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Theaters try new options on big screens

Movie theaters -- which often are more empty than full -- are trying to add to the bottom line. They're planning ad-driven "pre-shows," concerts and promotions.
/ Source: a href="" linktype="External" resizable="true" status="true" scrollbars="true">The Washington Post</a

By now, moviegoers have become grudgingly accustomed to watching commercials before films in theaters, coming to regard them as the price they pay (in addition to the cost of the ticket) for seeing a movie.

If the commercials aren't going away, at least they can be more entertaining. With the rollout of new high-definition digital projector technology, the nation's two biggest theater chains are upgrading what they call their "pre-show" from a series of static slides featuring Coca-Cola polar bears and ads for local bowling alleys to slick mini-movies interspersing commercials with entertainment.

It's one of a number of ways movie theaters -- which often are more empty than full -- are trying to add to the bottom line.

The theater giants -- Regal Entertainment Group, with 6,000 screens, and AMC Theatres, with 3,500 screens -- have been working over the past several months to spiff up the 20-minute period before a movie or the movie trailers start, trying to balance the need for more advertising revenue against potential consumer backlash.

"We have tried to be sensitive to the audience while they're sitting there waiting for the movie to start," said Kurt C. Hall , Regal's co-chief executive. "We wanted to create something that's entertaining and a heck of a lot better than what's been in cinemas before. The static slides are primarily local and regional advertising and are pretty poorly done. They're pretty boring, quite honestly. We've tried to upgrade that."

Regal's answer is something it calls "The 2wenty," a 20-minute film that includes cartoons and mini-movies from Turner Broadcasting, behind-the-scenes looks at Universal Studios movies and theme park attractions and shorts featuring NBC stars, such as Jay Leno, intercut with advertising.

Commercials take up approximately seven minutes of the 20-minute clip. It's modeled after the "second disc" increasingly seen in DVD packages, which feature interviews with the movie's director and stars, making-of footage and outtakes. So far, The 2wenty shows on 4,600 screens, eventually appearing on 5,200 of Regal's 6,000 screens, with some small and rural markets excluded, at least partly because advertisers are unwilling to pay to reach the smaller markets, Hall said.

AMC is still determining the content-to-ad ratio for what it calls its 20- to 30-minute "walk-in" show. But holiday filmgoers already can see some AMC pre-movie projects.

For instance, AMC camera crews descended on the Dec. 16 premiere of New Line Cinema's "The Lord of the Rings: The Return of the King," the final installment of the J.R.R. Tolkien trilogy. Camera crews interviewed fans, some of whom dressed as characters from the movie, and created a two-minute featurette that opened in 1,200 AMC theaters three days later, showing before the main feature.

AMC plans to expand its digital projectors to 2,500 by summer, the company said. Each projection booth has two projectors. A standard film projector shows the feature film and a digital projector -- Regal's costs about $14,000 -- does the pre-show.

Trying to fill seats
Recovering from the '90s, which saw theater overbuilding, bankruptcies and consolidation (AMC is exploring a merger with No. 5 chain Loews Cineplex Entertainment), the nation's movie theater chains are searching for ways to add revenue. The product they show is popular enough; this year's box office receipts will come close to matching last year's record of $9.3 billion.

But at the theater level, the challenge has always been to put more seats in the seats. Over an average week, only 12 percent to 13 percent of Regal's seats are filled, dipping below 5 percent on the movie dead days of Monday through Thursday, Hull said.

To that end, theater chains are increasingly showing more than movies in movie theaters.

Earlier this month, AMC gave away tickets to a preview of Avril Lavigne's new concert DVD, "My World." Viewers in several major markets piled into theaters to watch the hour-long program. For AMC, the promotion conditions moviegoers to thinking of seeing music in a theater -- the chain will charge for upcoming shows from other singers. For Lavigne's label, Arista, which, like all record companies, is suffering through lackluster sales, it is another way to promote the singer's $25 DVD.

"We are optimistic about the future of that program," AMC spokesman Richard King said. "It's something that's been a source of incremental revenue during off-peak periods. I think it also sends the message that our theaters are a home for multiple kinds of entertainment options even beyond movies."

Regal showed a number of concerts in the last months of 2003, including a Nov. 3 concert by Coldplay. Regal charged $10.50 in advance for the shows, $12.50 at the door.

"We need to use our assets better by finding new ways to use seats and screens in off-peak hours," Hall said. Both chains also are considering live concerts and sporting events, such as boxing.

More cash from concessions
Showing features other than movies also helps theaters earn more money selling concessions, which have the highest profit margin. Depending on the movie, 40 percent to 60 percent of the ticket price goes to the studio that made the film. The theaters don't have to split the concessions cost with anyone, typically earning profit margins of 85 percent.

Digital cameras, editing and theater projectors are leading efforts to produce higher-quality advertising. The equipment allows movie chains to do quick-turnaround projects such as the "Lord of the Rings" featurette and to instantly beam pre-show entertainment via satellite to theaters all over the country. They reduce the cost of producing an ad by 15 percent to 20 percent, Hall said, because advertisers no longer have to make a film print of their commercial for each theater.

They also allow the theaters to produce PG-rated pre-shows to be shown before PG-rated movies, R-rated pre-shows before R-rated movies, and so on. This makes them more attractive to advertisers, which can target their commercials. For instance, Regal's R-rated pre-shows have included liquor advertisements, but no profanity or nudity.

As for potential blowback from customers, Hall cited an Arbitron Inc. study in May that said two-thirds of theatergoers don't mind commercials before movies. For now, Regal has no plans to cut the number of movie showings to cram in more ads.

"Everybody hates bad marketing, bad content, bad advertising," he said. "But you can do it well, which is what we've been trying to do."