Recent years have seen a major overhaul of the look, content and quantity of movie theatres in Canada. A consumer who hadn’t been to the movies since 1996 – if you could find one – would be shocked by the changes: screens have proliferated, concessions have diversified and ‘extras’ like digital sound, stadium seating and curved screens are now par for the course.

It appears to be a win-win situation: the soaring number of screens provides economies of scale for businesses and a home for a bumper crop of releases. But could the day be far off when the market is finally flooded?

Judging from the expansion plans of the major players and according to those in the know, an end to the demand for cinema screens is nowhere in sight. In fact, the expansion of the supply side of the market is being met with an increase in the number of movie-goers filling the seats.

Marci Davies, senior vp of marketing and communications for Cineplex Odeon, which estimates its market share at 40%, quotes figures from a Statistics Canada report quantifying this rise. According to the report, people went to the movies an average of 3.9 times a year between April 1, 1997 and March 31, 1998, up from 2.9 times from a year earlier.

‘We know more people are going more often,’ says Davies. ‘We’ll have no problem filling these theatres. Hollywood is doing a terrific job of churning out great movies. There will always be films [to play in the theatres]. We do have slow times, but we wouldn’t be building multiplexes if we didn’t feel they were worth the money.’

Famous Players has its own numbers that point up this trend. According to figures from external marketing studies commissioned by the company, cinema attendance is through the roof. On average, people living in Ottawa went to the movies 4.8 times in 1996; the figure in 1999 was 6.5. Corresponding figures for other population centres are less pronounced but reflect the same steady growth: Vancouver recorded 5.7 visits in 1999, up from 3.4 in 1996; Toronto stood at 4.7 in 1999, up from 1996’s 3.2; and Calgary’s figure for 1999, 3.7, was more than double that of 1996, 1.8.

‘People are going to the movies more often and we’ve grown the market to meet the expansion,’ says Roger Harris, Famous Players’ senior vp and gm of theatre operations. ‘We’re not scratching around to find guests to come to our locations. More people are coming out in greater numbers than we’ve ever seen. They’re voting with their feet.’

Avid movie-goers

The same study appears to confirm the role of recent theatre revamps in the attendance boom. One question sought to pinpoint how ‘avid’ theatre-goers (those who saw at least one film a month) selected their locations: factors like the quality of sound, seating and screen size registered as the main draw, with concessions coming in as a secondary factor.

In fact, if anything, opportunities abound for extending such avid movie-going. Loews Cineplex Entertainment’s (Cineplex Odeon’s parent company) 1999 annual report states, ‘Outside of North America, many international territories are vastly under-screened.’

According to the report, markets exposed to multiplexes over the last decade (the u.k., Australia and Germany) have seen box office revenues double or triple in contrast to the underdeveloped European markets where, according to Loews’ figures, the average movie-goer will see a film less than once a year compared to devout North American cinema-goers who find themselves in the stalls five times a year.

Leap into the millennium

Canada’s remaining major player, the u.s.-based 1998 entry to the market, AMC Theatres, is a multiplex trailblazer. When the company opened the Grand 24 in Dallas, Texas, in May 1995, it was the largest theatre in North America.

amc still believes in multiplexes – with five locations in Canada (three in Toronto and one each in Ottawa and Concord, Ont.), it has a presence of 98 screens. Its corporate website boasts that roughly half of its screens reside in multiplexes.

amc claims to have been the innovator behind stadium seating. ‘The Grand 24 was such a huge success from day one that everyone in the exhibition industry realized that a sloped-floor multiplex was a dinosaur,’ according to Larry Whittenberger, AMC Theatres’ operations manager for Canada.

‘Even five or six years ago, theatres were using graduated sloped floors, not tiered seating. The state of movie-going as a whole has gone through an evolution over the past 18 months or so. It’s leapt into the millennium. It’s gone from smaller, boxy multiplexes to state-of-the-art megaplexes. We’ve taken movie-going several steps further ahead than it was even two years ago. It’s a better experience across the board.’

In fact, Whittenberger credits the megaplex with changing the audience’s approach to movie-going.

‘With megaplexes able to offer more film choices, there’s a difference in movie-going now versus 10 to 15 years ago. People were probably then chasing one film; they had one film in mind when they went out. Now what people do is have two or three choices in mind and make their choice when they’re at the multiplex, with the multiple choice of start times.’

amc’s approach to providing the complete movie-going experience differs somewhat from its competitors, concentrating efforts in the auditorium and placing less emphasis on the lobby.

‘We work with developers such that we’re a part of a greater entertainment complex. There might be eight or 10 restaurants ringing the complex, so there are multiple food offerings, not just fast food – audiences can have a fine dining experience, not just fast food. We might attract more people who want to have a meal with a date first and then go to the movies,’ says Whittenberger.

‘We focus on what’s happening in the auditorium itself, rather than what goes on in the lobby. [Other chains] have louder lobbies, huge arcade environments and that sort of thing. We’re more muted in our lobbies.

‘We’re the Mercedes of the movie-going experience,’ claims Whittenberger. ‘The picture on the screen is bright, crisp and clear – every print is viewed before it goes to the public so we can ensure it’s in excellent shape. We go that extra step that maybe distinguishes us from our competitors.’

With three new locations scheduled to open in 2000 and 2001 (one in Montreal and two in Toronto, including a ‘Canadian flagship’ theatre planned for downtown), Whittenberger is confident the market is nowhere near capacity. He concurs that movie-going is on the rise and says there is still plenty of room to push the frequency of visits higher – ‘to six or seven times a year.’

‘Basically, business has been very consistent with our business plan,’ he says. ‘We’re quite pleased with our performance thus far in Canada, and optimistic about the future.’

Expansion plans include opening sites in Western Canada. ‘Our goal is to be a small, quality circuit consisting of approximately 15 locations in major cities. We choose to be in major markets; Cineplex and Famous Players look at middle-sized and smaller markets, too.’

As for challenges, ‘the only challenge is to make people aware that movie-going has never been better, getting people out to have that exciting, electrifying experience. There’s nothing like being in an auditorium that’s sold out on opening night.’

With consumers accustomed to new standards in seating, screens and sound, the emphasis for larger companies is on differentiating themselves while retaining the winning formula.

‘Stadium seating, digital sound and curved screens are the point of entry in today’s building environment. Anyone who’s building a theatre won’t build without all that,’ says Davies.

All of these elements are present in Cineplex’s new prototype locations, the first of which – a 10-screener – opened in Niagara Falls late last year.

The prototype, Davies says, features a ‘brand-new design. It has a whole new feeling. Our environment will deliver something not available [elsewhere] today. It is modern design with a return to movie-going nostalgia.’

The theatres feature 40-foot-high ceilings, a large projector screen in the lobby, hot food, coat-checking, automated ticketing machines, birthday rooms for children’s parties, a Numbskulls outlet, a lounge area and a cafe ‘environment’ called Alan Smithee’s Cafe. Lobbies are divided in two, with the big-draw Cinescape, more likely to attract teens, on one side and the cafe and lounge area on the other.

‘It’s all about the movie experience,’ continues Davies. ‘The focus of the new theatre is to deliver a top-quality movie-going experience. We concentrate on customer service. We invest money in training, so guests will notice the difference. The most important thing is that it leaves people feeling their money was well spent in the

theatre – that we met or exceeded their expectations.’

Cineplex plans to open 14 to 19 new theatres (a total of 250 new screens) over the next 18 months, with 11 under construction and slated for completion in 2000.

The main challenge? According to Davies, it’s finding ‘the right location with the right deal that makes sense. It’s a real-estate game.’

Expansion is also a priority for Famous Players. The company’s last building of 1999 (16 screens) opened in Hull, Que., in mid-December to ‘very encouraging’ business, says Famous Players’ Harris. In the first six months of 2000, Silver City outlets (which Harris describes as the ‘core brand location’) are scheduled to open in Quebec City, London, Ont., Calgary and Edmonton. And once again, finding product for the new screens should be no problem. In fact, even with the number of screens in the market, Harris confesses to feeling ‘a little pressured’ to fit all the product on screens.

PPV WWF scores K.O.

Harris says Famous Players seeks to make the ‘environment dynamic and exciting, so that even for regular visitors there’s something exciting to see.’ Examples include the annual broadcast of the Superbowl and the recent addition of Sunday night pay-per-view broadcasts of World Wrestling Federation matches. The initial test screening, held at the Toronto flagship Paramount location late in 1999, attracted an audience of 300 (75% of the theatre’s capacity), much greater than the standard Sunday night draw.

Another new aspect of operations is the serving of alcohol. Famous Players locations in Vancouver, Montreal and Toronto have been licensed to serve alcohol since last year. Harris explains this in terms of the ‘complete night out. We went back to our original plan, which was to analyze the theatre-going visit. When you go to the movies, it’s typically not the only thing you do. You might have dinner first and dessert afterwards, so we went the food route, so it was like one-stop shopping. Then we said what else do people tend to do? They drink. Things like that are a logical extension to the theatre-going visit. It’s a one- to two-drink occasion.’

In order to preserve the family orientation of much of Famous Players’ business, drinking is permitted only within a defined area within the building. ‘We don’t want to mix that audience [the drinkers] with people coming in to see Pokemon.’

Other revenue-raisers are in the works: one idea for expanding the use of the facilities and making the most of the slow daylight hours involves offering the theatres for rent to companies for business meetings. Launched in the last year by Famous Players, this project is still in its infancy, but Harris says the reaction from clients has been ‘exciting – it’s a little more dynamic than a hotel or a convention centre.’

The exhibitor is also tweaking the formula by providing such new things as ‘complete digital systems,’ of which there are two (one in Vancouver and one in Toronto). Aiming to preserve the same quality as regular prints, the digital technology – whereby the movie is downloaded from a satellite – is essentially in the testing stages, although Famous Players sources say the money-saving technology is the next natural step.

With the mainstream movie trade in key markets dominated by the three major players, other exhibitors who wish to find a place in the market must position themselves in an undersupplied niche.

Exhibitor Alliance Atlantis Cinemas, established by the 20-year industry veterans of Alliance Atlantis Communications, focuses on smaller films – Canadian, foreign-language and independent – is having no trouble finding audiences in the expanded market. ‘Oh yeah, we’re doing well,’ says president Leonard Schein, ‘we don’t have much competition in our area.’

In fact, the seven-location company is set to expand operations considerably by both building new theatres and taking over and renovating old theatres to up its locations to 11 and to boost screens from 25 to 49, with the possibility of an additional theatre for Halifax.

Positioning itself in an alternative market, Galaxy Entertainment has sidestepped any competition with bigger players by slotting into a niche it maintains is under-developed. The Victor Loewy/Ellis Jacob/Robert Lantos enterprise that launched late last year is in the process of gutting, renovating and, in some cases, demolishing the seven Ontario Theatre Group cinemas bought by the new venture.

Galaxy ceo Jacob says the renovation and rebuilding is ‘basically still in progress,’ with the chain’s first two theatres set to open in late May, followed by an additional three to open in fall of this year.

He also anticipates no trouble from the bigger players. ‘At this stage, we’re no competition for any of the majors. Our strategy is to be in small-town Canada where the market’s been underserviced. It doesn’t make sense for us to go somewhere that has a theatre already.’

A town without a movie theatre is likely to be a rarity in the near future. In fact, Galaxy’s strategy, coupled with the continuing expansion campaigns of so many other players, could soon find even small-town Canada with a megaplex on every corner.