There are many options for opening a movie theater, including using major corporate franchises, rerun theaters, drive-in plug-in screens, and more specialized mini theaters. Whatever type of cinema you are interested in opening, of course you want this business to be successful. Despite the many challenges in opening and maintaining a cinema, this business has the potential to become part of the identity and life of the community.
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Part 1 of 5: Gathering Information
Step 1. Familiarize yourself with the cinema industry
Learn all things related to the film theater industry. There are many books and magazines devoted to the cinema business (also known as exhibitions), databases of demographic information about moviegoers, and other available sources.
Step 2. Learn the different types of cinema
There are different types of cinemas with different places and styles to show movies. Some of them:
- Mainstream cinemas: These theaters usually show big movies at their prime. These theaters are usually corporate or franchise business ventures, but not all of them. This cinema screens several films simultaneously in their respective studios in the building.
- Second-run cinemas: These theaters specifically show films that have already been shown in mainstream theaters.
- Independent cinemas: These theaters sometimes show independent films, special features, classics, major films, or a combination of these. The broadcast is usually only one or several times. These theaters are also usually located in bars or restaurants.
- Drive-in plug screen. This cinema is in an open area showing movies on big screens and visitors watching from their cars which are parked in a large open area. This cinema requires a large projector and special audio equipment, as well as ramps for car parking. The car plug screen is often opened in the dry season so that it is not disturbed by the rain. Often the land is used for other activities in the rainy season, such as flea markets or concerts.
- You can also create a super-simple cinema using a home theater screen in your backyard, or a consumer-grade projector system installed in a bedroom. This cinema is suitable if you only want to show a film to a small number of people or a non-profit event.
Step 3. Do market research
Find out what theaters have to offer in your area. If you live in a large city, there are likely to be many theaters open, whereas in a smaller town there may be only one or no cinema.
- Talk to other movie theater owners to see how successful their business is. Just because you're going to be a competitor doesn't mean you can't have a friendly professional relationship.
- Create a survey in the local community to determine the type of film you want to watch. You need to make sure you're showing a movie that has an audience. If you live in a conservative area, of course, no one will watch salacious and controversial films.
Part 2 of 5: Starting a Business
Step 1. Decide what type of cinema you want to open
Each cinema has its own considerations. Each option has advantages and disadvantages, depending on the community and audience. This decision also depends on the initial capital and potential investors. Choose whether the cinema will be mainstream, rerun, independent, or drive-in plug-in.
Step 2. Look for cinema brands that offer franchises
Some theaters offer franchise opportunities where you can deposit capital to open a cinema with the associated cinema brand name. The advantages and disadvantages of this option include:
- Cinema names and brands are already big and well known to the public so that they attract visitors who want a standard viewing experience.
- Easy to prepare. The terms of obtaining a franchise will determine many decisions regarding cinema openings.
- Cinema brand financial support and resources, including contacts to film brokers.
- On the other hand, you may not be able to control the details of your cinema if you own a franchise.
- Some major cinema brands do not offer franchise opportunities.
Step 3. Understand the rules for starting a business in your area
If you're interested in opening a profitable movie theater, most of the general information about starting your own business will apply. Your cinema must open and operate according to business regulations in your area, including various permits, building code requirements, taxation, and more.
You can also open a non-profit cinema. For this cinema, you'll need a mission statement, rules of law, and a board of directors
Step 4. Calculate the cost
In addition to the standard costs of opening and running a business, there are also specific costs of operating a cinema. These fees vary by geographic location, and the size and type of cinema. Estimate the cost of running your cinema. These costs include:
- Rent or purchase a building.
- Staff salary
- Concession overhead
- License fee for film screening. These fees are generally quite expensive, especially for large mainstream cinemas. You can use the services of a film broker to assist in the process of obtaining films and approval for screening.
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Equipment. You'll need a projector system, lighting, seating, soundproofing, decor, concession area, etc. The main equipment needed depends on the type of cinema you want to open. Most theaters must have a digital projector because film distributors now deliver films in digital format. Digital projection upfront costs are usually quite expensive, around IDR 84,000,000 or more for a single screen digital projection system. If you open multiple studios, the costs will add up as well.
You might also consider offering certain specialties, such as 3D capability, D-Box seats, or IMAX (high-resolution large-format movie viewing)
Step 5. Choose a location
Location is an important aspect of any business, including cinemas. You should choose a location that is accessible to many people, easy to find, and close to businesses and other attractions that attract visitors. A good location means greater opportunities to acquire customers and generate profits.
Also consider parking in the cinema area. If customers find it difficult to find a parking space, they will be reluctant to return to the cinema
Step 6. Find special incentives for your business
Do some research on incentives and tax breaks that can help. For example, in the US there are incentives in the form of green businesses that are entitled to be owned by women and minorities, and independent businesses.
Step 7. Decide on a name for your cinema
Choose a name that can attract customers. Many cinemas have classic names or something like that, for example Cinema, Metro, Star, etc.
If you have a generous investor or donor, consider using his name for the cinema
Step 8. Develop a business plan
A business plan will be helpful when seeking capital from funding institutions or individual investors. This plan will show specific insights into the film theater business. There are several sample business plans available on the internet specifically for opening a cinema. Your business plan should include information such as:
- Mission or business goals
- Market research and audience analysis
- Cinema opening and maintenance costs
- Ticket pricing, concessions, etc.
- Estimated costs and revenues
Step 9. Get funding
The initial costs of opening a movie theater are huge, but don't be discouraged. Thanks to a solid business plan, you can get investors who are willing to invest their capital to get a reward for the business you run.
- You can also look for business partners. Look for people with connections to the local business community and experience in making money and running a business.
- Some small organizations run crowdfunding to raise funds. This is done by asking for donations from people who are interested in your cinema. Several independent cinemas have successfully run crowdfunding campaigns to purchase digital projector systems.
Part 3 of 5: Preparing for Cinema Opening
Step 1. Plan the timing of the opening
Adjust for the time when there are a lot of people in the city. Don't schedule the opening on the same day as a concert or other large event that invites a large number of people.
If you plan to open a cinema with a certain new film, the opening schedule will need to be adjusted to the release date of the film
Step 2. Pay for the movie viewing license
If you charge a fee for visitors to be able to watch the film, you must have obtained a license from the film distributor. There are copyright laws that determine how films are shown to the general public.
- Contact the film distributor to find out the cost of showing the film.
- If the film is in the public domain, it means that no one owns the copyright. Therefore you do not have to pay a license fee. Check the status of your film on the Library of Congress website.
Step 3. Hire employees
Depending on the size of the cinema, you will need to have several employees to operate the cinema. At the very least, you'll need projector experts and ticket sellers, as well as people to sell concessions.
Step 4. Schedule delivery
We recommend that you schedule multiple views for each movie. Ensure a good range of viewing times in the evenings and weekends.
Step 5. Promote and advertise your cinema
Cinema competes with various forms of entertainment for customers' time and attention. You will need to work hard and put all your effort into attracting customers. Market your cinema across a variety of media, and focus on how your cinema provides visitors with a unique experience.
Invite local media to tour your cinema. Be willing to be interviewed. If the local newspaper or television covers your business, this can be of great value to the continuity of your business
Part 4 of 5: Operating the Cinema
Step 1. Pay attention to concessions
If you sell concessions at the cinema (popcorn, candy, soft drinks, etc.) your profits can grow and in some cases become a major source of income.
- Concessions can be a great source of income because their prices can be raised quite a lot. For example, you can buy popcorn at a cheap price, but it can be sold for many times the purchase price.
- Popcorn, candy, nachos and soft drinks should be provided in all theaters. You can choose to add certain foods to the menu, or even alcohol, depending on your local regulations.
Step 2. Offer on-screen ad serving
You can sell advertising space to local businesses who want to market their business to visitors. This is another important source of income, especially for small cinemas.
Step 3. Consider a subscription model
The subscription model allows moviegoers to buy a pass for a certain time (one month, six months, one year, etc.) and watch a variety of movies in theaters. This model also allows you to compete with video streaming services, and gain repeat customers while still making a profit. The subscription model can be very beneficial for independent theaters.
- Your business subscription model can offer passes for all or some movies within a certain time limit.
- You can also offer different levels or facilities with different passes. The standard subscription fee only consists of the admission fee, while the premium package includes the admission fee and snacks, drinks, etc.
Step 4. Offer cinema rentals for other events
If you run an independent cinema, consider using it for other purposes. You can generate income by renting out movie theaters for certain events, such as birthday parties, group meetings, etc.
You will need to determine the rental price for the cinema, as well as policies regarding the use and cleanliness of the cinema. The schedule of events must also be adjusted to the schedule for showing films in theaters
Part 5 of 5: Building a Business
Step 1. Consider joining a trade association
Trade associations facilitate similar businesses to share information and determine appropriate conditions for their business operations. In the US, there is an organization called the National Association of Theater Owners (NATO) which oversees cinemas in the US and around the world. Its members include major cinema companies as well as independent home theater owners. This organization can be a great source of information and support.
Step 2. Attend industry conventions
There are several conventions that are specifically held for film theater business owners. This event can provide useful information and ideas regarding cinema openings, as well as opportunities to build collaborative networks. Some of the major industry conventions include:
- Arthouse Convergence is a gathering event for cinema owners.
- CinemaCon is the official convention of the National Association of Theater Owners (NATO).
- ShowEast is another convention held in Hollywood, Florida (USA), every year.
- CineEurope and CineAsia are international industry conventions for cinemas and cinema brands across the globe.
Step 3. Run promotions together with local businesses
Continue to grow your business by working with restaurants, cafes, bookstores, and other businesses in your area to offer promotions to your audience.
Step 4. Collaborate with other local organizations
As your cinema grows in popularity, think of ways to develop connections within the community. Work closely with local universities to offer a series of broadcasts on specific topics. Host a film festival or screening for a local nonprofit.
Step 5. Anticipate market changes
As your business grows, you need to stay abreast of industry trends. The market is changing all the time, especially with the growth and prevalence of personal entertainment devices. Therefore, your business must adapt to keep it going.
