Sony Acquiring Alamo Could Spark an Evolution in Cinemas…Or their Extinction.

It’s been a rollercoaster week for our community members in Dallas. First, they found out that beloved arthouse theater chain Angelika would be closing its Plano location. Then, in a huge double-whammy, Alamo Drafthouse announced that its Dallas Franchisee was going out of business, effectively shuttering six additional cinemas renowned for their wonderful programming and elevated experiences. Movie Lovers in Dallas were suddenly thrown into a wicked corkscrew turn.

However, before doomsday-sayers could even complete their victory lap, news broke that promises to change the landscape of theatrical exhibition…not only in DFW, but across the entire country. In a landmark deal, Sony Pictures Entertainment announced that it would be acquiring Alamo Drafthouse. For the first time since the Paramount Decrees were sunset, a major film distributor is getting back into the theatrical game.

Why This Deal is So Significant 🫱🏻‍🫲🏽

We all know about the struggles that cinemas have been enduring since long before COVID threatened to be a final nail in their coffins. Yet while streaming has upended the business and by some metrics become the primary delivery method of most films, data has shown that movie theaters are still treasured resources which are critical to the success of the entire film ecosystem. Obviously, nobody has a more vested interest in ensuring the survival of movie theaters than the distributors who reap the most from moviegoing. This deal could be the first of many that see distributors (and streamers) investing in, reviving, and revolutionizing (ReSee-ing? Sorry, I couldn’t resist) the movie theater experience. And the partnership between Sony and Alamo is nothing short of a dream combination to test those waters.

Why Sony and Alamo Are a Match Made in Heaven 💞

If you like movies and are lucky enough to live in a city with an Alamo Drafthouse, you know that the Austin, Texas-based chain is heralded as one of the best things to happen to moviegoing in the States in quite some time. Alamo skyrocketed to fame by giving moviegoers what they wanted: high-quality cinemas with added experiences you can’t get at home. Their theaters feature a dine-in experience (after all, people have always been willing to go to restaurants and bars even though food and drinks are much cheaper at home) and high-end equipment, but what makes them special is that they clearly cater to movie lovers who see cinemas as their second homes. From their strong stance on bad behavior to their diverse programming, the Alamo has branded itself as the last bastion of cinema, and the people responded. What made them truly innovative was that they successfully built a community and an identity around their business in a way that few cinemas have ever done.

Sony is certainly no stranger to innovation as well. Most people associate the brand with the production of hardware, electronics, or video game consoles, but their film division has also been crushing the game in recent years. When every other traditional Major studio scrambled to copycat Netflix and create their own streaming services, a bad decision that has thus far shown to be wildly unprofitable (we’re talking losses in the billions), Sony stuck to its guns. It decided that it would continue to focus on producing quality films. It also struck a deal with Netflix to ensure that, after their theatrical runs, the tech giant would have first dibs on the streaming rights. The strategic decision to zig where others zagged is what has allowed Sony to expand its footprint in a major way by acquiring not only the Alamo Drafthouse, but also a stake in Paramount Pictures. In sports parlance, that’s what we call building a squad.

A marriage of two companies that have both shown a penchant for clever decision making, innovation, and an appreciation for the customer experience is exactly what movie theaters need right now. As we at ReSee have often said, if the industry wants people to go to movies, they have to make it worth it to get off the couch. Alamo and Sony are more than capable of that.

An Increased Focus on the Moviegoing Experience 🤌🏽

When Sony announced the acquisition of the theater chain, they also noted that Alamo Drafthouse founder Tim League would be staying on as the head of a new division at Sony called Sony Pictures Experiences, headed by Alamo Drafthouse CEO Michael Kustermann.

Boom.

Sony is signaling loud and clear that not only do they believe cinemas are vital to the success of the film industry, but that they also understand the true untapped potential of movie theaters as experiential spaces. Gone are days of people flocking to cinemas because of big screens and booming speakers; for many consumers, higher fidelity is not enough to justify higher prices. But what is undeniably true, is that going to the movies with a group of friends, your family, a date, or even on your own, provides an experience that you can’t get at home. And in a world where many struggle with isolation in the digital age, cinemas need to be positioned as community spaces that offer something special.

A movie studio that understands that the customer experience must be at the center of not only moviegoing but also movie making, has the potential to provide us with some truly revolutionary cinema moments.

Combining Film, Music, and Gaming to Create World-Class Cinema Experiences 🎞️🎵🎮

You don’t have to be gamer to understand how big of a game-changer video games have been for film and television. Legendary video game IP Fallout is the source material for one of streaming’s biggest shows of the year, The Super Mario Bros. Movie was a massive box office success just last year, and we all know a gamer or ten who can easily pour hundreds or even thousands of hours into a single title. It’s easy to see how gaming could potentially help to engage moviegoers in a way we’ve never seen before.

Sony now has the perfect physical spaces for experimenting with crossover content. Between both its gaming and music divisions, Sony has enormous potential to create multimedia experiences one can’t replicate at home and everyone will want to see for themselves.

Oh, and they just so happen to have a new movie franchise in the works based on one of the most popular video game franchises of all time: The Legend of Zelda.

Don’t be surprised if the former Alamo theaters play host to one-of-a-kind moviegoing experiences specifically designed for their Zelda film. Don’t be surprised if that film opens a major new chapter in the history of filmmaking. And it’s still too early to tell, but don’t be surprised if a future Legend of Zelda movie becomes one of the ten highest-grossing films ever made.

But It’s Not All Sunshine and Rainbows 🌩️

Obviously, I’m really excited about the potential that this acquisition brings, but as someone who’s mildly obsessed with the business of Hollywood, I’m not gonna lie to you: there’s a chance for some seriously negative ripple effects on the industry as well. When Disney acquired 21st Century Fox and folded in the Fox film division into its own, the end result was significantly fewer films being produced between the two entities…something that one could argue has hurt industry stakeholders as well as consumers. It almost feels a little ominous that the first studio to buy a leading movie theater chain once the Paramount Decrees went away have also just recently acquired part of Paramount. For better or worse, Sony has significantly strengthened its position at a time when strength was arguably already too consolidated amongst the Hollywood Majors.

The reason that the Paramount Decrees prevented studios from owning cinemas is because they wanted to ensure that moviegoers would be able to see films produced by rival studios at their local cinema. Sure, it was a different ballgame when multiplexes didn’t exist and you couldn’t watch a movie on a device that the majority of the world has in their pocket, but there is still a major question of how Alamo Drafthouses will fairly showcase movies from their rivals. Sony COO has promised that they will “continue to welcome content from all studios and distributors”, but how exactly? Will they force Warner Bros. Discovery and Universal Pictures to take fair splits? Will they give them the same amount of screen time? A lot of questions are still to be answered.

It might not seem like such a big deal since Alamo only has ~35 locations in major cities where there is a plethora of cinemas to choose from, but what happens when other acquisitions go through? What happens if Disney steps in to save AMC from bankruptcy, and chooses to only show Disney movies across the lion’s share of movie screens in the US? What if Amazon does, and we’re all forced to have Amazon Prime if we want to watch movies there?

I’m very curious to see how antitrust officials react to the Alamo Drafthouse acquisition. This deal has the potential to be a bellwether for future mergers and acquisitions in the movie space. On one hand, studios further vertically integrating by acquiring cinemas has the potential to create better products and services by removing some of the complexity around licensing and distribution. On the other hand, consolidating more control with the now four legacy studios could also put a squeeze on film industry professionals and moviegoers.

Sign Me Up for the Ride 🙌🏼

The say the least, this roller coaster hasn’t even hit its first loop-de-loop yet, but for now, I like where it’s headed. I’ll be in the front row with my hands up, and I’ll definitely also be headed to an Alamo Drafthouse whenever I make my way back the US for my next visit.

I’ve never tried to eat popcorn on a rollercoaster, but there’s a first time for everything. What could possibly go wrong? 🍿