90 cinemas close = 900 est. projectors/players/sound hit the second hand market?

[Mark Gulbrandsen]

In the USA reviving a not so profitable site would require a sound plan that would be presented to the court for approval. It would need to show that there exists a sound plan to turn a given site back to profitability. The court is also most likely want to know how profitable it was over a given number of years before COVID hit. The entire plan may also involve new investors to pump money in and help make things work.

In this country, distribution usually likes a minimum of an 8 mile clearance between sites. There have been past execptions to that. In a Western Chicago suburb in the late 80's General Cinema built a new 8 Plex as part of a shopping mall development. Then 4 months after that opened Cineplex built a brand new free standing 8 Plex right across the street. I don't think either theater grossed very well and eventually Cineplex filed bankruptcy and that site was shut down. I believe that the AMC is now a Hollywood Boulevard Cinema. Apparently the Cineplex was either repurposed or torn down. Here in the U.S., bankruptcy courts won't allow an iffy plan to float. It's easier and safer for all involved to just let it all sink.

[James Gardiner]

Thanks Mark,

Yes, interesting point Mark on how they need to justify a site staying open. Remember they are trying to convince an older person/judge, who typically has general business intelligence (As they deal with every type of business on a day-to-day basis) and so need to present it under that limitation to convince the judge. In cinema, people, from my perspective, have a lot of faith in how they make financial decisions. I don't expect a judge to have the same faith. i.e. can they demonstrate that attendance levels will improve? Not really, I expect the judge was listening to this and only after the Christmas period and the persistent lower attendance levels did the judge go with the fundamentals and push the extra locations into closure.

8mil = 13 km. I am not against regional isolation regulations, but there needs to be legislative detail on what is acceptable and what is not. I would welcome such written-down conditions as it makes it hard to start a business when you are not sure exactly where you stand on these issues. But competition issues in general, like a coffee shop can set up next to another coffee shop is acceptable under consumer law everywhere as to allow competition, there needs to be some type of mechanism for cinemas too.

I tend to like the general rule, cinemas are not recommended if setting up within a 15 min drive of another cinema. And/Or better still, the number of seats/screens in an area being a calculation of the census/population of that area.

I set up cinemas in regional areas and a few times I have gotten interest but rule them out straight away due to census/population metrics.

[Leo Enticknap]

Pacific Theaters moved all equipment to one place and held a big auction a couple years ago.

We bought (at that auction), refurbished, and resold some of it. No Series 1 stuff, though.

[Geoff Jones]

But competition issues in general, like a coffee shop can set up next to another coffee shop is acceptable under consumer law everywhere as to allow competition, there needs to be some type of mechanism for cinemas too.

I wonder what the moviegoing experience would be like if cinemas had been forced to compete with each other over the years, rather than rely on the "monopoly" provided to them by clearances?

I wonder what the moviegoing experience would be like if cinemas had been forced to compete with home theaters other over the years, rather than rely on the "monopoly" provided to them by release windows?

[Mark Gulbrandsen]

Thanks Mark,

Yes, interesting point Mark on how they need to justify a site staying open. Remember they are trying to convince an older person/judge, who typically has general business intelligence (As they deal with every type of business on a day-to-day basis) and so need to present it under that limitation to convince the judge. In cinema, people, from my perspective, have a lot of faith in how they make financial decisions. I don't expect a judge to have the same faith. i.e. can they demonstrate that attendance levels will improve? Not really, I expect the judge was listening to this and only after the Christmas period and the persistent lower attendance levels did the judge go with the fundamentals and push the extra locations into closure.

8mil = 13 km. I am not against regional isolation regulations, but there needs to be legislative detail on what is acceptable and what is not. I would welcome such written-down conditions as it makes it hard to start a business when you are not sure exactly where you stand on these issues. But competition issues in general, like a coffee shop can set up next to another coffee shop is acceptable under consumer law everywhere as to allow competition, there needs to be some type of mechanism for cinemas too.

I tend to like the general rule, cinemas are not recommended if setting up within a 15 min drive of another cinema. And/Or better still, the number of seats/screens in an area being a calculation of the census/population of that area.

I set up cinemas in regional areas and a few times I have gotten interest but rule them out straight away due to census/population metrics.

James, This is why large companies hire experts in corporate investigation and risk to handle their woes. Kroll is but one company that specializes in handling bankruptcies for really large corporations and helping figure out weather a given entity can become solvent again or if they should be liquidated.. They have to get it right because if there is a second go around with in a certain time frame, then the court will order the corp will be dissolved.

[Leo Enticknap]

I wonder what the moviegoing experience would be like if cinemas had been forced to compete with home theaters other over the years, rather than rely on the "monopoly" provided to them by release windows?

Thanks to a combination of Disney and Netflix smashing the 90-day window and cheap Chinese consumer electronics, they are competing against home theaters. This, IMHO, is a big part of what drove the growth of combined movie theater/restaurant venues (Alamo Drafthouse, Flix Brewhouse, etc.) - the desire to compete by providing something that a home theater cannot (unless you have a chef and a butler).

[James Gardiner]

James, This is why large companies hire experts in corporate investigation and risk to handle their woes. Kroll is but one company that specializes in handling bankruptcies for really large corporations and helping figure out weather a given entity can become solvent again or if they should be liquidated.. They have to get it right because if there is a second go around with in a certain time frame, then the court will order the corp will be dissolved.

In my experience, the cinema exhibition industry is full of a more than typical level of "mate-ship-deals". You know, it's all about relationships, and that's very true in this industry. This also leads to more than usual business decisions made that are not based on commercial common sense. It will be some one-sided discussions on certain aspects of how the business was run and Kroll, as an example, doing due diligence on moving the company forward.

For example, many independent cinemas in Australia have secret ownership to allow them access to content on a more commercial basis. It gets very messy very fast.
And I would not be surprised if it is not similar in most of the rest of the world.

[James Gardiner]

Thanks to a combination of Disney and Netflix smashing the 90-day window and cheap Chinese consumer electronics, they are competing against home theaters. This, IMHO, is a big part of what drove the growth of combined movie theater/restaurant venues (Alamo Drafthouse, Flix Brewhouse, etc.) - the desire to compete by providing something that a home theater cannot (unless you have a chef and a butler).

Leo, you bring up a very interesting aspect of how the industry is changing. For example, the head of ICA, the Australian NATO equivalent, indicated that independents have to diversify to survive. i.e. become more like what is happening in the U.S. with the aforementioned, "Entertainment Complex" that also has cinemas.

Its becoming more obvious to those who run cinemas that they need to become Entertainment entities, not letterbox themselves to just only "Cinema". As we are now in the going out business, being a one-item on the menu destination is losing out to entertainment complexes when it comes to being an entertainment destination.

So, cinemas need to diversify into other offerings. Restaurants, Bowling, laser tag, Gameing-machines, sports bars. You name it.

The big problem with this realisation is that there are many more established entertainment complexes already in existence. Many more than Cinemas. If Cinemas decide they can become more like them, can they then decide to become cinemas? (Ultimately this has not occurred as distributor policies artificially lean towards cinemas as they are today. And explains why the conditions are seen as being warped and commercially do not make sense. They do make sense if you understand what is going on here.)

Look at Las Vegas for example. NO-CINEMAS-ON-THE-STRIP. That's crazy. It is suppose to be the pinnacle of entertainment destinations in the U.S. And no Cinemas. This cannot be accidental.

This is problematic as, from what I have seen, well run and established entertainment complexes have older staff with better customer training. If I was to bet on a head to head battle between a cinema becoming more like an established entertainment site or an entertainment site adding cinemas. Who do you think is likely to win?

It will be an interesting few years to see if this situation changes. If they attempt to keep cinema to themselves, we can expect to see a significantly higher reduction in screen numbers.
As ICA CEO said, they need to diversify, but if they are restricted from doing so to protect the current majors dominance, they cannot diversify so closure is the result.

[Mark Gulbrandsen]

Leo, you bring up a very interesting aspect of how the industry is changing. For example, the head of ICA, the Australian NATO equivalent, indicated that independents have to diversify to survive. i.e. become more like what is happening in the U.S. with the aforementioned, "Entertainment Complex" that also has cinemas.

Its becoming more obvious to those who run cinemas that they need to become Entertainment entities, not letterbox themselves to just only "Cinema". As we are now in the going out business, being a one-item on the menu destination is losing out to entertainment complexes when it comes to being an entertainment destination.

So, cinemas need to diversify into other offerings. Restaurants, Bowling, laser tag, Gameing-machines, sports bars. You name it.

The big problem with this realisation is that there are many more established entertainment complexes already in existence. Many more than Cinemas. If Cinemas decide they can become more like them, can they then decide to become cinemas? (Ultimately this has not occurred as distributor policies artificially lean towards cinemas as they are today. And explains why the conditions are seen as being warped and commercially do not make sense. They do make sense if you understand what is going on here.)

Look at Las Vegas for example. NO-CINEMAS-ON-THE-STRIP. That's crazy. It is suppose to be the pinnacle of entertainment destinations in the U.S. And no Cinemas. This cannot be accidental.

This is problematic as, from what I have seen, well run and established entertainment complexes have older staff with better customer training. If I was to bet on a head to head battle between a cinema becoming more like an established entertainment site or an entertainment site adding cinemas. Who do you think is likely to win?

It will be an interesting few years to see if this situation changes. If they attempt to keep cinema to themselves, we can expect to see a significantly higher reduction in screen numbers.
As ICA CEO said, they need to diversify, but if they are restricted from doing so to protect the current majors dominance, they cannot diversify so closure is the result.

Here in the States many independents have built fairly large plex's to keep up with the Cinemark's, and often to lock the majors out of a given market.. But the Independents with single screen sites also do very well because they OFTEN offer a MUCH better movie going experience. People also love the old theaters. There used to be at least one MPX on the strip in Vegas. There is for sure one just off the strip at the Palms... It's operated by Brendan Theaters and has the largest Liemax screen in Vegas. iT'S A very nice MULTIPLEX!! I have also stayed at the gold coast, across the street from the Palms just to get away from the constant hustle bustle of the area where Caesar's Palace and the MGM Grand are at. I have also stayed at the Rio. The Rio has the best seafood buffet in town!

[Allan Barnes]

Please post any links for auction or sale of used equipment

[Leo Enticknap]

We don't auction anything, but we do acquire used equipment, inspect / do due or overdue planned maintenance / repair as necessary, and then resell. If there is anything specific you are looking for, please feel free to contact sales {at} movingimagetech.com. If it's projectors you're interested in, shipping from Southern California to Canada will be pricey, but more viable for servers and smaller items, I'd have thought.

[Sean Weitzel]

Here in the States many independents have built fairly large plex's to keep up with the Cinemark's, and often to lock the majors out of a given market.. But the Independents with single screen sites also do very well because they OFTEN offer a MUCH better movie going experience. People also love the old theaters. There used to be at least one MPX on the strip in Vegas. There is for sure one just off the strip at the Palms... It's operated by Brendan Theaters and has the largest Liemax screen in Vegas. iT'S A very nice MULTIPLEX!! I have also stayed at the gold coast, across the street from the Palms just to get away from the constant hustle bustle of the area where Caesar's Palace and the MGM Grand are at. I have also stayed at the Rio. The Rio has the best seafood buffet in town!

Here in Vacaville, CA where I live we have a Brendan 16 screen and I do have to agree they are highly customer service centric and also put on a quality experience for a reasonable price. (My only beef being they sell Pepsi products rather than coca cola).

The Rio's Carnival buffet closed permanently last April.

[Tony Bandiera Jr]

<snip>

Look at Las Vegas for example. NO-CINEMAS-ON-THE-STRIP. That's crazy. It is suppose to be the pinnacle of entertainment destinations in the U.S. And no Cinemas. This cannot be accidental.

<snip>

You are correct, it is not accidental. The reason is all about money. No cinema complex will ever make more money per square foot than a casino. Casinos make millions, if not billions, per MONTH in Vegas. The average gambler will bet (and lose) more than $100 per person. Impossible numbers for any cinema (can you imagine a concessions stand that will hit $88-90 Per Cap? I don't think so.)

The few cinemas located off the Strip are doing about the same or worse than an average metropolitan area 'plex. Why? A large percentage (based on my many trips to Vegas, I'd say 96%) of people in DTLV and The Strip are there to gamble, not watch a movie. If anything, they want to see live shows with lunch/dinner in a nice showroom setting, with wait staff and drinks, not a cinema with no staff, close in seats and concession stand food.

As for more viable locations, what you said about becoming, or being part of, an entertainment centre or complex makes much better financial sense, but ONLY if the cinema owner also owns the rest of the complex. Too risky IMHO to lease space/buildings for a cinema as part of someone else's complex....just look at how mall based cinemas were treated. Best to own the land, building, etc. or not even bother in today's market.

[James Gardiner]

@Tony, Your argument makes no sense. The large entertainment complexes on the strip, yes, predominantly have gambling. But they have bars, restaurants, clubs, shops, live shows, etc. Basically everything else but for Cinemas. Not everyone gambles. I can tell you right now, many of these entertainment complexes would install a cinema in a flash if they could get content. They cannot so they don't. That's the ONLY reason they don't have cinemas.

The big reason we are seeing cinema combined entertainment complex push as the next big deal for cinema is that, as part of a complex, making money from different activities and having staff active and productive consistently is a huge deal. Cinemas get very busy, but they also have long periods of minimal activity with staff doing nothing.. Or when there is no good films around, they can be ghost towns. As part of a complex with many attractions, if one is not working, others likely are, allowing the locations to amortise the running costs over all activities and to also make sure the staff are actively making the venue money at all times.

The problem with this is, cinemas are becoming more like entertainment complexes, but then this effort to limit who can become a cinema falls down. If a cinema can become more like an entertainment complex, why cannot an entertainment complex add some cinemas? If that happened, Wow would there be an implosion of the current major exhibitors (As competition could explode).

Interesting times. And as you can see, why this reminds me of Kodak. Artificial limitations to maintain high probability, but when it breaks, it goes boom.

[Leo Enticknap]

Agreed with Tony. You don't go to Vegas to go to the movies. You can do that anywhere. Vegas's shtick is losing three figures on the slots while having a good time, or being screeched at by Adele (or not, if she wusses out again) or Celine Dion for a couple of hours, while being too drunk to be worried about the permanent hearing loss being inflicted on you in the process.

The "combined entertainment" model, with cinema as an intrinsic, but not the only part, might be the up and coming thing in the 'burbs and mega malls, but Vegas is a special case. The only market for cinema there is the same one as exists in other major metros: for people who actually live and work there, and the movie theaters that serve those folks are all well away from The Strip, where operating costs are more in line with what they are for movie theaters everywhere else.