It is not that movie theaters want to use video games to undermine American after-school pastimes like Little League Baseball and peewee football – it’s just that they have seats to fill.
Despite years of impressive box-office figures boosted by pricier tickets and extra fees for 3-D screenings, theater attendance has been falling. Last year, theaters counted the fewest butts in seats since 1995.
That’s left theaters with lots of extra auditorium space – and it’s convinced about 80 multiplexes around the country to sign up with Santa Monica startup Super League Gaming, which will use otherwise empty theaters as venues for kids’ recreational video-game leagues starting next month.
More than 134 million people will watch professional video-game tournaments, or so-called e-sports, this year, generating an estimated $612 million in advertising and ticketing revenue, according to New York video-game research firm Super Data Research.
Super League and its theater partners – including Cinemark, which is also an investor in Super League – figure that enthusiasm for gaming isn’t going to stay bottled up at home or online and that kids and parents will be interested in organized e-sports.
“For a gaming generation, there’s never been that option that says, I’m a gamer and this is how I compete after school,” said Super League co-founder and President Brett Morris. “Competitiveness, the socialness and everything that goes along with after-school activities are tied up in these events.”
Laptops, jerseys
Starting next month Cinemark, AMC, Regal and iPic theaters will be hosting Super League Gaming leagues in 34 cities nationwide. The leagues will hold matches every Tuesday or Wednesday afternoon – the slowest of slow times for theaters – for six weeks.
Players pay an $80 entry fee. For that, they get a jersey and the chance to win a piece of $15,000 in cash prizes. Super League splits revenue with theaters, but Morris would not say how much each gets.
Each week, gamers on teams of four to six play a version of Microsoft’s Minecraft. Gamers have to own the game already – so Super League doesn’t pay for licensing – and play on their own laptops.
Holding Minecraft tournaments requires some technological wizardry. To facilitate its matches, Super League wires up theater auditoriums with Wi-Fi hot spots, uses custom Minecraft software and a specially designed server that plugs into a theater’s digital projector.
That allows the company to project a bird’s-eye view of the Minecraft playing field on the big screen, an added dimension Super League organizers use to throw out prizes on the digital map that gamers rush to pick up. With each league hosting as many as 100 kids, ages 7 to 14, league matches can be a loud, chaotic scene.
Block busted
Super League comes along as theaters are increasingly reliant on big blockbuster movies – the kind that people want to see on the big screen instead of waiting to watch them at home – to bring in revenue. Theaters generally split ticket sales evenly with studios, industry insiders say, but theaters give up a bigger chunk of ticket proceeds when blockbuster films pass certain revenue benchmarks.
Those economics have forced theaters to rely more on alternative revenue streams such as premium concession sales of meals and alcohol. Concessions are famously high-margin products for theaters. Cinemark of Plano, Texas, for example, last year brought in $845 million in concessions revenue, while only spending $132 million on concessions supplies, according to public filings.
Along with selling more soda and popcorn, another way to bring in more revenue is to get more out of unused fixed assets, specifically theater auditoriums that sit empty on weekdays and during matinee hours.
“At least 70 percent of a theater’s revenue is generated Friday to Sunday,” said Eric Handler, a media and entertainment analyst at equity research firm MKM Partners of Stamford, Conn. “If you can find some alternative content that can fill some theaters in the slower period of the week, then that’s a good thing.”
Conveniently, Super League events take place in after-school hours in the middle of the week. The matches, which last about an hour and a half, start at 4:30 p.m. For instance, Super League last week ran a sold-out test event at a Cinemark theater in Playa Vista, complete with an appearance by Minecraft-playing YouTube celebrity Jordan Maron.
As such, theaters are welcoming Super League. Cinemark made an undisclosed Series B investment in the company this month alongside Japan’s Softbank Group, and a growing number of theater chains have expressed interest in hosting the company’s events.
National Amusements of Norwood, Mass., a theater chain controlled by billionaire Viacom Chairman Sumner Redstone, sees Super League tournaments as an extension of what it calls “event cinema” – alternative content such as live broadcasts of New York’s Metropolitan Opera and showings of classics such as “My Fair Lady.” It reached out to Super League and will be running test events this fall.
“As a percentage of our overall gross cinema revenue, the revenue generated by our event cinema is dwarfed by movies,” said Shawn Sullivan, National Amusements’ vice president of legal and business affairs. But, he added, “while event cinema is a small fraction of our box office, on any Monday or Tuesday it could be 60 percent of the gross on that particular day.”
National Amusements also sees alternative programming as an effective marketing channel.
“It strengthens our ties with the community,” said Mark Walukevich, the company’s senior vice president of film and event cinema. “It also brings a different audience that doesn’t go to the movies, but once they go, they might see something they want to see.”
Still, alternative programming events such as Super League Gaming will likely remain a small part of the movie theater business. Due to technological limitations, Super League’s events for now max out at 100 participants. At that audience count, multiplied by $80 per league registration, multiplied by 80 leagues running this fall, Super League’s revenue for the six-week season will be at most $640,000. Out of that, Super League has to pay theaters a share, and also has to pay workers who organize and run the weekly matches. Eventually, though, Morris said Super League might be able to run competitions remotely and rely on parent volunteers to keep things running smoothly.
“Everyone talks about the soccer moms and the soccer dads. Well, there’s plenty of Minecraft moms and Minecraft dads,” he said.
Super League ultimately believes it can scale up by running as many as seven six-week Minecraft leagues over the next 12 months. And it has plans to bring on additional games, perhaps hosting three different tournaments a week at a single theater location.
Even with more events, Super League will still be a fraction of any theater’s business, but MKM’s Handler said theaters will be happy with whatever extra revenue they can get.
“It’s pretty inconsequential,” he said. “That being said, you don’t turn down that revenue. … If it could do 10 percent of overall revenue, I think it would be a huge success for the industry.”
