Merch At The Movies
GREG KAHN
SEP 24, 2023
Taylor Swift is showing cinema operators a new era for revenue sourcing — are they watching?
Those super-sized popcorn buckets are not big enough to plug the looming gap in movie theater chains’ revenue reports.
As the Hollywood “double strike” by writers and actors continues, cinemas are likely to see less content coming to the screens next year. Naturally, that would mean smaller audiences at the box office.
But it doesn’t have to be that way.
As with most things related to pop culture, Taylor Swift may have the answer. All theater owners need to do is follow her lead in thinking beyond the typical concession stand fare.
While media consumption habits are rapidly upending traditional entertainment models, the desire for in-person entertainment is still strong. Now would be a good time to, not just meet consumers where they are, but to get them to change their habits.
It’s an opportunity Swift has seized with an impressive entrepreneurial acumen and zeal. Now it’s theater chains’ turn to copy her moves and run with it.
Note: I’m thinking about the state of video and entertainment generally as I prepare to lead a panel at VidCon in Baltimore on Sept. 28. I’ll be sharing the stage with The Information’s creator economy reporter Kaya Yurieff and Kirthiga Reddy, the founder and CEO of Virtualness, the mobile-first platform building the brand and media ecosystems in web3.
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Beyond the Popcorn
While group sales have always been offered for special events, theaters have rarely put much marketing behind such efforts.
That is, until now: AMC Theatres has struck a groundbreaking deal with Swift to distribute the singer’s New Eras concert tour film starting Oct. 13.
It’s a smart move by the chain. The chances of attracting large audiences on the heels of this summer’s “Barbenheimer” blockbuster season is huge and tying merchandise to movie content may prove a breakthrough move on Swift and AMC’s part. But it is a tad controversial.
Most of the discussion surrounding the deal focuses on AMC bucking the traditional movie release model by serving as the concert film's distributor as well as one of the venues showing it. Since the anti-trust era of the 1930s, film studios handled the distribution and were prohibited from also running the theaters. As a cinema owner, AMC could invite monopoly charges in this aggressively regulatory environment. But the company appears to have exercised caution by ensuring access to the film by its theater rivals.
Moving Pictures, Moving Inventory
Financially, the deal is in favor of Swift’s company. According to reports in Puck and Insider, 57% of box office earnings will be shared between AMC and the Swifts, with the other 43% going to other theaters showing the film. The majority of the split between Taylor and AMC will likely go to the singer and her team.
Theaters showing the movie will be required to play it for a minimum of four weeks. The higher audience volume comes at an important time for AMC, which has been weighted down with heavy debt issues for years.
And concession sales will have to do more lifting. It's the one area where movie theaters traditionally don’t have to split the sales with studios.
AMC is already promoting commemorative Swift-branded popcorn tubs and cups at higher prices. At a time of still-too-high inflation, estimates that Swift fans spent an average of $300 at her shows must have theater owners salivating.
In addition to the free posters and premium popcorn and drink collectibles at the New Eras movie screenings, the potential revenues from other Swift merchandise, including apparel and music drops.
Consider this: Universal Music's merchandising revenue grew 12% to $173.77 million between April and June alone on the backs of Swift’s tour-related merchandise..
A few months ago, I wrote a piece in Variety that implored theater chains to explore web3 experiences could revitalize movie theaters fortunes by inviting in hybrid digital/physic experiences through mobility and mixed reality headsets.
So the question to theater owners is: are you going to consider offering movie merchandise on a regular basis? With shrinking audiences, more room could be found for retail space by reducing the number of screens.
There could also be clear mobile commerce play involved. Before telling moviegoers to shut off their phones, theater owners could present a QR code that opens to an online store for that particular movie.
And with film, TV, and video production held up for 143 weeks due to the strike, this is a perfect time for theaters and studios to fully — and finally — tap into the massive engagement power of influencers. Could movie theaters become the next playing ground for creators? What about inviting groups of Swifties to take over a screen for an afternoon or evening?
These venues are tailor made for experiences that offer more to audiences than popcorn and candy in support of a film.
It won’t take much.
Movie theaters saw how audiences value the in-person experience. All they have to do now is present shopping experiences that enhance that value.
Or, they could just wait for the next Barbenheimer moment to come along.
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Greg Kahn
GK Digital Ventures
Greg Kahn is a catalytic force in the technology, media and entertainment industries, renowned for connecting innovators with investors, growing brands and driving billions of dollars in transactional deals. Learn More >
