Hartford Business Journal

8 Hartford Business Journal • June 26, 2017 www.HartfordBusiness.com CT movie theaters reinvent business model to lure patrons By Natalie Missakian Special to the Hartford Business Journal A hmad Ali Davis, owner of the six-screen Parkade Cinemas in Manchester, knew his small 1950s-era movie house needed to change with the times to draw movie-watchers away from Netflix and the com- forts of their own home theaters. Within the last year, he's started showing first-run films, brought in mobile caterers for dinner-and-movie nights, and has nearly finished remodeling two auditoriums, which he is converting to recliner seats. He's also applied for a full liquor license to give patrons the option of a beer, wine or cocktail with their show. "We're trying to bring more of a complete movie-going experi- ence to the theater," said Davis, owner of the cinema since 2006. Growing competition from online streaming sources like Netflix and Hulu, along with eas- ier ways to access them at home or on mobile devices, has shifted movie consumption away from theaters in the last five years, according to a recent IBISWorld report on the industry. While gross box office sales are up in the U.S. and Canada — from $10.2 billion in 2011 to $11.4 billion in 2016 — the report attributes most of that growth to higher ticket prices, stepped up concession sales and the trend toward 3D movies, which com- mand a premium. The release of Hollywood blockbusters like "Star Wars: The Force Awakens," in 2015 also bolstered sales. But growth of movie audiences overall has stagnat- ed, the report said. The number of movie tickets sold in the U.S. and Can- ada remained flat in 2016 compared to the previous year, at 1.32 billion, according to Motion Picture Association of America figures. That's down from a high of 1.6 billion in the pre-streaming years of the early 2000s. Movie theaters throughout Connecticut and nation- wide have responded by changing their business mod- els to attract bigger audiences, offering more high-end amenities like recliner seats, bigger screens, better 3D and sound technology, and concessions that go well beyond the standard popcorn, candy and soda. Some have bars, cafes or full-service restaurants on- site, so customers can grab dinner-and-a-movie in a single stop. Others are marketing their auditoriums, projection and sound systems for other purposes, like conferences, lec- tures and even church services. "The theater industry as a whole tends to reinvent itself every few years as most industries need to," said Joe Paletta, owner of Spotlight Theatres' Front Street Stadium 4 in Hartford. "The trend right now is to provide more of a unique experience." Spotlight, part of a Georgia- based chain of boutique the- aters, was the first movie the- ater in Greater Hartford to offer Q&A Foxwoods gambles on interactive gaming Q&A talks with Felix Rappaport, president & CEO of Foxwoods Resort Casino, about interactive gaming. Foxwoods recently intro- duced skill-based video game gambling machines in partnership with New York City-based GameCo Inc. Q: Foxwoods pioneered the use of interactive gaming machines in Connecticut. What are inter- active gaming machines and how have they been received? A: Interactive gaming machines, or Video Game Gambling Machines (VGMs), are the world's first skill-based gaming offerings. VGMs bring video game play to the casino floor, engag- ing a new generation of casino customers. Their proprietary arcade-style cabinets allow a player's skill to determine the payout and winnings while maintaining the same casino-based econom- ics as a slot machine. At this time, it's too early to have a complete under- standing of how VGMs will perform over the long haul, and we therefore don't have the same expectations for them that we would for other slots. However, those that have used the machines enjoy the level of interaction and the fact that they can improve their chances of win- ning — and win bigger payouts — the better they play. We believe this will resonate with both Millennials and gamers of all ages. Q: How important was it to be first in this market? A: We live in an age when agil- ity and speed to market are vital. I believe that skill-based gaming is here to stay, and if you look at all the major manufacturers rep- resented at conferences such as the Global Gaming Expo (G2E) or ICE Totally Gaming, they are now all pursuing a skill-based component. We partnered with GameCo because they are ahead of the curve, smart and innovative. It's common knowledge that many Millennials and Gen Xers love playing video games, but video games are very different from typi- cal slot machines and the industry has been trying to bridge that gap for years. We believe skill-based games are the first step in doing so. Q: Are these games the future, or do younger people still embrace table games like craps and black jack? A: At Foxwoods, we believe skill-based gaming machines are an important part of the future of gaming, but Millennials tend to gravitate towards craps, blackjack and poker too as those games also require a level of skill that they find appealing. I also believe they enjoy these games because of the inherent social aspect, whereas slots are a more solitary pursuit. We feel confidently that skill-based gam- ing and electronic table games are a growing phenomenon, at least at Foxwoods. In fact, at the end of this month, we will be adding our first electronic table game arena, which will allow our guests to play baccarat, black - jack and roulette. This innovative arena will be monumental, comprised of 24 video monitors, and will be located in a hip area near The Scorpion Bar and Sugar Factory American Brasserie. Q: How are these gaming machines categorized? Are they still considered slot machines in terms of revenue for the state? A: Yes, VGMs are categorized as slot machines and are therefore subject to the 25 percent contribu- tion to the state of Connecticut. Q: As the Hartford Business Journal previously reported, younger generations are not interested in passive games, particularly slot machines, and casinos must find ways to cater to younger tastes. Are there traditional forms of gaming younger generations do like? A: We know that the younger generation tends to veer towards fantasy sports, sports betting, poker and video games. However, we believe that skill-based gam- ing marries that technology with the slot machine product. We currently have two skill-based games — Pharaoh's Secret Tem- ple and Nothin' but Net — but will definitely offer more in the future as these become regular offer- ings across the industry. Q: What are the similari- ties and differences between Gen X and Millennial players? A: The lines between Gen Xers and Millennials are often blurred, but we've found that Gen Xers still have casinos and gaming as one of their top entertainment choices. Millennials are more selective — gaming is only part of their overall entertainment experience. n FELIX RAPPAPORT President & CEO, Foxwoods Resort Casino BY THE NUMBERS 2,073 Estimated number of movie theaters in the U.S. $16.7B Projected U.S. movie theater industry revenues in 2017 $1.2B Projected U.S. movie theater industry profits in 2017 S O U R C E : I B I S W O R L D FOCUS ENTERTAINMENT/GAMING Movie theaters, like Spotlight Theatres in Hartford (shown above), are growing their entertainment options with bars, food and networking space. Continued P H O T O S | C O N T R I B U T E D

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