Disney dispute with theater chains is about more than 'Iron Man 3'*

The big exhibitors seem to be holding their own financially (Regal Entertainment stock is up more than 20 percent year to date), but they're living on borrowed time, what with movie-goers finding alternatives to a night at the multiplex. Blockbusters like Disney's "Iron Man 3" have carried the chains in recent years, despite the studios receiving a big percentage of ticket sales in the opening weeks of release. So with Disney looking for an even larger piece of the pie, theater owners have been taking a stand, as first reported this week by Deadline. The two biggest chains, Regal and AMC, are refusing to sell online tickets for Iron Man, which opens on May 3. Such a move could impact ticket sales, though to what extent is unclear. While the dust-up is almost certain to get resolved, a broader issue over who gets how much is still up for grabs. Disney and other studios have been pushing for shorter theatrical windows before the film moves to other distribution channels. The chains want to keep films in their theaters for as long as possible, in part because their percentage of the box office take increases over time. Even with some accommodation from the studios, exhibitors recognize that their business has to change, which is why there's so much talk at this week's convention in Las Vegas about revamping the theater-going experience with higher-end auditoriums, food delivered to your seat, and variable pricing. From the WSJ:

While difficult negotiations between studios and theater companies are common, it is rare they flare up in public or affect such a high-profile movie. [Gerry Lopez, chief executive of No. 2 AMC], said that in his four years running AMC, his company has never been this close to the opening day of a major release and not been selling tickets online. Mr. Lopez declined to discuss specifics, but said one point under negotiation is whether the studio would receive a bigger percentage of box office for all of its upcoming films or just the "Iron Man" sequel.

From my Los Angeles magazine piece in February:

Chains must also figure out how to make money when The Avengers, The Hunger Games, and The Amazing Spider-Man are no longer in release. With studios wanting to move films out of the theater as quickly as possible, the pressure will intensify. One obvious need is consolidation: There are roughly 39,000 screens in the United States, and that number has to drop--both through the closures of older, single-screen auditoriums and the consolidation of suburban, mall-adjacent behemoths whose leases have become too expensive. More important, the entire moviegoing experience must be revisited. Some ideas worth considering: allowing texting in designated portions of the auditorium, introducing location-based pricing (with middle and upper rows costing the most), and reconfiguring multiplexes so there are four mega theaters instead of 12 smaller ones.

*From Deadline, which is covering the CinemaCon event:

"We've seen a lot of brick and mortar businesses go down. We have to be nimble and find content that will sell to our base" -- including young people to "make them movie-going fans," [said Alamo Drafthouse CEO Tim Reed]. He and others on the International Cinema Technology Association's panel agreed that theaters need to become more aggressive about introducing alternative content including live sports and concerts. "This is the year for satellite (distribution) and that whole conversation," Walt Disney Studios Motion Pictures VP for Strategic Planning Paul Holliman says. But movie distributors have to help by relaxing their terms. For example, Warner Bros International Cinemas President Millard Ochs says studios could just require that a film be shown six nights a week instead of seven after it's been out three weeks. "We have to change. Everything is changing around us." Still, Reed warns that alternative content can be expensive and execs don't know yet what material will pay off. "What we have found is that it's more market driven on a psychographic level," he says.