A Return To The Movies
The box office performance of Top Gun and Avatar provides insight into the future of movie theater design and development.
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My dear friend Keaton saw "Top Gun: Maverick" in the movies 8 times. I only saw it 4 times. We marveled at the stratosphere at supersonic speeds, and felt the force of 10G ascents pushing us back into our seats.
Tom Cruise, the lead star and executive producer of the movie, has defiantly held off its release for over two years due to the pandemic. It was worth the wait, Top Gun 2 became an astonishing box office success and grossed over $1.5 billion in worldwide ticket sales. It also managed to stay off the streaming platforms for much longer than originally planned. Renowned directors like Steven Spielberg now praise Tom Cruise for saving the theatrical release, the soul of Hollywood, and moviegoing.
I believe that "Top Gun: Maverick" and "Avatar: The Way of Water" offer a glimpse into the future of movie theater design and real estate development strategies. Multi-IMAX theaters will soon be upon us.
IMAX and the new trends of movie going
During its opening weekend, "Avatar: The Way of Water" fell $16 million short of the domestic box office forecast. Yet it didn’t spell doom for its long term performance. It turns out that the original predictions didn’t account for the increasing bias of viewers towards premium viewing formats. While all IMAX auditoriums were booked solid for days and weeks out, regular screens did not sell nearly as well. These days, people are looking for the largest, loudest, and meanest screen, or they may not bother going to the movies at all. In the age of streaming and synchronous releases, premium formats like IMAX may be the true saving grace for movie theaters.
The movie theater business is tough. Studios can take up to 90% of ticket sales during the opening weekend. Only by the third or fourth weekend can theaters increase their share to 40%-50%. The longer a movie plays, the more money a cinema can capture if attendance remains high.
The problem is that many cinemas have, at best, one IMAX screen. It’s a coveted real estate with a packed schedule of new releases. It doesn’t allow a hit movie to continually run in premium format long term, undermining the ability of theaters to capture the upside.
I witnessed this issue firsthand during the initial Top Gun 2 run. I caught the very last IMAX screening at AMC Lincoln Square 13 in New York. It was a 10:45pm show and the auditorium was still sold out. In the next few days it had to give way to Jurassic Park and Bullet Train, but these movies barely got butts in half the seats. When Keaton and I noticed this pattern, we decided to plead with the General Manager of AMC Lincoln Square to bring the movie back.
Matthew, a true gentleman, not only replied but also personally invited us a few weeks later when Top Gun returned to IMAX. In fact, the movie managed to return to IMAX multiple times, first in August, then in November, and even in December, more than half a year (sic!) after its May release. Squeezing in a few days here and there. This impressive but inconsistent schedule made it difficult for cinemas to inform their customers and fully benefit from the movie’s popularity.
Towards an IMAX-plex
Movie chains have been looking for ways to boost their revenues and viewership for several years, especially since Covid and increased competition from streaming. Some are introducing airplane- and concert-like priced seat selection, others invest in expanding food and concessions offerings. These are viable options, but I believe that a more important and lasting solution will be an increase in the number of premium format auditoriums.
As regular auditoriums increasingly compete with home streaming options, movie theater developers may choose a new real estate strategy: building new cinemas with two or more IMAX screens and fewer regular screens. Multiple premium auditoriums could allow hit movies to run simultaneously during competitive seasons, capturing more of their long-term value for the cinema.
This is a simple idea that requires a deeper financial feasibility analysis, but judging by the evolving consumer preferences and trends — seems like an inevitability at this point.
Even after being available on demand for 2 months, fans still came back for in-cinema Top Gun experience. It didn’t surprise me. Watching a picture like Top Gun at home, you’re watching a different movie. You may enjoy the plot, but it simply won’t make you feel the same way.
Movies remind us that physical spaces and our senses matter. I always love sitting in the front rows where the screen extends just beyond my field of vision. I love listening with my body, not just my ears. I love the feeling of communion in the cathedral-like auditorium.
Modern luxury is not about the cost of admission or convenient access anytime, anywhere. It's about being able to experience something magical in person, whether it's traveling abroad or going to see a movie on a very large screen.
Movie theaters are here to stay. Larger. Louder. And even more majestic.
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P.S. It's not lost on me that I just wrote a piece praising a movie that romanticizes fighter jets. In the wrong hands, a warplane can cause much damage and suffering. Unfortunately, we see daily evidence of this as Russian forces bomb Ukrainian civil infrastructure, homes, and peaceful residents. I hope that Ukraine prevails against this aggression, and that the U.S. and its allies provide Ukraine with the planes and other resources necessary for its defense. I also hope that the russian government and its enablers face justice for their crimes. I hope that peace and prosperity return to these lands.