"As always, our goal is not to be the largest exhibitor of films, but the best exhibitor of films in the industry," Muvico president Michael Whalen, Jr. says of his effort to assure continuity. "The vision and strategy remain steadfast: to develop, acquire and operate state-of-the-art megaplex theatres in entertainment centers." All the while, the circuit is "continuing to take a boutique approach to each project, making it unique and a breathtaking place to see a movie." After 13 years as an investment banker and finance executive, in 2000 Whalen became Muvico's chief financial officer after he helped the company secure some $40 million in funds.
Looking back at those past years, Whalen reflects on the state of theatrical exhibition: "It doesn't take rocket science to see that the average attendance has been declining at one to two percent a year. In my book that is a negative trend... You have to ask yourself why? What is structurally creating that?" As far as he has observed, "teens and children with their parents are still going. They are big consumers of movies. The people who have not gone to the movies as much really belong to the 25-to-54 demographic." The goal then becomes how to "create an experience that gets that audience back." Looking at a combined 87 million Muvico-goers since 1996, the company certainly has found a way.
The "21 and over" environment of Muvico's "Premier" concept is key. "A night out is not just about the movie only," Whalen declares, highlighting the synergy of film and food in the "entertainment experience." Originally introduced in Boca Raton with a bar and restaurant, valet parking and other VIP amenities--ranging from more than generous space and architectural ambiance to supervised child-care facilities and expanded concessions--the concept's success has been such that Muvico is reviewing existing locations without the full "Premier" package for the possibilities of a retrofit. At the same time, Whalen says, "the Muvico brand as it is known in Florida will be taken out to major DMAs across the country."
After out-of-home state expansion to Memphis, Tennessee, and Hanover, Maryland--at 2.2 million people annually, the Muvico Egyptian 24 is "the highest-attended in the country"--several top 50 markets are under investigation. Muvico has confirmed 2007 openings in Boynton Beach, Florida, and Rosemont, Illinois. The circuit's first entry into Metro New York will be at the New Jersey Meadowlands. After a recent $2 billion commitment by the likes of Colony Capital and Credit Suisse, the long-in-the-works Xanadu entertainment complex is now scheduled to open in late 2008.
Once intended to be the largest cinema in the country with 26 screens and 6,500 seats, the Xanadu project has been scaled back to just under 5,000 seats in 17 auditoria plus a rooftop open-air screen--the result of what the company has called a "smart" approach to design, construction and fiscal considerations. Even though the September launch of Muvico 18 in the Village of Rosemont near Chicago will also be down from 24 auditoria, none of its amenities or signature style elements will be less grand, Whalen assures. He describes the megaplex's "sophisticated" style, streamlined to be used in other projects and thus cutting back on fees for a different theme each time, as reminiscent of "the grand palace theme of theatres of old."
No less than six auditoria will feature luxury seating to be accessible from the upstairs "Premier" area only. Unlike previous balcony construction, Muvico will now feature a special VIP gallery within the same auditorium that is separated from general seating by a wall. Not only does this save construction time and cost "as the height level comes down," Whalen explains, but "the real beauty" is that sightlines will be much improved over looking down from a balcony. "We think a bigger auditorium with both general and 'Premier' seating is a better model than the boutique approach with several smaller VIP-only screens." Rather than "feeling like you're in a living room," with two services available in the same "huge" auditorium, Muvico "offers the airline model, where you give people options at different price points," he says. The $20 price/value proposition of the "Premier" experience includes a new luxury love seat of 32 inches across (82 cm), along with free popcorn and sodas, valet parking and reserved seating.
"At the core of everything we build," Whalen elaborates, "are six auditoria plus the 'Premier' bar, restaurant and related amenities. All we do on the outside is to add additional screens depending on market capability. Within those six main houses that have a total capacity of anywhere from 1,500 to 2,000 seats, the gallery seating will encompass some 400 to 500. Going forward, a typical-size Muvico theatre will have between 10 and 16 screens and the house sizes will be bigger."
As for the reasons, he points to picture playtime. "Five years ago, films started in the largest screen and over the course of several weeks went down to very small houses in a 20-plex. Today, movies are in and out of the market quicker... So we think the model going forward is with bigger auditoria to create that social environment but fewer of them, given the shorter shelf lives."
Muvico's VP of film, Hank Lightstone, adds, "Playing multiple prints of the same title, people are not being turned away during early weeks of engagements." This kind of front loading is augmented by the fact that "most advertising dollars [are] spent prior to opening and during the first couple of weeks." Hoping for a better way of doing business, he says, "The way film rental is arrived at needs to be addressed."
Digital cinema also holds a promise of betterment. "Introducing digital brings a technological change to a business that has been static for many, many years," Whalen ventures. "Along with technology change and technology risk, business models change. In any industry that I can think of--as a banker in telecommunications or cable financing--where digital was introduced, it had an impact on the economics of that business and how people conduct business." He thinks the exhibition industry too "will change pretty dramatically over the next five years," both in the way "movies are distributed and the sort of houses that show them."
For now "viewing all options," Muvico has installed Dolby Digital Cinema/Real D at six locations and a seventh screen with NEC. Whalen is eagerly looking to finalize "a deal with someone that creates a brand and a differentiated identity for our theatres... A special deal for us--and whether it's out there or not, we'll see--would be someone who has a great brand that offers something unique to the consumer. We would then go out in a market like [Rosemont] and open the first all-digital cinema in the United States. That sounds like Muvico to me."
What else will define the future of moviegoing? "I don't see plain theatre boxes selling soda, popcorn and candy as the optimum model going forward," Whalen replies. Instead, Muvico envisions "an entertainment destination that remains focused on movies, but has restaurants and bars around it" to entice the older and upscale demographic. However, "no model will work if you cut out teens, kids and families," he cautions. "On the other side, the missing piece for the teen market will be some sort of interactive gaming. There already is great synergy between movies and videogames being released in the same window." Furthered by the advent of showing concerts and sporting events, there will be "a drastically different box sitting out there," he predicts. "How great to have a sports game in 3D a few years from now, where at half time or between quarters...someone can come out and have a drink and a bite to eat at the restaurant that is part of the entertainment complex."
As movies "will always be at the core of the business and most important" to Muvico, Whalen ultimately defines success by what "you build around the movies to keep people at the theatre for more hours of the day. Besides the admission ticket, what other ancillary services can you offer them when they come to your building?" he asks. "That's the holy grail for the other side of the house. We're not quite there yet. Keeping all that in mind as we design theatres is an integral part of our strategy as we move forward."
Muvico Rosemont 18
Developer: Village of Rosemont
Project: Village of Rosemont, Rosemont, IL
18 screens; 4,750 seats
Theme: Celebration of the great movie palaces of the '20s and '30s
Muvico Boynton Beach 14 Theater
Developer: Simon Property Group
Project: Boynton Beach Mall
14 screens; 3,800 seats
Boynton Beach, FL
Muvico Xanadu 18 Theater
Developer: The Mills Corporation
18 screens; 5,000 seats
East Rutherford, NJ
Muvico Sarasota 14 Theater
Developer: Benderson Management
Project: University Town Center, Sarasota, FL
14 screens; 2,500 seats
Muvico Lehigh Valley 14 Theater
Developer: Forest City Enterprises
Project: Summit Lehigh Valley, Allentown, PA (Bethlehem Township)
14 screens; 3,400 seats
All theatres will feature "Premier" auditoria and bistro and bar concepts.