The exhibition industry was “looking aggressively” at the idea of implementing Tuesday night discounts National Association of Theater Owners chief John Fithian said at the group’s CinemaCon confab last year. But no more. The idea is on indefinite hold. “I haven’t heard anything about it in months,” says AMC Entertainment CEO Gerry Lopez. “Some of the studios didn’t take kindly” to the initiative which Fithian said had helped to fill seats on the slow night in Latin America and Canada. The No. 2 exhibition chain also opposed the idea. “Rarely have I seen a consumer category where lowering the price results in a long term advance,” Lopez says.
That theme — putting value above low prices — may sound counterintuitive at a time when moviegoers say that they’re becoming fed up with rising admission prices. But the AMC Entertainment CEO is in a strong position to make his case the day after he unveiled better-than-expected Q4 earnings, which helped his stock to touch a new 52-week high today. He, as well as Wall Street analysts, say that the results validate Lopez’ efforts to improve concession offerings — including adding restaurants and liquor at some venues — and to outfit some theaters with fewer seats that are more comfortable and recline.
The effort means that AMC attracts “more adults who are paying full fare as opposed to kids.” And instead of lifting entry prices incrementally by a quarter or so “we’re raising a buck or a buck and a quarter.”
Don’t ticketbuyers really want lower prices? That’s what people told research and consulting firm PwC in a survey to find out why last summer’s box office was so weak. Yet Lopez says that AMC discovered that consumers are willing to pay up for an out-of-home experience that they believe provides value. “Our stuff is based on actual consumer behavior,” Lopez says. “The survey failed to ask those questions? Oh, gee whiz.”
The premium strategy now includes plans to boost the number of AMC Prime venues, which offer large screens plus state-of-the art projection and sound — including subwoofers built into each of the reclining seats. It now has nine Prime venues. But Lopez told analysts yesterday to be “prepared to be blown away when we announce and launch the next amazing innovation in AMC Prime in a few weeks.” Although he remains mum about details, Lopez says that innovations in sound and projection technology, possibly including laser projection, mean that “the next generation in PLF (for Premium Large Format theaters) is within our reach.”
He’s not as enthusiastic about alternative programming, which rivals including Carmike consider a promising opportunity to fill seats on weekdays. It’s “still in the emerging stage,” he says. “We need 26 weeks of alternative content, not four or six weeks. It needs more bulk.” For the time being he’s more interested in drawing targeted audiences with movies that appeal to, say, Latinos or fans of Bollywood.
Like most of his colleagues, Lopez is enthusiastic about the barrage of potential blockbusters headed to theaters this year, including the new Star Wars, Jurassic World, Minions, and Avengers: Age Of Ultron. But he also recognizes that this year’s hits may set a standard that’s hard to beat. “I’m worried about 2016,” the CEO says. “I never had a year that I felt was great and I wasn’t worried about the next year.” Still, he’s encouraged that “two out of three years are record-setting years. It used to be one out of three.”
Meanwhile dealmakers will be out in force looking for merger and acquisition opportunities. “There is no doubt the industry is going to consolidate,” Lopez says. “I would be surprised if 2015 closes without a couple of deals being announced.” That could include AMC, which is owned by China’s Wanda Group. “We’ve been consolidators” although mostly by picking up individual theaters as opposed to chains. “You don’t get a headline when you buy a one-sy or a two-sy.”