Capturing the Rhythm of
Downtown Santa Monica
Santa Monica Centric
Fate of new Downtown movie theater uncertain after ArcLight pulls out
By Kevin Herrera

Some films captivate an audience with their riveting plots and memorable performances, while others may rely more on special effects and a savvy marketing plan. With acclaimed writer-director Christopher Nolan’s World War II drama “Dunkirk,” audiences are being given healthy doses of movie magic, but perhaps more than anything the format in which the film was shot is playing the starring role.

 

Presented in 70mm, the film is actually using a format that was popular during the 1950s and ‘60s when filmmakers were creating epics like “Lawrence of Arabia” that felt much bigger than the screen itself. However, the difference now is that 70MM films are being shown on massive screens like IMAX. This immersive movie going experience features wider pictures with more detail and clearer resolution, making the viewer feel as if they are actually in the battle playing out before them.

 

“It needs 70mm to really throw you into it," David Schwartz, chief curator of New York's Museum of the Moving Image, told CNN about the film. "It's possible that the average viewer can't exactly put their finger on what's different about it, but when you see it, it just makes you feel like you're in the world of the film. [Viewers will] have a better experience even if they don't know why."

 

Nolan went so far as to say 70mm is the film industry’s best defense against the at-home screening trend.

 

“This is something that nobody will ever be able to see in their living room,” Nolan said. “It’s the best argument that cinema has against the competition represented by improvement to home-video systems. I think the studios understand that.”

 

If Santa Monicans want to see the “Dunkirk” how Nolan intended, they’ll have to drive to Universal City Walk. That’s because IMAX 70mm screens are so rare. Universal City Walk has the only one in the L.A. area. That may mean movie goers who would prefer not to fight traffic have to settle for seeing “Dunkirk” at their local cinema on regular IMAX screens, which are more prevalent.

 

Santa Monicans have no choice, unless they want to get back into their cars again. Santa Monica doesn’t have a theatre with an IMAX screen or other Premium Large Format (PLF) option like RealD.

 

And it could be some time before the city does.

 

A plan to replace a Downtown Santa Monica parking structure with a state-of-the-art movie theater that included an IMAX screen has been put on hold after the proposed operator, ArcLight Cinemas, ended negotiations with City Hall in late June over concerns that the project wouldn’t be profitable.

 

 Visitors to the Third Street Promenade this summer pass a recently renovated AMC theater. 

 

ArcLight, which operates nearly a dozen multiplexes across the country, including one at Santa Monica Place shopping center, had presented a detailed project description to the City and was refining the design when it decided to pump the brakes. ArcLight executives could have been concerned about the level of demand locally or market cannibalization after having opened the Santa Monica Place cinema just down the street from the proposed theater’s location, Parking Structure 3. Representatives with ArcLight declined to comment.

 

“It’s always been an expensive project,” said Andy Agle, housing and economic development director for City Hall who was involved in the negotiations with ArcLight. “I think for them, on the revenue side of things, they couldn’t justify the expected expense of construction and operation. … So we don’t necessarily have a project at this point.”

 

The next step is to consult with the Downtown Santa Monica, Inc. Board of Directors, who advise City Hall on issues impacting downtown, to address fundamental questions about the project’s feasibility and then take DTSM, Inc.’s recommendations to elected officials for further debate.

 

That leaves Santa Monicans and the millions who visit downtown each year without a venue to watch blockbusters on a massive screen. As movie studios and theater operators nearby invest more heavily in digital 3D and IMAX formats, as well as upgrade projectors to broadcast in 4K resolution, Santa Monica is at risk of falling further behind, leaving locals with no choice but to travel inland or south to the Marina and Playa Vista to experience the best in movie making.

 

That could impact ancillary business, including retail and restaurants. A cinema market study conducted by a consultant for City Hall found that the Fourth Street theater could contribute nearly $27 million a year in off-site sales, based on a projected attendance of roughly 897,000. Other studies have shown that a moviegoer spends on average roughly $17 to $22 at neighboring businesses each time they go to a cinema.

 

While revenue generation is always a concern, it’s not the sole driver for cinema development in downtown. A theater contributes to downtown’s reputation as an exciting place to be and lends to the authenticity of the district, much like the world-famous Third Street Promenade’s eclectic mix of street performers. An authentic downtown with a plethora of entertainment and cultural options benefits residents, visitors and businesses searching for flourishing areas their employees will want to work in.

 

“Downtown Santa Monica built its reputation on being a vibrant retail, entertainment and dining destination.  Movie theaters have been and will continue to be an important part of the entertainment mix in downtown,” said Rob York a retail consultant for DTSM, Inc.

 

For a city that is home to many working in the entertainment industry, from screenwriters and actors to visual effects editors and composers, the lack of an IMAX theater is a reality some no longer wish to endure and there are calls for something to be done to revive the Fourth Street project.

 

“I hear from a lot of people who do not like that they have to travel … to see films in IMAX,” said City Councilwoman Gleam Davis. “And since we do not have the same number of seats as we used to, people end up having to travel anyway to see some of the films they want to see.”

 

Since 2013, the Mann Criterion closed and the AMC Loews Broadway 4, AMC Santa Monica 7, and Laemmle Monica Film Center have undergone renovations resulting in a loss of 2,664 theater seats. Even with the 2015 opening of the ArcLight at Santa Monica Place, total seat inventory has fallen 47 percent, according to the city’s market study, which was released in January 2016.

 

That means Santa Monica’s theaters are leaking sales to competitors in West LA and Playa Vista.

 

Primary and seconadry market areas for Santa Monica theater operators. 

 

“While the renovations made by AMC on the Promenade came with improved plush recliners, the facilities are still older and are not considered cutting edge,” the city’s study states. “The ArcLight at Santa Monica Place, with relatively small screens and a less desirable location that attracts less foot traffic, is at a competitive disadvantage with the Landmark Westside Pavillion and Century City theaters, which offer easier consumer access from within the facility.”

 

And then there’s the issue of film clearances, which is when a theater with considerable market share penalizes film distributors that don’t grant it exclusive access to certain first-run movie titles by boycotting the distributor’s movies entirely. While AMC’s dominance isn’t what it once was, given its reach in the region it still has some bargaining power. A new theater on Fourth Street with nearly 3,000 seats and an IMAX would have made ArcLight more competitive and “reduce or eliminate AMC’s ability to enforce clearances and conduct an effective boycott,” according to the city’s market study.

 

The Promenade Uses Task Force, established by the City Council in 2001 to address community concerns regarding the promenade losing some of its signature diversity and vitality, recognized the importance of movie theaters to downtown, acknowledged that Downtown’s cinemas were, at the time, outdated, and recommended the city consider larger sites beyond the Promenade that could accommodate contemporary cinemas while expanding the associated pedestrian energy to other downtown streets.

 

Davis said she is interested in reviving the theater development, but believes any project should be flexible enough to not just exhibit films, but also host video game tournaments or live-stream major sporting events and cultural offerings, making the project more economically viable. A new entertainment center could also have active uses on the ground floor, such as a museum or art gallery, and feature live music or dance performances.

 

“The facility is the hardware and the films and other entertainment is the software,” York said.

 

More than just popcorn, candy

 

While Downtown Santa Monica does not have an IMAX theater, AMC and Laemmle have invested heavily on upgrades to attract moviegoers, including recliner seats, alcohol service and expanded food menus that offer more than just popcorn and candy.

 

Other amenities moviegoers are becoming accustomed to include full-service dining inside the theater. The service is targeted at an affluent demographic willing to spend for a luxury experience. For example, iPic, a dine-in cinema at New York’s South Street Seaport, charges $14 to $29 per ticket, depending on the seat, show time, and choice of film—food and drinks are extra.

 

Many theaters offer individualized screenings for audiences who want to enjoy the latest film in a private setting. Instead of hundreds of attendees watching the same film in the same theater, a small group can rent a private screening room and watch whatever they like. The service is offered by both large, multiplex chains.

 

Then there’s sensory exploration in which a viewer is totally immersed in a film to the point that they can become a character within the movie. Orbi, a cinema-based experiment launched in Yokohama, Japan, provides audiences a taste of tomorrow. Visitors are able to explore a real and projected world through sight, sound, smell and touch. Kinetic seats can tilt, spin and rumble based on what’s happening on-screen.

 

Those features are meant to entice people to get out and go to movies instead of streaming films on their home entertainment centers. Movie theater attendance has remained relatively steady over the last seven years, hovering around 1.4 billion in the U.S. and Canada. Revenue has actually increased, mainly because of a slight uptick in ticket prices. In 2016, U.S and Canada box office receipts totaled $11.4 billion, up 2 percent from 2015, according to Motion Picture Association of America (MPAA).

 

 

 

Attendance did dip a little during the Great Recession, and the slow recovery hasn’t helped. However, unemployment is low and wages are slowly rising, leaving theater operators with hope that they can retain their standing.

 

“Contrary to what some people think, we don’t really compete directly with the home,” said Patrick Corcoran, vice president and chief communications officer for the National Association of Theater Owners, who is based on Los Angeles and is familiar with the Santa Monica market. “People want to go out, they want to be social.”

 

Video streaming is disrupting the television industry, as fewer people are watching network TV, but not the movie industry to the extent some say.

 

“The theater experience is better, the options are better,” Corcoran said.

  

Who wants to go see a movie?

 

In 2016, more young people and diverse populations went to the movies, according to the MPAA. Audiences between the ages of 18 and 24 attended an average of 6.5 movies over the course of the year – more than any other age group. Per capita attendance also increased among African American and Asian/other audiences.

 

Santa Monica’s drop in attendance is more to do with declining seat inventory and increased competition regionally than with a dramatic change in people’s attitudes towards moviegoing.  And it’s going to take more than just a new theater to change that trend. Santa Monicans and others living near the city must get re-accustomed to going to the movies in Santa Monica. That means a marketing plan that let’s them know that downtown’s theaters are back and better than ever.

 

“The balance shifts over the years,” Corcoran said. “Westwood used to be the real center of gravity, than that shifted to Santa Monica, then to Century City, Burbank and other suburban areas. Now you see Playa Vista and the Marina. LA is a very competitive market. People have a lot of choices so theater operators have to be on top of their game.”

 

Gregory Laemmle, president of Laemmle Theaters, said it can take three to four years after a renovation of a cinema for an operator to hit their stride. Laemmle felt it was necessary to renovate the Monica Film Center on Second Street because the facility was roughly 50 years old. They brought in wine and beer, expanded their menu, reconfigured theaters to add more screens and a ground-floor restaurant. They are adding a rooftop restaurant now as a way to diversify their revenue stream. They also host live music and showcase artwork accompanied by discussions with the artists.

 

And they’re investing in something a little more old-school: a rewards program for loyal customers that includes discounted ticket prices.

 

Laemmle isn’t sure a new theater on Fourth Street is the right move for downtown. He doesn’t believe there is a demand, however, the city’s market study says otherwise. It estimates 1.63 million tickets will be purchased at Santa Monica theaters in 2020. Profit margins will be thin, as they always are in the industry, but theaters will still be able to keep the lights on.

 

“I understand the desire to energize Fourth Street, and certainly we are trying to do our part to energize Second Street, but I think there can be some other opportunities outside of another theater,” Laemmle said. “Hopefully the city will find another opportunity.”

 

IMAX may be just one amenity moviegoers in Santa Monica may have to travel out of town for.

 

Consensus is that the city would have to play the role of protagonist in any theatre development given the challenges associated with developing in Santa Monica, including a dearth of available real estate suitable for a multiplex, the cost of acquiring land and construction materials, and strict height and density limits for new development. Theaters are typically built on large parcels with expansive surface parking lots, or are attached to shopping malls or large developments that include housing, office space and neighborhood serving retail. Given that cinemas are also traditionally loss leaders within shopping malls, much like big department stores, they would have to be subsidized somehow, with the city being one of the few entities able to do so.

 

There’s currently a prohibition on the construction of new theaters outside of the downtown core, a restriction instituted in the 1980s when the promenade was reimagined as a way to draw foot traffic to downtown. So if there is ever a new theater built, chances are it would have to be in downtown, unless elected officials choose otherwise.

 

Like popular serials of the first half of the 20th century, it seems downtown Santa Monica’s theater drama is to be continued.

 

 

 

Santa Monica doesn’t have a theatre with an IMAX screen or other Premium Large Format (PLF) option like RealD.

Kevin Herrera is a former journalist turned marketing and communication expert, beer enthusiast, cyclist, cultural observer/commentator and expert on all things Downtown Santa Monica. He is currently the sr. marketing & communication manager for Downtown Santa Monica, Inc. 

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