Don’t be fooled by the flashing marquee lights—the box office is hurting. Last year, movie attendance sunk to its lowest level since 1995. Overall ticket sales have been declining by 2% on average every year since 2002. This month, the box office recorded its worst weekend in years, with the top 12 titles earning $51.9 million, 37 percent below 2012's previous low. And as studios vie to release their films earlier in the more profitable home entertainment channel, theatrical release windows are shrinking. Movie theaters, once the primary venue of entertainment, are becoming a last thought.
It seems that in the hyper-connected, on-demand world we live in today, the magic of going to the movies has lost its spark. This is a movie-going public equipped with Netflix, Hulu, YouTube, and endless other ways of being entertained. Throw into the equation an ever-increasing price tag to sit in a theater with sticky floors, mediocre food, and people shushing each other, and it’s no wonder people are starting to think, Why bother?
But like any design strategist with a soft spot for buttered popcorn, I wondered whether the problem was worth looking at from a fresh perspective. And the industry may be ripe for change—the Chinese investment group Dalian Wanda just announced its acquisition of AMC Theatres for $2.6 billion. So I got together with my colleague, Tony Driscoll, a ten-year veteran at Disney, to see if we could answer a big question: Could design thinking bring the magic back to the movies?
Design thinking is really just about asking customers why, and listening. Not investors, not industry experts, but the customers you’re building products for. So we asked our friends, colleagues, and their kids: Why do you go to the movies? While a couple people mentioned particular filmmakers or big-budget effects, the majority of them had reasons that had little to do with movies at all. Most of them go to the movies as a social event—a shared experience with their family or friends. And yet, going to the movies is hardly a social experience. You don’t talk to each other, eat with each other, or even look at each other. Pretty much the only socializing opportunities are in line at the concession stand or on the way out of the theater.
The fact is that most theater advancements have been purely in the service of enhancing the movie-watching experience (e.g., 3-D, IMAX, stadium seating), rather than the movie-going experience. It seems like the movie industry is using technology to put a Band-Aid on a bullet wound. As they face declining audiences, they’ve responded with bigger and better features to enhance the spectacle and justify price hikes. The problem is that these features are overshooting the mass audience’s needs. People will shell out for a compelling blockbuster like Batman or The Avengers, but for most movies, there will be a point and a price at which people don’t care enough about bigger and better. It’s time to get out of the technology arms race.
When Continuum was engaged on a project with Holiday Inn to better monetize the lobby experience, the key to the redesign was the realization that their competition wasn’t other hotels; it was cafés like Starbucks and Dunkin’ Donuts, which typically flank their properties. Once they realized what they were really up against, they were able rethink their brand and guest experience to keep people from running across the street for their daily fix. The same tactic can be applied to the theater industry. People aren’t foregoing a trip to the movies for a rental at home—they’re foregoing it for other social activities such as restaurants and bars. So why are cinemas so intent on one-upping the home theater experience with new visual and audio effects? What if they really focused on competing for Friday night?
Social atmospheres center around conversation, the mixing of people and shared food and drink—things that are all noticeably absent from mainstream movie theaters. Boutique theaters such as Alamo Drafthouse and Arclight Hollywood have penetrated the market by directly addressing this need with gourmet dining options and lively bar scenes. But enhancing the social experience doesn’t have to mean going premium or getting a liquor license (though in many cases, I suspect it would be a lucrative investment). Design changes such as repositioning lounge areas closer to theater rooms could encourage more traffic between moviegoers and movie leavers and help build up excitement. A bigger investment could be to implement social seating arrangements such as private boxes for large groups to allow them free range to talk without disrupting the rest of the audience.
Most theaters are like cable companies to people, little more than a "dumb pipe" that spits out entertainment content. If a theater two blocks closer to you is showing the same movie, that’s the one getting your business. If movies are mediocre that weekend, you may not go to the movies at all. For an industry that depends on people heading to the theaters in times of good movies and bad, the current service model is a risky business. If theaters want to keep them coming, and more importantly buying their concessions (which make up 40% of their profits), they need to make their service experience stand alone.
And right now, that experience is something like a cattle call. You rush in to get good seats, and once the credits roll, you rush out to a more hospitable environment. What if theaters could make their space compelling enough for people to just hang out and split a popcorn, even if they don’t end up seeing a movie? One idea could be to create a standalone experience around previews—arguably the most fun part about going to the movies. Theaters could designate a lounge area that projects trailers for all the movies that are currently playing. People would have a place to socialize. Studios could build hype around their new movies. And theaters would make pure profit from their concessions.
The reality is that "good enough" entertainment content is available any time, anywhere—and options outside the box office will only continue to grow. Cinemas need to deliver on what they alone can own—a social experience unique from both the couch and the bar. Those who do will have to worry far less about what’s at the box office or what’s on Netflix—a lesson that can serve businesses both in and out of the limelight.
***Yun Yulia/Shutter Stock]