Going to see a movie used to be a good evening out with the family or a date, but now, people seem to be spending more time at home enjoying their personal entertainment systems. Since peaking in 2002, domestic theater attendance has dropped from 1.58 billion tickets sold to a projected 1.27 billion tickets to be sold in 2013. With Americans staying in to watch TV, what can movie theaters do to draw them away from their plasma screens and buy a ticket to see the silver screen?
Theaters on the ropes
Three of the largest American theater companies are Regal Entertainment Group (NYSE:RGC), Cinemark Holdings, Inc. (NYSE:CNK), and Carmike Cinemas, Inc. (NASDAQ:CKEC). All of them have witnessed growth and attendance issues during 2013.
Last quarter, Regal experienced an 8% attendance drop which led to a quarterly revenue of $642.8 million. This is a 9.5% decrease from the same quarter of 2012. The company has primarily expanded through strategic acquisitions. The most recent acquisition was of Great Escape Theaters, which grew Regal Entertainment Group (NYSE:RGC) by 25 theaters and 301 screens. The company also has 115 premium theaters that offer patrons larger screens, nicer seats, and better sound for a few extra dollars.
Cinemark Holdings, Inc. (NYSE:CNK) saw U.S. admission revenue decline 12%, leading to a quarterly revenue decline of 6.5% to $547.8 million. The company boasts 3D capability on 51% of all domestic screens and has been utilizing its mobile app for marketing purposes in an attempt to boost attendance.
But, these actions don’t seem to be enough to draw patrons to theaters. While the U.S. is slowing, Cinemark Holdings, Inc. (NYSE:CNK) is finding some success overseas. The company saw international revenue increase 8.5% to $184.2 million. The international success is still only a small silver lining on a rough quarter for the theater company.
Carmike Cinemas, Inc. (NASDAQ:CKEC) is the smallest of the theaters listed and was the only one to post revenue growth in the last quarter. This small growth of 0.10% comes after an attendance drop of 4.60% to 11.6 million patrons. The company is looking for acquisitions to grow towards a goal of 300 theaters and 3,000 screens. Carmike also has the Ovation Dining Club, which offers an upscale dining experience to accompany a movie.
All of the theater companies are coming up with ideas to draw patrons, but there is one company that offers consumers an experience that is impossible to get at home.
Bigger is better
IMAX Corporation (USA) (NYSE:IMAX) offers patrons a unique movie going experience by showing movies on massive screens. According to CEO Richard Gelfond, IMAX stands alone because, “IMAX is the only end-to-end premium entertainment solution in cinema, starting from collaborating with the filmmakers during the design of the film, right through to the point of presentation, customize equipment, and ongoing quality and service.” IMAX Corporation (USA) (NYSE:IMAX) supplies filmmakers with IMAX cameras that deliver unique aspect ratios that make the film fit perfectly on an IMAX screen. These cameras were recently used to shoot films such as Star Trek: Into Darkness and Man of Steel.
It is the IMAX Corporation (USA) (NYSE:IMAX) experience that can draw consumers away from their home entertainment systems. Regal, Cinemark, and Carmike all boast IMAX auditoriums and have identified them as a valuable source of revenue. All three theater companies have also developed their own brand of big-screen theaters. Regal has RPX, Cinemark Holdings, Inc. (NYSE:CNK) has XD, and Carmike has Big D. While these screens are not as big as a true IMAX Corporation (USA) (NYSE:IMAX) screen, they offer consumers a cheaper premium theater experience.