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Movie theaters take on live simulcasting

TEXT OF STORY

Bill Radke: My alma mata, Washington, got knocked out of the NCAA tourney last night, so we don't speak of that sport anymore. But that's OK, because tomorrow is the big "Ultimate Fighting Championship" bout -- mixed-martial-arts fighters kicking, punching and wrestling their way to glory. For the first time in the U.S., the Ultimate Fighting match will air live in movie theaters. Marketplace's Rico Gagliano says this is going to be big business.


Rico Gagliano: More than 300 cinemas will show tomorrow's Ultimate Fighting event. That's just a fraction of the screens in America. Right now, only about 500 theaters in the whole country are even equipped for digital simulcasts. But that's about to change.

Joe Hovorka is an analyst with Raymond James:

Joe Hovorka: The three major chains, which are Regal, Cinemark and AMC Entertainment, recently completed a $660 million round of financing, which is going to allow them to roll out a huge number of digital screens.

Around 14,000 of 'em. Most will still show digital movies, of course. But Hovorka predicts theater owners will reserve more and more screens for live simulcasts. That's 'cause movies tend to bring in audiences on weekends, leaving some theaters empty during the week.

Hovorka: Monday through Thursday has a very low utilization rate. If you can get some kinda programming that works on one of those weeknights, there's a lot of excess capacity in the theater industry during those days.

And companies from the Metropolitan Opera to boxing promoters are eager to fill those theaters with live simulcasts. Even though some of those events are already shown on pay-per-view TV, where they cost more to watch.

Bruce Binkow is chief marketer at the sports promotion company Golden Boy. He says theater screenings appeal to a different audience than pay-per-view, and cost about the same per viewer.

Bruce Binkow: In pay-per-view, people tend to buddy-up or party-up, and there's usually multiple people watching at once. So on a per-capita basis, it probably ends up being about the same.

Last September, Golden Boy tested the waters by showing a Floyd Mayweather boxing match in theaters. Binkow says Golden Boy just struck a deal to simulcast all its major matches in theaters.

In Los Angeles, I'm Rico Gagliano for Marketplace.

About the author

Rico Gagliano co-hosts and co-produces Marketplace’s “Small Talk” segment.
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I'm the Director of Marketing for NCM Fathom, and we're the company who puts on many of these "alternative" cinema events. The popularity of live alternative events is taking off largely because nothing compares to the magic of seeing a live event up on the big screen! I myself am a movie lover and own a 52" HD TV and BluRay, and I watch a ton of stuff at home and will continue to do so. Still, there is something about the big screen experience that can't be replicated at home, particularly when you are seated with a bunch of like-minded fans with whom you can share the event. I went to the theater to witness the first UFC fight and the Hopkins vs. Jones boxing match and it was amazing. I had a ringside seat to the matches, basically, and hoot and hollered with the rest of the viewing audience. I am not alone in this opinion and not entirely biased because I work for NCM Fathom, because there were 1.7 million others who attended our events in 2009 too and many more who attended other cinema events not hosted by Fathom. These events are clearly gaining momentum, and I don't think this is an "either TV or cinema" argument. There is clearly room for both.

This is a silly idea: Theaters certainly do have a problem with underutilization (i.e. empty theaters on Monday-Thursday, full on weekends). Why not lower the ticket prices significantly to entice people to visit on slow nights? Variable pricing optimizes resource utilization, especially, as with retail, they pay for facilities 24x7.

Theaters only still exist because of their monopoly access to new films. They overcharge us for unhealthy food/drink. Crowded/sticky seats are not fun. Most patrons now have broadband, so where is the unique selling proposition? Meanwhile new 3D Blueray players are now enabling decent home theaters. Wake up Hollywood!

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