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April 18, 2013

An interesting trend in the movie business is the consolidation of cinemas. We all feel and see it and it’s obviously part of the larger trend of disappearance of the mom-and-pop shops. But here is how this specific trend took place historically:

Number of Cinema Sites vs. Total Number of Screens

* Raw data from the National Association of Theater Owners –

If we only look at the number of screens, we might wrongly conclude that the cinema-operating business is growing across the board – a mistake I almost made when I noticed the steady growth of the first-week distribution magnitude of domestic blockbuster releases. However, when you add the number of cinema sites, or cinema complexes – a fairly steep decline emerges: 26% fewer cinema sites in 16 years (7,744 in 1995 vs. 5,697 in 2011 – the red left axis).

When you couple this decline in cinema sites with the 29% increase in total number of screens in the U.S. (27,843 in 1995 vs. 39,580 in 2011 – the blue right axis) – the conclusion is clear: the industry is consolidating and converging into the distinct model of the mega cinemaplex. The average number of screens per cinema site has grown from 3.6 in 1995 to 6.95 in 2011 – that’s almost double. This means that the local one-screen neighborhood cinemas are being wiped out.

Why? My guess is that they are being squeezed from two directions by two parallel elements: First, Hollywood’s shift toward blockbusters that require repetitive parallel screening, especially during peak seasons, in order to fully capitalize on their financial potential. Second, improved home entertainment quality, which replaces the need for a cinema when it comes to smaller movies that don’t rely on special effects and the aura of the massive screening hall.

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