Why Digital Alone Won’t Kill Second Run Movie Theatres

By | March 3, 2014 3:57 am PST

The threat that the digital conversion poses to single-screen and drive-in cinemas have been highlighted several times on CelluloidJunkie.com (here, here and here), but there is a third category of cinemas that also face an existentialist threat with the phasing out of 35mm prints. Second-run cinemas, also called discount theatres, dollar theatres, dollar movies and sub-run theatres have built a business on showing film prints and films no longer playing in regular cinemas, typically one or two months after the film’s opening; a business about to go away.

While mostly found in the US, they also exist in other major cities around the world, where they mop up the last theatrical box office takings a film is likely to see before it moves on to download, DVD/BD, streaming and pay-television. Favoured by large families, pensioners, students, unemployed and the working poor, these cinemas have always constituted a way to get a sprinkling of big screen magic, even if the seat was creaky and the floor was sticky, for as little as a dollar.

Silver Screen

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The recent closure of the eight screens Silver Cinemas South Hills in upstate New York’s Wappingers Falls (pop 5,488) after 16 years of providing low-cost entertainment to the town was a stark illustration of this sector’s death spiral. On Tuesdays films there were just $1 and the rest of the week they were still only $2. Patrons there will instead have to go to Regal (Hoyts) Cinemas Galleria Mall 12, or there is the Overlook Drive-in one of the rare all-digital drive-in cinemas. The cinema had lost its lease, but the writing has been on the wall since it became clear that it would never show The Wolf of Wall Street since no 35mm print was made for the film’s North American release.

With its closure the number of Silver Cinemas shrank from eight locations to seven, dropping from a total of 55 screens to 47. The chain is an interesting operation, being a division of Mark Cuban’s 2929 Entertainment art-house exhibition arm Landmark Theatres. It is not the only low-cost arm of a major exhibitor. Other major chains often keep a smaller multiplex open even after they open a newer and larger mega/multiplex nearby, by turning them into a second-run cinema.

This was for example the case with Regal Cinema’s Bellis Fair 6 in Washington state. This too has now closed. In UK there is the Odeon Panton Street that shows slightly older films, particularly art-house ones, which is probably the last cinema in central London where tickets cost less than £10 (yes, that’s considered ‘budget’ by West End standards).

Dollar and Sense of Second Screens

The economics of second run cinemas is very straightforward. Rental terms deals between distributors and exhibitors have a steep drop-off after the first week, with films increasingly going ‘wide’, ie on as many screens as possible, in the opening week. This is especially the case in peak seasons such as summer or major holidays with a glut of releases.

A film is thus more profitable to exhibitors the longer it plays in cinemas, because a larger proportion of each box office dollar is kept by the cinema. So while Disney is no doubt pleased that Frozen has grossed over $1 billion worldwide (and become the studio’s first non-Pixar film to win an Oscar for Best Animated Feature Film), it is cinemas that are cheering that it has been playing to families for weeks and weeks on end.

Even more than first-run cinemas and multiplexes, second runs cinemas make their money from concessions. While tickets can be a quarter or a fifth of the price in a nearby multiplex, concessions sell at around half the price and thus offer an even better margin.

The main cost of second run cinemas is rental and staffing. As these cinemas are typically not located in premium malls or sites, but often in less attractive parts of towns, rents are typically low. Low staffing means less frequent cleaning and hence the stickier floors. Second run cinemas are thus an example of squeezing not just the last few drops from a film but also from older multiplexes that often have time left on their lease that would be costlier to break.

Unknown Number of Second Screens

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The number of second run cinemas in the United States and around the world should not be underestimated. Cinema Treasures lists 339 second run cinemas, of which 331 are active, though this list is far from complete as it only lists four cinemas outside the US (one each in the UK, Belgium, Egypt and the Philippines) and not even a single one in Canada.

A better gauge can be had from searching local listings for second run screens by city or region. Here is a list of no less than eight second run theatres just in Detroit, the largest US city ever to declare bankruptcy for whose inhabitants the dollar theatres are often the only means of ever seeing a film on the large screen.

In other parts of the US, attending a second run cinema is a point of pride, nowhere more so than in Hipster Capital Portland, Oregon. Here is an overview of some of the city’s landmark cheap cinema options by local paper The Street in an article with the telling title “Last Picture Show for Second-Run Theaters?“:

An absolute palace like the Laurelhurst, aglow in neon and commanding lines around the block on weekends, will let you into a slightly dated showing of The World’s End or The Way, Way Back for $4. Get a slice of pizza and a beer from nearby Coalition or Migration breweries, and it still might not cost you $10.

The Avalon Theater supplements its nickel arcade games with $3 showings of Disney’s Planes and We’re the Millers. The Academy Theater just down the road offers pizza, beer and even babysitting services on top of its $4 showings of The Butler and The Wolverine. The Kennedy School, meanwhile, will show you the The World’s End for $4 and offer you a slice and beer in a reclaimed school building.

Having such a selection of great cinemas, the journalists note, “made second-run theaters and waiting a few months for their budget-priced releases a cornerstone of the city’s vibrant cinema culture.” But even in trendy Portland the second run cinemas now face a bleak future.

Economic Reasons

It would be too simplistic to lay the entire blame for the declining fortunes of second run cinemas at the doorstep of digital. Much like America’s changing relationship with the automobile is a large part of the explanation as to why drive-ins are disappearing, so too second runs cinemas face a variety of factors that conspire against them.

Shrinking Release Windows – Whereas home video (VHS and DVD) used to be a sacrosanct six months (or “26 weeks!”, as one former trade body head would bellow to anyone who dared to round off months upwards), but the arrival of the DVD in the early aughts, saw studios led by Warner Bros squeeze this to five months and later to four months. Other studios went even further, with Disney getting flack for shortening Tim Burton’s Alice In Wonderland to just 13 weeks instead of the customary 17. This means that people have a perception that films will be available to rent within a few months of them no longer playing in first run multiplexes.

Netflix – While Netflix does not have access to the latest releases from all the Hollywood studios, the low price point and all-you-can-eat streaming format means that people can watch more films than ever before by paying little more than the price of a first run cinema ticket per month. Although second run cinemas are still cheaper, they are competing for people’s attention, with the likes of iTunes, Amazon/Love Film and Hulu also offering low-cost alternatives.

Lease and Rental costs – This is perhaps the single greatest factor in the decline of second run cinemas after the end of 35mm prints. With a revival of downtown areas where old cinemas formed party of shabby neighbourhoods, the likes of New York, Los Angeles, Houston, Chicago, Atlanta and almost every other major US city (apart from the likes of Detroit) are seeing artisanal coffee places and American Apparel boutiques taking over exposed-brickwork locations and squeezing out older cinemas.

Still in Demand

While we could be accused of nostalgia for cinemas that get one-star reviews online, it should be noted that the actual demand for second run cinemas has not gone away. As mentioned earlier, these are the only out-of-home entertainment option for large bands of demographics, including senior citizens, students, and the working poor.

The Great Recession forced many to cancel their cable subscription, not because of any ‘cord cutting‘ but because they could not afford it. For them the closure of a second run cinemas means that their only source of watching films will be free-to-air television and, yes, illegal downloading/streaming. It is worrying that for two demographics in particular, large families and teeneagers, they will end up growing up without a tradition of going to the cinema.

Second run cinemas are unlikely to be digitised and as such, face near-certain death. They are unlikely to be able to mount a Kickstarter campaign to go digital and those that have parent companies or are part of larger cinema chains will most likely not be bailed out either. Most will go with a whimper and not a bang, at most getting an article in the local paper (assuming they still have one), such as this one (pictured above) in Norman, Oklahoma that closed in July of last year:

Norman’s Robinson Crossing 6 Theatre closed on Monday with no fanfare.

A simple posting online bid goodbye to the community: “Starplex Cinemas would like to express our sincere gratitude to all of our employees over the years for their exemplary service and performance of duties and to our many loyal patrons that shared more than a generation of entertainment experiences with us.”

The Robinson opened as a dollar theater in July 2002 about two years after AMC left Norman as a first run theater. These discount theaters show second-run movies and provide an opportunity for inexpensive entertainment popular with families.

“I was shocked because just the week before I took the kids to see ‘Oz the Great and Powerful,’” said Norman resident Victoria Fisher. “For a family with four children, the dollar theater was a fantastic place because it is very expensive to pay full price for that many children and two adults.”

Ms Fisher is quoted as saying that her family will be attending fewer films now.

What’s To Be Done

The sad truth is that very little can be done. If we were to do a cinema triage we would have to conclude that second run theatres as well as drive-ins will not be a priority to rescue compared to single-screen independent cinemas, which play an even more important role in communities. Those that frequent second run cinemas will have to make do with cheap tickets at off-peak times such as mid-week and matinees.

There is also hope that with digital technology, exhibitors can hang on to DCPs and put on special showings after the film has exhausted its primary runs. With the rise of mother-and-baby as well as autism-friendly screenings, there is no reason not to have second-run screenings, particularly of popular films. Gravity in its sixth month of release might still attract more viewers to a Tuesday matinee than a third-week screening of Pompeii.

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There are also some success stories of second run houses that continue to thrive. London’s Prince Charles repertory cinemas mixes older releases with film festival, theme weekends, retrospectives, late-night cult screenings (The Room), double bills, tribute screenings, Rocky Horror Picture Show nights, sing-along to Sound of Music, Dirty Dancing and Mamma Mia, and even a swear-along to South Park the Movie or why not a weep-along to Les Miserables (“free tissues and a glass of wine and beer with every ticket”).

Portland demonstrates that it is possible to upgrade second run cinemas, but it is not cheap and it requires a major amount of entrepreneurial zeal, as discussed in the previously mentioned Portland article:

The Bagdad Theater recently began renovations and announced that it was going with first-run movies that would increase the price of a show from $3 to $8.50.

The theater has been around since 1927, when it was first opened by Universal Studios, and served as the premiere site for One Flew Over The Cuckoo’s Nest in 1975. Pub chain McMenemin’s bought the theater in 1991, gave it its first facelift and help reopen it with the help of Portland director Gus Van Sant and the premiere of My Own Private Idaho. The latest renovation stripped antique loveseats out of the balcony, replaced old seats with plush 24-inch-wide versions, increased the size of the screen and added 7.1 surround sound and a 4K digital projector.

The Portland Mercury Blog interviews the cinemas COO Lars Raleigh:

“It’s about competing with the home theater,” Raleigh said when I asked him why the theater’s getting a facelift and switching to first-run. Competing with living rooms is now a challenge for theaters that book second-run movies—as the Bagdad did, as other McMenamins theaters and many of Portland’s most beloved theaters still do. You can thank movie studios, distributors, and yourself for that: DVDs, Blu-rays, On-Demand, and streaming services like Netflix now make movies available on TV before they’re out of theaters (or, in some cases, before they even get into theaters). By the time second-run theaters get a movie, it’s frequently already available to buy or rent—or will be within a matter of weeks. So in order to get people to heave themselves out of their couch’s ass-indents, “you need something pretty special,” as Raleigh puts it. “I think we’re going to have that.”

I think he’s right—from what I saw, the new and improved Bagdad’s going to be pretty slick. Part of that is thanks to Greg Wood, the owner of Portland’s fantastic Roseway Theater and the manager of Seattle’s great Cinerama. Wood came in to help McMenamins out as the the theater’s consultant and film booker, and he’s a guy who knows what makes for a good moviegoing experience. Just as Wood revamped the Roseway and the Cinerama, the Bagdad is set to become something better than it’s been in a long while.

This type of transformation (below) need not be confined to Portland; there are film lovers (and hipsters) all over the world. What is required is for entrepreneurial spirits to see opportunities where other see sticky floors and idle 35mm projectors in spaces that still have a long time to run on their lease. With replacement cycles meaning that the first generation of digital cinema equipment becoming available and affordable to buy second hand, we may yet see some second run cinemas coming back to life.

Patrick von Sychowski
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Patrick von Sychowski

Patrick was a Senior Analyst at Screen Digest, went on to launch the digital cinema operations of Unique and Deluxe Europe, then digitised Bollywood at Adlabs/RMW, and now writes, consults and appears on panels about cinema all over the world.
Patrick von Sychowski
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