Does Proximity Increase Demand?
Theater chains are planning billions in upgrades and expansions, including bowling alleys and pickleball courts alongside traditional improvements. However, their core business—showing movies—struggles with low attendance.
The unspoken assumption?
Adding entertainment options next to theaters will somehow increase movie ticket sales. As an independent film producer who's seen both sold-out screenings and empty theaters for our movies, I can tell you: this strategy misunderstands what drives demand.
As an independent film producer, I've seen this disconnect firsthand. Our films played to empty theaters at 10 pm when our target audience was asleep, and I've missed countless indie films I wanted to see because I never knew they were playing. These are fundamental problems with audience connection and scheduling - issues that no amount of adjacent entertainment can solve.
Does proximity increase demand? I don’t believe it does. Better seats and sound systems enhance what theaters sell - movies - but a pickleball court next door won’t fill empty seats.
The Real Problem: Supply-Side Thinking
The theater chains' investment strategy reveals a fundamental misunderstanding of their audience. They're operating from what Bob Moesta, co-author of Demand Side Sales 101, calls "supply-side thinking" - focusing solely on what they want to sell rather than what progress their customers want to make.
When was the last time you heard someone say "I wish there was a bowling alley next to the movie theater"? The strugglefor moviegoers isn't a lack of entertainment options. It's finding films they want to watch at convenient times (at affordable prices), knowing about films they'd love before they leave theaters, and having confidence that the experience will be worth their time and money.
This supply-side thinking is evident in the industry's reporting. A recent Cinema United report celebrates $2.2 billion in planned investments from the largest circuits, with a notable portion directed toward adding bowling alleys, laser tag arenas, and arcade games instead of addressing moviegoing demand.
The report celebrates these adjacent entertainment options as innovations, yet it doesn’t address the fundamental question: Why do people choose to watch movies in theaters? This is classic supply-side thinking - focusing on what theaters want to sell rather than what customers want.
A New Model for Theaters
Instead of investing in adjacent entertainment, theaters could transform their business by understanding and serving their audience. This means:
- Email marketing segmentation - if someone buys a ticket to a Pixar movie, they would likely enjoy another indie animated film like Flow, without the same marketing budget. It's straightforward and free to market to your existing audience, increasing ticket sales and impacting the bottom line.
- Brand affinity - I mostly go to Megaplex Theatres for movies because the experience is consistently high-quality.Other chains are hit-or-miss. Becoming the brand with the best seats/screens/sound, or the most “indie-friendly” chain, serves your customer more than an attraction next door.
- Align screening times with viewing habits - Our movies played at 4:35 (too early for working adults) and 10:00 (too late for seniors or families), resulting in empty screenings. The theaters should align the times with the audience’s habits. Put horror, action, and R-Rated films later, adult movies at 7/8 pm, and family movies at 5:30-7 pm. One sold-out screening per day is better than four with 10 people each due to misalignment.
- Court suppliers who increase your occupancy rates - plenty of distributors besides the studios would benefit from partnering with chains to get their movies in theaters. But giving them 4 days notice to market their film(notifying them on Monday afternoon that it is opening on Friday) doesn't make for a profitable outcome. Strengthening those relationships brings better movies and their marketing dollars to your theaters.
- Invest in marketing indie films. Studios will attract audiences, so curating and marketing indie films benefits you, your audience, and the filmmakers. Yet most theaters require a four- or five-figure minimum marketing spend to inform their audience - which they can reach for free over email and social media - that a movie is worth their time.
I experienced these issues firsthand with our film, Faith of Angels. We worked for weeks to arrange a special screening in my hometown of Sacramento. Despite having everything the theater needed - the poster, the DCP, and an audience ready to buy tickets - we didn't hear until two days before opening that our movie was set to play.
We managed to sell out the Friday night screening through our email list, personal network, and word of mouth - but without our presence, it would have been empty. This ongoing problem hurts both theaters and filmmakers.
From Supply-Side to Demand-Side
Some argue that diversifying revenue streams through additional entertainment options provides financial stability for theaters. This misses the point: if your core product—showing movies—is operating at low capacity, adding peripheral revenue won't address the issue.
The current theater model is pure supply-side thinking. It takes whatever the studios provide, puts it on screens, and hopes people show up. This approach:
- Ignores the audience’s actual demands.
- Treats every movie and showtime as equally valuable.
- Assumes proximity equals demand.
- Focuses on correlation ("people who bowl might watch a movie after") rather than causation ("people watch movies because...")
What would demand-side thinking look like for theaters? It would mean understanding:
- What progress do moviegoers want in their lives? Said differently: What experience do they want? How can we help them see the movies they want to watch?
- What motivates people to see a movie in theaters instead of at home?
- What motivates your audience to buy tickets beyond demographics?
- How can you be a curator and concierge for your audience instead of just an order-taker for the studios?
The Misdirected Investment
While theaters invest in arcade games and pickleball courts, they're missing core insights about their audience. When someone buys a ticket to a Pixar film, they're not thinking "I wish this theater had a bowling alley." When a family skips a 3:20 pm screening because it's too early, they don't need laser tag as consolation (and opting for a laser-tag outing doesn't improve movie ticket sales). When an indie film fan misses a great movie because they didn't know it was playing, a state-of-the-art arcade won't bring them back.
These investments might create new revenue streams for theaters, but they don't solve the fundamental challenge of attracting more people to watch more movies.
The Path Forward
The more movie tickets sold, the more theaters and filmmakers benefit.
At 15-20% occupancy rates, theaters are leaving 80% of potential revenue on the table. Every empty seat represents lost concession sales, marketing opportunities, and future screening promotion. For a multiplex with 2,000 seats, increasing occupancy by 10% could mean an additional $200,000+ monthly revenue.
For filmmakers, the math is compelling. When theaters promote independent films to their audience through email and social media, attendance increases by 50-85% in our experience. That's the difference between a film being pulled after one week and running for a month or more.
The struggle theaters face isn't a lack of entertainment options. It's a lack of understanding of why people choose seeing a movie over others. When you understand those causes, you can create experiences and curate content that drives demand.
The filmmakers are your suppliers, and the audience is your customer. You must serve both sides for a profitable outcome. Yet instead of focusing on this core relationship, theaters gatekeep and make it expensive and difficult to put films in theaters. The audience is often unaware that something they would have enjoyed was "playing in a theater near them."
The solution isn't more adjacent entertainment. It's better understanding of and service to your core audience. As Moesta says, "Great sales requires a complete devotion to being curious about other people. Their reasons, not your reasons." The same principle applies to running a successful theater chain.
For the cost of building that bowling alley, a theater chain could fund a year of marketing independent films to their audience, driving higher occupancy rates, creating loyal customers, and building a sustainable ecosystem for theaters, filmmakers, and movie lovers.
The next great era of cinema won't come from assuming proximity equals demand. It will come from theaters that understand and serve their core audience. Those that invest in improving the moviegoing experience and connecting with their audience will see higher occupancy rates, more visits, and sustainable profit growth. Those chasing adjacent entertainment options will wonder why a bowling alley next door isn't filling their seats.
The choice is clear: either invest in what drives ticket sales or watch your audience shrink. Tomorrow’s successful theaters will understand and serve movie demand today, not hope proximity to other entertainment will somehow create it.
If you're a theater owner, reassess your investment priorities. If you're a filmmaker or movie lover, share this perspective with your local theaters. The future of cinema depends on understanding and serving real demand.
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