And specialty film exhibitor Imax Corp.—makers of spectacular twoand three-dimensional films displayed in a panoramic 70mm format—hopes to double its current 154 systems around the world in the next five years.

Compared with much of the current inventory—small screens in relatively cramped quarters—the new cinemas are a feast for the senses. In addition to razzle-dazzle optics and audio, and roomier theatres, the old staple diet of buttered popcorn and sugared soda water has been expanded to include brand-name everything from pizza and french fries to espresso and white chocolate cookies. And both Cineplex (with Cinescape) and Famous Players (with TechTown) are adding family entertainment centres (interactive video-game rooms)—another incentive to visit theatres and stay longer.

But the new film forums represent only part of a much broader phenomenon—the proliferation and enrichment of what social demographers call the out-of-home entertainment experience. Golf driving ranges, laser tag venues, Internet-linked cyber-cafés, oversize bookstores with fireplace reading areas and coffee nooks, and themed restaurants such as Planet Hollywood and Rainforest Cafe—the contemporary urban landscape is marked by increasingly sophisticated attempts to entice consumers (and their wallets) away from their television sets. And it seems to be working.

The latest case in point: Playdium Entertainment Corp.’s Sega City, an $18-million mini-theme park in Mississauga, Ont., adjacent to the 1.4-million-square-foot Square One mall. Exploiting the latest high-tech genius of Japanese game manufacturers, Toronto-based Playdium combines a 33,000-square-foot indoor games sensorium with a Mario Andretti-designed gocart track, Cito Gaston-endorsed batting cages, as well as beach volleyball, miniature golf and a 40-foot climbing tower—in short, a fun-fuelled menu that aims to capture a wide demographic mix. The first of its kind in North America, Sega City opened last fall—in its first 10 months, it recorded more than 700,000 visitors, including nearly 500 corporate groups that reserved the site for special events. “In both attendance and revenues,” says Playdium’s very satisfied CEO Jon Hussman, “we have far exceeded our initial expectations.” (Owners of a private company, Hussman and chief operating officer Steven Warsh have won investment capital from some high-powered partners, among them Hong Kong’s Nina Kung Wang, reportedly the richest woman in Asia—she owns 20 per cent. Other investors include Hollywood-based Sega DreamWorks, an alliance of Japan’s Sega Enterprises Inc., MCA Inc., and DreamWorks SKG, owned by Steven Spielberg, David Geffen and Jeffrey Katzenberg.)

More significant, perhaps, the Sega attraction—directionally marked as a major tourist landmark on Toronto-area highways— is also creating retail synergies with the nearby mall. The evidence is so far anecdotal, concedes Howard Quennell, vice-president of Hammerson Canada Inc., which owns Square One. But he’s convinced crossover traffic from both Playdium and Famous Players’ adjacent 10-screen Coliseum complex, which opened in May, is boosting sales inside the mall. More and more, it seems, developers and landlords are recognizing the need to inject new value into the traditional shopping experience.

And the cinemas are central. Once relegated to out-of-theway corridors and dark mall basements, movie houses are now seen by developers as major traffic builders. “If you need a new anchor tenant for a new mall,” asks AMC’s director of business development for Canada, Harry Peckham, “who are you going to turn to today? The Bay? Eaton’s? I don’t think so.”

AMC’s megaplex strategy is to surround its 24or 30-screen houses with complementary destinations—book and music stores, restaurants, bars, games centres. “So now,” says Peckham, “when you go to the movies, you’ll spend six hours in the area, instead of two.” Its Montreal development, in a completely refurbished Montreal Forum, is scheduled to open in 1999. The Toronto site—part of a $150-million city-centre redevelopment project adjacent to the vast Eaton Centre complex—is further off, awaiting land assembly and the regulatory process.

For film exhibitors, the essential logic of expansion is compelling. For only a marginal increase in administrative costs, multiplexes can generate significantly higher traffic flows and revenues. One concession stand—still the only lucrative profit centre of most film houses—can service 10 cinemas as easily as two.

In addition, the general decline of real estate values in Canada over the past several years has made landlords far more willing to sign long-term leases favorable to exhibitors, with lower rents and better locations. “Compared with 10 years ago,” says Famous Players vice-president Roger Harris, “developers see us in a totally different way. It’s a philosophical change. They recognize that their environments must be made more exciting.” To some extent, the new theatre “hardware” is needed simply to accommodate the growing output of film software—the rising number of features turned out by Hollywood studios (471 in 1996, up 15 per cent from the year before), independent and foreign producers, and the seldom-exhibited products of Canada’s struggling film community.

Among industry analysts, moreover, there’s a feeling that Canada has too few screens, forcing major Hollywood releases to often leave theatres while they are still drawing crowds in order to make way for the next scheduled release. In a multiplex, movies can open on several screens simultaneously, then be scaled back to meet demand. “We have to be able to play more titles for longer periods of time,” says Famous Players’ Harris. “If you were a restaurant, how long could you survive with just four items on the menu?”

“The movie theatre of yesterday is obsolete,” agrees Imax’s co-CEO Richard Gelfond. “The changes in home entertainment systems—more channels, video, laser discs, computers, the Internet, better screens, better sound—mean that when people leave their homes, they want something dramatically different and memorable.”

But can Canada’s urban centres absorb the arrival of an AMC, with its 6,000-seat theatres? Is the market large enough to profitably sustain three major exhibitors? “We’re not afraid of competition,” insists Cineplex Odeon’s executive vice-president Howard Lichtman. “I’m not sure 30 screens in Canada works as well as 30 screens in Texas,” says Famous Players’ Harris. “But if it’s not them, it’ll be someone else. We have to be prepared.” As for AMC’s Peckham, he’s convinced that “growing the industry is the key for us all. It shouldn’t be a dogfight.”

Or maybe it should. Well-financed, new company muscles its way into established territory, stirring resentment. Not a bad premise for a film. Pass the pizza. □