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At CinemaCon, movie theater owners face new competitors for their audiences

National Association of Theatre Owners President and CEO John Fithian speaks during CinemaCon 2016 in Las Vegas.
National Association of Theatre Owners President and CEO John Fithian speaks during CinemaCon 2016 in Las Vegas.
Alberto E. Rodriguez
National Association of Theatre Owners President and CEO John Fithian speaks during CinemaCon 2016 in Las Vegas.
National Association of Theatre Owners President and CEO John Fithian says studios would have to agree to new models for distributing movies, including a proposal to make new releases immediately available in private homes.
Alberto E. Rodriguez

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Do you go to movie theaters on a regular basis? What keeps you coming back? Or what keeps you away? These are questions people attending CinemaCon in Las Vegas would really like to know.

The convention is an annual event that brings studio execs, distributors and exhibitors together to preview coming attractions and to show off the latest in screening technology. But it’s also an opportunity to discuss the state of the theatrical business.

Theater admissions in the U.S. have been flat in recent years, and efforts by disruptors such as Netflix, Amazon and now The Screening Room have people wondering whether the exhibition model as it exists today is about to change.

The Frame's host, John Horn, caught up with National Association of Theatre Owners chief John Fithian at CinemaCon who — not surprisingly — stressed the value of putting movies in theaters before they’re available in homes.

Interview Highlights:

Why is it important that films open first in theaters instead of in people's homes?

Movies that are made for the big screen should come to the big screen first. It establishes the brand, it establishes word-of-mouth, and then that success story in our cinemas drives the later markets — the electronic sell-through and the DVDs and the other ways movies can be seen.

We think the business model works really well, and there's been suggestions of late of disrupting that business model. We're not against evolution. It's just that the people who want to determine this evolution are the distributors and theater owners, negotiating together about how we should do this, and not third-parties with ideas from the outside.

That third party — it's a little like Voldemort, He Who Must Not Be Named — is The Screening Room, which is Sean Parker's idea to have a $150 set-top box and a $50 rental fee that would be shared with exhibitors. Movies could be watched at home the same day they're at the theater. Your counterpart at the Motion Picture Association of America, Chris Dodd, said he'd be meeting with some representative of The Screening Room. Do you plan on doing the same? If so, what would you say in that conversation?

First of all, it's not for trade association representatives to decide the business models, right? So Screening Room, or anybody else that has a new third-party business model, really has to talk to the individual studios and theater owners about their ideas. Chris Dodd and I don't determine the models — our members do.

Secondly, I would say that, in order to do something like this, you'd really need a majority of the distributors who have the movies and a majority of the exhibitors who play the movies to agree to the model. Otherwise, it's a non-issue. The whole Screening Room debate is a bit of a distraction — we're having such a great year.

People thought 2015 was a fluke, but now in the first quarter of 2016 we're up almost 13 percent over last year, which was a record-breaking year. The cinema business is growing, it's hot, it's alive and well, and these distractions aren't what I want to talk about right now.

Theoretically, what would you say to a filmmaker, say Steven Spielberg or J.J. Abrams, who've embraced this shortening, or this possible shortening of [exhibition] windows?

It's not theoretical, I've had a conversation with J.J. Abrams. What I said to J.J. was, "Do you really want somebody plopping down $50 and inviting 40 fraternity brothers over to their house to watch 'Star Wars' on opening night? Or do you want them coming out to the big house, to watch your movie on the big screen, with a big sound system?"

[laughs] And what did he say?

Well, he said, "You've gotta adapt, you've gotta change," but I'm like, "Change for what purpose? What is the end goal?" Again, I truly respect J.J. Abrams' filmmaking abilities, but this is a challenge for us.

In the end, the last thing I said to him was, "If you believe in the cinema experience, if you believe in leaving your house and experiencing movies on the big screen, do you want to trust Sean Parker about what's good for that business? Or do you want to trust the studios and the theater owners?"

I want to come back to the box office. You remarked earlier about the growth in domestic and international, and if we focus pretty narrowly on the growth worldwide, there's explosive growth in China. I'd imagine China is accounting for almost all of the global growth in box office. Is that something that you worry about having a limit? What happens if China stops growing?

China is a big deal, no doubt about it. Fifty-two percent growth last year. It's on a trajectory to be the biggest movie market in the world in a year or two. But it's not all about China. The movie art form and the movie business form is becoming diverse and global. In the old days, the three biggest markets for us were the U.S., Europe and Australia, which at the time were overwhelmingly non-diverse communities.

Now the fastest growing markets are all across Asia, and Latin America has been growing for the last 10 years as well. What I'm trying to say here is that diversity in the movie industry is a good thing — it's the right thing to do, but it's also good for business. When we see movies like "Furious 7" with an incredibly diverse cast just crushing box office records all around the world, that's because, when a movie cast looks like the world, the world goes to the movies more often.

Yeah, but "Furious 7" is the exception to the rule. For the second straight year, we didn't have a single actor of color among the 20 acting nominees in the Academy Awards. Do you have serious concerns that, if Hollywood were better able to represent the composition of the nation and the world on-screen, that your theater members would be doing better business?

There weren't nominations for African-Americans in last year's movies, but we sold a lot of tickets to movies with African-Americans in them. "Straight Outta Compton" blew everybody away with how well it did and how long it stayed on our movie screens. "Creed" was gigantic.

I could go on and on with movies featuring African-American women in leading roles or with minorities across the board. It's not that the movie industry isn't reflecting diversity in their movies, it's that the awards shows have to catch up with what's going on in the business.

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