Small-Town Theaters vs. Studios: ‘It Doesn’t Feel Like the Industry Wants Us to Survive’Cinema owners tell me the two-week mandatory run for movies is crushing them. And that’s even before Warner Bros. falls into new hands
I write Crowd Pleaser, a newsletter from Ankler and Letterboxd that covers audience and moviegoing trends. I scooped how Paul Thomas Anderson landed in Fortnite, and drove across 20 states to 58 U.S. theaters. Email me at matthew@theankler.com
Oof. Two weeks of Tron: Ares. That’s the mandate Disney handed theaters across the country this fall — even the one- and two-screen venues that can’t afford to spend half a month showing a movie their audiences already rejected. For multiplexes, a two-week holdover on a flop is an annoyance. For small-town theaters, it’s an existential threat. “If the industry just let us have multiple movies, we’d be far better,” says Mike Peters, executive director of the 107-year-old Fox Theatre in Walsenburg, Colo. Instead, owners like Peters are forced into impossible bets: commit their entire screen to a dud for 14 days or lose access to future studio releases altogether. And that’s before you factor in the looming $82.7 billion Netflix–Warner Bros. mega-deal (aka World War Warner Bros.) — a seismic shift that theater owners fear could accelerate a collapse already underway. “Theatres will close, communities will suffer, jobs will be lost,” Cinema United warned in its blistering statement opposing the merger. Owners don’t need the reminder. They’ve been living inside the industry’s fecklessness for years. As I learned during my two-week, 58-theater road trip from rural Colorado to northern Arkansas to backcountry West Virginia, many of these mom-and-pop venues aren’t kept awake by Netflix’s latest move so much as by a more immediate, slow-moving force: the studio “holdovers” system that dictates exactly how long a theater must play each film — whether the audiences show up or not. Says Peters, echoing a version of a sentiment I heard over and over: “It doesn’t feel like the industry wants us to be successful.”
Holdovers Hell for Small Theaters
The logic behind holdovers is simple, at least on paper: guarantee adequate exposure for new releases and prevent theaters from dumping underperformers too quickly. But for small-town exhibitors operating one or two screens, the logic breaks the moment a movie bombs (with concessions, naturally, about as lively as a broken popcorn machine). “Generally, it’s two weekends,” says Will, manager of The Ritz Theatre in Hinton, W. Va. “Sometimes three.” Universal required Wicked: For Good to play for three weeks — a condition Will and others were happy to meet, until they realized the dates overlapped with the studio’s other late-fall tentpole, Five Nights at Freddy’s 2. By the time the holdover lifted, one- and two-screen theaters (which also had Disney’s Zootopia 2 on the docket) had missed the No. 1 movie in the country.
At nearly every non-chain theater, staff discuss impending, ongoing or desired renovations they say would significantly boost business. Reclining seats (which reduce your capacity by roughly half), new projectors, improved flooring — all are in a holding pattern pending theaters’ ability to secure the funds and product to warrant them. “When you don’t have people coming, it’s a little hard to put money into it,” Veronica, a manager at Brenden Theatres in Kingman, Ariz., says. “It’s kind of hard to validate doing any of the upgrades and all these fancy things if nobody’s going to come out for it.” Friction with studios — which extends to single-day rentals, percentage of the take and mandatory advance guarantees — accounts for much of the trouble. They attest that studios don’t quite grasp the effects of their restrictions. “It doesn’t really seem fair,” says Kim, co-owner of the two-screen Shelby Theatres in Conshocton, Ohio. “Why not let us play Wicked for two weeks and then bring in Five Nights at Freddy’s?” His booker told him the studio “might let you out early.” They didn’t.
Even four- or five-screen venues aren’t immune. Brenden Theatres and Athens Movie Palace in Tennessee both lost out on bigger films because their screens were locked by titles the community had already seen — or, in the case of Disney’s Tron: Ares, rejected outright. Says Kavitha, director of operations at Athens Movie Palace, “It’s these archaic methods from the ’70s. There’s no push and pull. It’s just push. You sign it, or you don’t.” Her hope for what can change — someone who can foster dialogue between distributors and exhibitors, and perhaps even has some magic up their sleeve. “It’s probably because I just watched Wicked, but I see The Wizard of Oz,” Kavitha posits. “You need somebody who’s like, Okay, let’s have an industry-wide discussion and figure out how to make this make sense.”
Disney’s ‘Movie Mafia’
Owners and managers complain about all the studios, but they have a particular axe to grind with Disney, which one manager only semi-affectionately calls the “movie mafia.” In addition to strict week counts, the company’s typical quote of box office grosses comes in at 65 percent, with theaters at 35 percent. “Disney, they will never give more than they think they have to,” a small chain manager in Arkansas tells me. (Disney did not respond to a request for comment.) Disney, however, is not the only studio operating in that ballpark. Across the country, theater owners bemoaned the fact that major studios routinely take 60 to 65 percent of a film’s box office. This is not a new phenomenon and has been ongoing for decades. The only thing that’s changed is that initially, if theaters waited two weeks and then screened a film, they only had to pay 35 percent. Now, the owners say they’re still paying the 60 to 65 percent, even two weeks later. For indie films desperate for screens, a 50-50 split is more likely, with the percentages often dipping so exhibitors earn over half of the take. Ann Sanders, manager at the Liberty Theatre in Pagosa Springs, Colo., tells me she screened Roadside Attraction’s bomb Kiss of the Spider Woman because, “Well, 45 percent is better than 67 percent.” But for the big draws, studios know they have the leverage and aren’t shy about exerting it, which is why every theater relies on concessions to pay the bills and — increasingly — repertory screenings and special events. Theater owners negotiate either a flat rate or a lower percentage with studios when trying to play films from their back catalogs. In the case of one theater that wanted to screen Spaceballs, it was either spend $250 or give Amazon MGM a 35 percent cut of the take. Disney is the strictest company in this space, and generally does not allow one-time showings of their films. Fox Theatre’s Mike Peters started doing rep screenings without consulting the studios after another theater owner told him they’d been able to skirt by undetected. Mike lasted six months before a showing of Hocus Pocus in his 3,035-person town led to a phone call from Disney’s lawyers. Of course, studios have every right to charge for rep screenings — such are the rewards of having a deep archive. But as tensions with studios persist and theaters struggle to scrape by, it all adds up to an adversarial relationship that pits distributor against exhibitor.
New Elephant in the Room
Then there’s the Netflix of it all. If 35 percent is a tough pill to swallow, how about no release and whatever Netflix co-CEO Ted Sarandos meant when he suggested “over time, the windows will evolve to be much more consumer-friendly, to be able to meet the audience where they are quicker”? Theater owners have been through it with both Netflix and Warner Bros. over the last several years, and while the potential joining of the companies feels nebulous and far-off — or maybe won’t even happen if Paramount has its say — the inclination, based on recent history, is to lean toward pessimism. (Don’t forget that Warner Bros. kick-started the tightening of the theatrical window during Covid with “Project Popcorn,” an initiative that brought its studio’s films to HBO Max at the same time they were released in theaters. It was not exactly a fan favorite amongst the exhibitor crowd.) “I’m always going to try to be optimistic about it, but I’ve also been in the business long enough where there have been similar struggles, as long as streaming has been around,” Ryan, manager of Golden Ticket Cinemas in Harrison, Ark., says. “Netflix, I assume, doesn’t care that much about theater exhibition, but I hope they would see that there’s a potential for them to make more money and more profit.” (Entertainment Strategy Guy recently made this argument persuasively.) As Ryan alludes, there’s a real hope among some in the exhibitor class that this merger will actually bring the behemoth streamer onto the theatrical playing field once and for all. In other words, theaters can weather Netflix. What they’re not sure they can weather is the business model he’s about to inherit.
Now From Letterboxd: The Best Movies About Going to the MoviesCinematic words straight from its members
At Letterboxd, we love going to the movies, and it’s a particularly meta experience when we’re watching a movie where characters go to the movies, too. Letterboxd members voted on the best scenes in movie theaters, and it’s easy to see the power of films reflected in the stories we’re watching. Look at the climax of 2009’s Inglourious Basterds from Quentin Tarantino, where the theater becomes a place of not only vengeance, but borderline supernatural rebirth. “Shosanna Dreyfus laughing while a theater full of Nazis are screaming in agonizing pain is by far the most beautiful thing I’ve ever heard,” says #1 gizmo fan. 
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