Sisters Britany and Lacey Hamilton don't watch movies in movie theaters too often these days, although this week they did for a special occasion: Lacey's 22nd birthday.
They caught the first showtime of the day for "Black Panther: Wakanda Forever" at the Emagine Royal Oak and avoided any crowds.
"We know that one won’t be on streaming services for awhile, so we wanted to see it," Lacey Hamilton said. “There weren't that many people in there because it is midday on a Tuesday."
Movie theater operators in metro Detroit are hoping — possibly even praying — for packed cinemas this weekend for the long-awaited release of another big sequel, "Avatar: The Way of Water."
Nationally and locally, the movie cinema business has been under increasing financial pressure since the COVID-19 pandemic sped up adoption of in-home streaming services, slowed Hollywood's cadence of film releases and got some formerly frequent theatergoers out of the habit.
Metro Detroit has seen two large multiplexes permanently close since COVID arrived in 2020: the AMC Star Southfield 20 and AMC Fairlane 21. Both theaters at one time were popular and busy, although industry insiders say they fell behind on moviegoing trends and never upgraded to recliner seats, which is becoming a must-have amenity in the local market.
Theaters need big showings from "Avatar 2" to turn around what has been a dismal 2022, even amid some box office surges from the new Black Panther and "Top Gun: Maverick" last summer.
The new Avatar has been forecast to gross a $150 million to $175 million box office in 4,100 North American theaters during just this opening weekend, according to entertainment trade publication Variety.
Local movie theaters need some of that action. Business at metro Detroit theaters is said to be down roughly 25% to 30% this year compared with before the pandemic, industry insiders say.
While a portion of the slump can be blamed on long lulls between this year's hot releases, some of it likely reflects societal changes driven by in-home streaming services.
“2023 in this business is going to be a transition year because, right now, the business has lost 30%. And probably 25% is never coming back again ever," said Dennis Redmer, a former vice president of operations for MJR Digital Cinemas, who last year retired after 47 years in the local movie theater business.
Prior to the pandemic, it was expected that streaming services would result in a gradual "drip, drip, drip" loss of business for movie theaters over perhaps a decade, he said.
"COVID made it happen overnight," Redmer said. "So now, if you lose 25% of the business, do you have to lose 25% of the theaters? We’ll see how that plays itself out.”
Locals still dominate
Metro Detroit is unique in that much of the movie-theater market here is historically dominated by local companies such as Emagine and MJR.
While MJR was purchased in 2019 by Belgian company Kinepolis Group, the 10-theater chain is still locally managed out of Bloomfield Hills and still regionally famous for its pre-movie trailer that leads audiences to clap three times in quick succession.
The old Star Theatres chain in Michigan also was locally owned before its acquisition by Loews and ultimately AMC.
“Detroit, and really Michigan in general, is one of the only states that is sort of owned by more local chains," said Joel Kincaid, vice president of operations for MJR. “Usually you have the bigger chains like AMC or Regal or Cinemark that own the market, and Detroit has always been against the grain.”
Metro Detroit has seen more than two dozen movie theaters close since the 1990s, according to an index compiled for the Free Press by Paul Glantz, cofounder and chairman of Troy-based Emagine. He also is president of the Michigan branch of the National Association of Theatre Owners trade group.
However, the number of movie screens in the market remained relatively level until recently, industry insiders say, because new cinemas were built and some theaters added screens, oftentimes to compensate for lost seating capacity when they upgraded to leather recliners.
“Going back to the 2000s, you’d open a 25-screen complex and then you’d own the 20-mile radius," Kincaid said. "Now it’s 10 screens and 10-mile radius, because there are just so many more theater buildings."
The recliners-in-theaters trend swept through metro Detroit in the mid-2010s. The first local venue to convert to recliners was AMC Star John R in Madison Heights.
In an interview, Glantz recalled how the local industry took notice when box office numbers at AMC Star John R, which had been struggling a bit, tripled after the recliners were installed in two phases in 2013 — even as the upgrade left the theater with fewer total seats than before.
Those results led Emagine to start introducing recliners to its own theaters, starting with Emagine Canton in October 2014.
“You have to understand there was great hesitancy on the part of exhibitors to cut their seat count by two-thirds, and that’s essentially what happens" in a recliner retrofit, Glantz said. “It's counterintuitive to believe that you can reduce your seating capacity by two-thirds and actually serve more guests in the building, but it’s a fact — it’s proven."
The 2020 closure of AMC Star Southfield 20, at 12 Mile and Northwestern Highway, was startling for some longtime moviegoers. When the multiplex opened in 1997, it was the first metro Detroit theater to have stadium-style seating, and it quickly became one of the highest-grossing theaters in the state.
But the location lost its novelty and allure as a flurry of other theaters opened in metro Detroit in the late 1990s and early 2000s, also with stadium seating and fresh amenities.
“They were the only game in town with stadium seating for a few years, and then all these theaters started to catch up with them," said Cory Jacobson, owner of Farmington-based Phoenix Theatres chain of seven theaters.
AMC offered few details at the time on why it closed the once-popular Southfield location, aside from calling it a "business decision." The publicly traded company has been under significant financial pressure in recent years, losing $6.6 billion since 2019, and according to the New York Times, has closed 98 locations since the start of the pandemic.
The shuttered Southfield theater has since been bought by Triumph Church.
The closure last month of AMC Fairlane 21, located at the Fairlane Town Center mall in Dearborn, was less stunning for some, given the theater's aging interior and AMC's financial travails.
"There was still a lot of people going to that theater, but there needed to be investments that AMC just couldn’t pull the trigger on," said Kincaid, the MJR executive.
Another industry insider said the mall's new ownership was reluctant to financially help AMC with renovations, and then fell short when trying to entice other operators to come in.
Fairlane mall was purchased in May by Dallas-based real estate firm Centennial.
In an emailed response to Free Press questions, Fairlane Town Center's General Manager Dan Fayad said the industry rumblings about the mall's role in the theater's closure are not true.
He referred the Free Press to AMC. An AMC representative said they don't typically share financial details for specific locations.
Still down vs. pre-COVID
As for Emagine, its theater business this year through November was about 75% of what it was in the same period in 2019, Glantz said.
He attributed the decline more to production delays and inconsistent releases from the movie studios and less to competition from streaming services for would-be moviegoers' attention.
One promising development for Glantz is reports that Amazon, in the wake of its purchase of MGM earlier this year, now plans to spend $1 billion annually making 12 to 15 movies for theater release.
“Largely it’s product driven, meaning that when there’s been compelling product, we don’t have any problem filling our theaters," Glantz said. "In fact, I think every exhibitor will tell you that July of 2022 was one of the best months in the history of the industry. We had our best month in the history of our company in July of ’22. But it’s been very spotty.
"The beginning of the year, business was anemic because of lack of product. Then it got very slow again in August and September, when there was limited product," he said. "But again, I’m optimistic looking ahead that ’23, and then ’24, look quite prolific in terms of the number of feature films that will be available to theaters.”
In-theater dining, alcohol
Besides stadium seating and leather recliners, other evolutions in theater amenities since the 1990s include higher quality concessions, sports viewing lounges and the reintroduction of alcoholic beverages.
The since-demolished Dearborn Theatre was in the 1970s one of the first movie theaters in Michigan to serve alcohol. But over time the venue stopped serving after it was purchased in the 1980s by National Amusem*nts, which became known as Showcase Cinemas.
Emagine is credited with reintroducing alcohol to the local cinema market, starting at Emagine Birch Run in 1998. Emagine also upped the concession game with new options, such as fresh brick oven pizza.
A trend that hasn't caught on in metro Detroit — or generally the Midwest — is the in-theater dining concept, which is popular in the South and on the coasts, and commonly associated with the national Alamo Drafthouse Cinema chain.
Alamo Drafthouse once planned to open a location in Midtown Detroit, but backed out in the months before the pandemic.
"It has not proven to be a particularly popular concept in the Midwest," Glantz said.
Glantz said the concept poses financial challenges to operators because to do it right, a business must be a movie theater and a quality restaurant that can compete with out-of-theater restaurants. Also, the full experience can get expensive for customers, making it something that people may only do for special occasions.
"When you have a dining operation, you need to staff a kitchen with large number of people — whether anyone shows up or not," he said. "It really only works, in my opinion, where you’ve got really high volume locations."
Big Sean theater dreams still alive
Emagine is still collaborating with Big Sean to potentially open the Detroit rapper's own movie multiplex. They once eyed a specific Detroit location for the theater, but have since scratched those plans and are considering other options.
"It’s been a real challenge finding the right location," Glantz said. "We’ve narrowed it down to a terrific location at this point in time. We’re just not in a position to make an announcement until we’ve got the land deal cemented.
"The more recent challenge is that construction costs have gone up pretty astronomically since we originally planned it," he added. "But it’s going to be a very special venue if we can get it built, so I’m optimistic about that and we continue to pursue it."
Contact JC Reindl: 313-222-6631 orjcreindl@freepress.com.Follow him on Twitter@jcreindl.
