Opportunity
Problem
Indoor Theatres:
In 2021, the global box office revenue added up to 21.3 billion U.S. dollars, up from 11.8 billion dollars a year earlier, an annual growth of 80.5 percent. Still, the 2021 figure amounted to little more than half of the 42.3-billion-dollar revenue recorded in 2019, before the COVID-19 outbreak.
While movie ticket sales in 2021 certainly improved over 2020, when cinemas were shut for much of the year, global box office revenue was still down a hefty 50 percent from pre-pandemic times as the movie business struggled to emerge from the COVID-19 era and grapple with a new landscape dominated by streaming.
Fig1. Statista 2022 Global box office revenue: 314 Lounge
Drive-in Theatres:
Although the first outdoor drive-in movie theater was established in New Jersey in the 1930s, the phenomenon of drive-ins didn’t catch on until the 1950s and ’60s. Suddenly these late-night hangouts started popping up across the country with many still in operation today. The promise of a night out that entertained, in a public yet still a somewhat private setting for just a few bucks, drew folks in. Then add a bucket of buttery popcorn, Red vines, and some corn dogs, and America was hooked.
While today’s definition of catching a movie typically involves hitting up the local AMC and cozying up in a fancy leather reclining chair, drive-in theaters haven’t been taken off the map just yet. In fact, due to social distancing guidelines, drive-in movie theaters are making a huge comeback across the country as many indoor theaters remain closed or have minimized their operations due to COVID-19. The United Drive-In Theatre Owner’s Association reports that there are still 305 drive-in theaters currently operating in the United States. Except for Louisiana and North Dakota, you can still catch a movie under the stars from the comfort of your own car almost anywhere in the country.
Over the years, some of these retro establishments have closed down, renovated, and then reopened decades later with a new modern feel. However, other drive-ins have remained untouched by time, except for a few minor technological updates.
More than half a century ago, there were 4000 drive-in movie theaters in the United States, and watching a movie from your car was a popular way to spend an evening. But with the number of drive-ins reduced to just a few hundred, a new breed of the outdoor movie has been popping up across the nation. Going to an open-air theater has become a modern summer pastime for many movie fans. For some, the outdoor movies are reminiscent of the drive-in theaters of their youths.
In recent years, outdoor movie screenings have cropped up in parks, vacant lots, and shopping malls around the nation. Many of them are part of development or revitalization initiatives.
The future of cinemas is more than just movies. For many, the traditional view of food at the cinema conjures up images of popcorn, cheese-topped nachos, and soft drinks, and may even stretch as far as pick n’ mix in some venues. Until recently gourmet dining and films were not considered compatible, this is largely because the average cinema seating arrangement is not designed to accommodate dining, therefore dinner and a movie typically took place in two entirely separate locations.
However, this is no longer the case. The rise and development of the cinema experience have led to several significant changes in attitudes towards watching movies and dining, paving the way for the development of dining whilst watching a film. The sale of food and beverages in cinemas has always been a means of providing lucrative profit margins and this is set to get even bigger as more and more cinemas offer the dine-in movie experience, which exchanges popcorn and soft drinks for artisanal pub fare and higher ticket items such as gourmet burgers and themed cocktails. This enables cinemagoers to enjoy good food in a refined environment and has seen the transformation of movie-going into an event, creating a complete night out all in one venue.
Outdoor Cinemas:
Outdoor cinemas are coming back. The open-air cinema is an experience very different from the traditional movie session. Imagine sitting at a table having a laugh and a giggle with your friends over a glass of wine whilst you enjoy a delicious meal and the warmth of the summer night. Watching a movie outside is about an experience, not just a movie.
Watching a movie outdoors brings a fun and new experience. Fresh air, gorgeous scenery, excellent snacks, and, of course, giant screens help create an atmosphere quite different from that of a traditional theatre or your home. In comparison to the regular cinema, outdoor movies are always nicer as people come together to share a nice evening together watching movies under the stars.
Outdoor cinemas tend to screen timeless classics or other popular modern films that customers are very familiar with (and may have watched many times) – rather than just the latest film releases. It’s a proven business model and it successfully works in many countries worldwide.
An outdoor cinema can also have an opportunity to screen live sporting and other televised events, such as major tournaments on the big screen which will add value to the business.
Solution
The last few years haven’t been too kind to theatergoers or theater owners. Attendance took a beating during the pandemic, with the box office hitting once-unthinkable lows.
People are finally returning to movie theatres, outdoor cinemas, and drive-in theatres. In back-to-back weekends, the domestic box office has lured moviegoers with a wide range of film titles, setting ticket sales records. The movie-going experience is about to change. Technology will become a greater part of the movie-going experience as venues shift to digital ticket and concession sales. The overall trend in the cinema business is to provide more than just the popcorn and soda pop that theaters have been providing for decades. Cinemas are making it a point to stay up-to-date with ever-changing tastes and food trends.
Outdoor cinemas are truly a unique experience for people of all ages, giving people one more reason to come together in a beautiful setting. Sitting under the stars on a beautiful evening at an outdoor cinema creates an environment and a mood that you just cannot find inside four walls and under a roof. There are three key elements for outdoor cinema; the outdoors, the social experience, and of course, the movies themselves.
Market
Unlike the main cinema market, where detailed and reliable market data is widely available (e.g. box-office takings each week by films), there appears to be no reliable or recent data on outdoor cinemas, drive-in theatres, and the pop-up cinema market.
The outdoor cinema’s target audience in The United States of America is relatively affluent adults aged between 25-35 years. Of course, the target audience is also influenced by the choice of film.
The type of film that customers want to watch is also changing. Originally there was a certain nostalgia value to the movies screened and the biggest sellers would tend to be a movie that was at least 15 years old. Now the biggest sellers are more recent movies and demand for screenings of nostalgic movies has declined to the point where relatively few classics can attract an audience. Improved living standards coupled with high disposable income and evolving patterns of consumer spending towards leisure activities are the fundamental factors enhancing the growth of the global market for outdoor cinemas and the Pop-Up Cinema Market.
In recent times, outdoor cinemas and movie houses have found it difficult to fill up their seats. This is due to competition from online streaming platforms that have successfully drawn movie-goers away from the theaters and outdoor cinemas. Going forward, the outdoor cinema industry will benefit from rising disposable income, which will encourage consumers to spend more on entertainment.
The truth is that even though disposable income levels have improved, enabling more entertainment spending, media consumption is increasingly shifting toward lower-cost online subscriptions, such as Netflix and Hulu. This trend has been supported by the rising number of tablets and smartphones capable of streaming movie files, as well as the continued development of wireless data connections.
The fact that the industry is highly competitive does not in a way stop some outdoor cinemas from declaring profits yearly. In the bid to stay afloat in the highly competitive cinema business, owners of outdoor cinemas now go the extra mile to make their facilities welcoming and conducive for customers.
Studios had been reluctant to release films, fearing that their new movies wouldn’t turn a profit and many opted to postpone titles until 2022. Now, with many health and safety mandates repealed and consumers’ seemingly more comfortable venturing back out to cinemas, studios have stuck to their release dates.
Theaters/outdoor cinemas will see a steady stream of hotly anticipated films following the May 6 release of “Doctor Strange.” “Top Gun: Maverick,” “Jurassic World: Dominion,” “Lightyear,” “Minions: The Rise of Gru” and “Thor: Love and Thunder” will arrive on the big screen in quick succession over a coming nine-week period.
Movie theatres and outdoor cinemas now have Cannabis Lounges, coffee bars, dine-in, snack bars, and free Wi-Fi. Another known trend in the movie theater industry is that most movie theaters are trying as much as possible to recreate themselves and also to be on top of their game.
Roadmap
Our roadmap will ensure we take a good look at all aspects of the business requirements. This will result in a strategic tool that will serve as a guide for better and more effective management. It will help us to identify opportunities and challenges and will also focus our attention on important questions to be tackled. While our business is at present in the planning phase, the roadmap for the business, once it is launched, can be summarized as follows:
We will ensure we implement the following:
- Vision, strategy, and goals.
- A responsible budget: Knowing where to spend money and where to save it.
- A contingency plan: We will ensure we have backup plans and a security budgeting in place to account for the inevitable hiccup that comes with opening a new business.
- Reputation: Reputation is the single most important part of our business.
- Strong Partners: We will seek good suppliers that can offer guaranteed quality for food and beverages.
- Listening to customer feedback and adapting to maximize their satisfaction levels and build trust and brand loyalty.
Our Roadmap to success will be:
- Selection of popular films that work best in the group viewing environment; i.e. comedies, scary or adventure films.
- Provide exceptional service that leaves an impression.
- Consistent entertainment atmosphere and product quality.
- Managing our internal finances and cash flow to enable upward capital growth.
- The strict control of all costs, at all times, without exception.
Our future plans:
- Franchising.
- Adding a Consumption Lounge on the premises for adults over 21 years of age, under strict rules and regulations according to the laws of the United States of America. This will provide consumers with a physical place to consume safely and legally.
Company Overview
314 Lounge is led by Elijah Swain.
The reason for starting my business, 314 Lounge, is to take a budding business to the next level by enhancing the outdoor cinema experience. I want to bridge the gap between the upscale dining experience, cinema, and the home living room.
The company is in a start-up phase; therefore, there is no history.
Whilst visiting friends in Atlanta, Elijah Swain was out eating with friends at a new restaurant. He enjoyed the restaurant, but I felt like something was missing from his overall experience. Elijah did not feel at home, nor connected to the place he was visiting. That’s when he came up with the brilliant restaurant concept of dinner and a movie.
Just like several others, Elijah wants to feel at home wherever he travels and wants to have an unforgettable experience that will keep him coming back for more. Not just from an entertainment perspective, but from a nostalgic one as well. When growing up and watching movies, Elijah didn’t always have the typical theater snacks. He remembers eating ramen, TV dinners, or whatever his parents cooked for dinner that night such as fried chicken, Mac & cheese, spaghetti, etc.
By opening up 314 Lounge Elijah will recreate an experience so nostalgic, it will leave each customer feeling a connection they can’t get anywhere else.
