Published on: December 1, 2014by Kevin Coupe
Fascinating pieces in the New York Times that offer business lessons for many brands….
The first story has to do with the movie theater industry, which, having seen ticket revenue drop four percent this year, is looking for new ways to get people out of their houses and into the theaters. "Having tried 3-D films, earsplitting sound systems and even alcohol sales in pursuit of younger moviegoers, some theater chains are now installing undulating seats, scent machines and 270-degree screens," the Times reports.
“When I step back and think about what will get people off a couch, in a car, down the road and into a theater, the answer is not postage stamp-sized screens and old seats,” Gerardo I. Lopez, the chief executive of AMC Entertainment, the No. 2 chain in the United States, tells the paper. “Why would they bother? What the hell, stay in the house.”
The story goes on:
"The decline has hammered the biggest theater companies, with profit at both AMC and Regal Entertainment, the No. 1 chain, plunging more than 50 percent through the first nine months of this year, compared to the same period a year earlier.
"But what really has the exhibition industry unnerved are two statistics released in the spring by the Motion Picture Association of America. Last year, despite a glut of extravagant action movies, the number of frequent moviegoers ages 18 to 24 dropped 17 percent, compared to a year earlier; the 12-to-17 age bracket dropped 13 percent.
"The undiscerning young ticket buyers Hollywood has long counted on to turn out weekend after weekend are suddenly discerning. Or they are at least busying themselves with video games, living room wide-screen televisions and devices that can pull up thousands of movies with a couple of clicks. For many teenagers, the idea of focusing on a single screen for an extended stretch is anathema."
You can read the entire story here.
Ironically, the Times had a story over the weekend about how Netflix is trying to build a global brand by creating content that will, in fact, try to entice people to stay home. Following domestic successes with "House of Cards" and "Orange Is The New Black," Netflix is about to unveil its newest original series - a 10 episode, $90 million project called "Marco Polo," which it believes will have international appeal and drive up its global subscriber growth.
It is just the latest strategic move by a company that started out renting DVDs via the internet, but that has embarked on a much broader path in recent years, positioning itself as competitive to broadcast and cable networks as a content producer and supplier. While Netflix has suffered some stumbles and not every analyst is convinced that its current strategies will be successful, the company seems to believe that this is the only way it can survive long-term. Indeed, Netflix CEO Reed Hastings has gone on record as believing that traditional broadcast television will be obsolete within 15 years, and Netflix seems to believe that it needs to carve out a place in this new landscape if it is to survive.
You can read the Times story about Netflix here.
In terms of broader business lessons, I'd suggest that the study about declining theater attendance among young people is instructive. The simple fact is that young people have little or no allegiance to what many of us think of as traditional consumption experiences. I think over the long term, they'll go to stores when the stores seem relevant and compelling, and they'll shop online when it suits their needs and desires. Just as it seems clear that young people will go to movie theaters when those theaters offer them something they can't get elsewhere, and they'll stay home and watch smaller screens when those screens provide content they find compelling.
It is very simple, in my view. Successful consumer-driven businesses have to provide unique content in a compelling and differentiated environment. Do that, and consumers will come. Be a "me, too" business, and people will find other places to spend their money.
One other thing. I'm willing to go on record right now as saying that movie theater companies are going to have a better 2015 in terms of box office receipts than they experienced this year.
The reason has nothing to do with undulating seats, scent machines and 270-degree screens.
Nope, it has to do with a little movie coming out next year called Star Wars: The Force Awakens.
Because differentiated content is the key to differentiated success.
(BTW…you can see the first teaser trailer for the new Star Wars movie here.
And may the force be with you.
- KC's View: