My Independent Movie Theater

I want to start my own independent movie theater and I think it’s a good idea. At the Jackson Hole Film Festival, June 7-11 2007, more than 750 movies were submitted and only 93 were accepted for the festival. What happens to the other 657 movies? Thousands of movies are sent into film festivals that only allow less than one hundred to be shown. With the increase in technology that makes independent film making easier and more widely available, more and more independent films are going to be made. Just look at how many independently made videos are on youtube.com where in July 2006, they announced that they hit 100 million videos served per day. There is an increase of independent movies being made but there is no increase of venues to show them.
My independent movie theater will also take advantage of strategies that conventional movie theaters can’t. My theater can maximize profits using the economic theories of supply and demand, which states that when demand is high and supply is low companies should raise prices, and when demand is low and supply is high, they should lower prices. Traditionally in a movie theater, a hugely popular movie will cost just as much as a less popular movie that’s on its 5th week of release. This strategy doesn’t make much sense. Just as retail stores mark down inventory to move it, the independent theater can mark down movies to lure more customers. We all know that millions of Americans who won’t shell out 8 dollars to see a not-so-great-movie in the theater will happily spend 3 or 4 dollars to watch the same movie on their home TV when it comes out to rent. To further this argument that lowering prices of less popular movies in the theater will increase box office sales, Americans spent 1 billion more on movie rentals than on movie theaters in 2002, which suggests that there is a lot of cash being spent at Blockbuster that theater owners could be claiming instead. If less people are going to a certain movie that costs 8 dollars, then the price will be lowered to 5 dollars to get more people into the seats. This strategy will maximize profits.
In a traditional movie theater, they only get to keep 25 percent or so of ticket sales in the first few weeks of a movies run. The percentage of ticket sales that the studio takes decreases each week that a movie is in the theater. During the film's opening week, the studio might take 70 to 80 percent of gross box office sales. By the fifth or sixth week, the percentage the studio takes will likely shrink to about 35 percent. This is why movies rely so much on concessions to make a profit.
On the other hand, in the independent movie theater, the price that the theater makes per ticket could be increased. This is possible because instead of having to show a big production studio’s movie in your theater on the big production company’s terms, you can show it on the terms between you and the independent filmmaker himself. Independent filmmakers are used to having to pay submission fees in order to get their movies shown in film festivals let alone make any money back. And more than anything, they just want their work to be seen. So more often than not, the independent theater could collect as much as 75 percent or more of ticket sales beginning opening night.
My independent theater could also make money off charging independent filmmakers to show trailers. Traditionally again, studios pay theaters for showing their trailers after the fact, based on the number of people who saw them. Studios send a couple of new trailers every week to the theater and then the theaters have to call in their numbers every night to the studios, and then the studio gives them 'x-amount' per person. This process could also be side stepped in an independent theater where a flat fee could be charged for an independent filmmakers trailer.
In addition, tidbits like local advertising and concessions can generate revenue for my independent theater as well. The theater could have slide projectors that show ads for local businesses that play before the movie begins. Having 15 advertisements that cost 100 dollars a week each can easily add up to as much as 6,000 dollars a month.
Then it comes down to just getting independent filmmakers to give you quality movies to show, and then getting people to come to the theater to watch them. Since independent films are inherently lesser known, this poses a slight problem. For it to really work, the theater would need to be in a big city where there are film schools and where film festivals take place. You could advertise just like any theater does but emphasize cheaper prices and that the films are independent. Like with any company, the best kind of marketing is through word of mouth. Recommendations that come from your peers are 100 percent more effective than a recommendation that comes from the company itself because your peer is speaking honestly and is unlikely to have an ulterior motive (i.e. they are not receiving an incentive for their referrals.) So, the independent theater would need to translate its idea to the public in a way that it is intriguing enough to get them to interact with it and then share it with others.
To get the news out there that this theater exists you can use pre-existing social networks, chain Emails, electronic mailing lists, a website, and blogs to spread the word, and you can put the theater’s website on every ticket stub and box of popcorn sold to motivate more participation. On the website, the trailers for any independent filmmaker’s movie could be uploaded and then people could vote with their Email addresses on which movie they would want to see most. They could also comment on the movie’s blog and forward the trailer to friends so they can vote as well. Then once the movie has enough votes to sell out a few showings, you email all those people who voted to tell them when the showings would start. Instead of pushing films into theaters with lots of marketing money, audience pull will be the way that more films get into theaters. In addition, to pass advertising onto others, by spreading the message across the Web like a virus, is at no cost to the Independent Movie Theater.
So there’s my idea.