🦸🏼‍♀️ saving cinema

🪆 Boswell > Barbie

A lot of ink has been spilled recently about bad behaviour in movie theatres - people on their phones, taking pictures, and talking during films. But the worst behaviour right now comes from the largest cinema chain continuing to bully independent theatres that need fair access to film.

Earlier this summer, boosted by the meme cycle that paired the film with its tonal opposite Oppenheimer, the Barbie movie crossed the threshold of a billion dollars in global box office just over two weeks after its release. The twin release made July 2023 one of the best months for Canadian cinemas ever, bringing in a record $86 million in net box office revenues for Canada’s largest theatre chain Cineplex. But independent cinemas like the Fox Theatre in Toronto, the Plaza in Calgary, and the Rio Theatre in Vancouver are still shut out of filling that demand and sharing in the revenue from the smash hit due to restrictions imposed by the giants of the movie business.

The reason? Gatekeeping-like control by major distributors and exhibitors that limits showings to Canada’s largest theatre chains for months before independent cinemas can offer competition for the sold out shows across the country - if they ever get access at all. This is partially a result of the Canadian industry practice of zoning, preventing independent cinemas near chains like Cineplex, Landmark, and Guzzo from screening films until the chains have had a full run. Unwritten and arbitrary geographic limitations, coupled with distribution exclusives, disadvantage independent and upstart players and tilt cinema’s declining marketplace in favour of the largest player. It’s a made-in-Canada case study of Cory Doctorow and Rebecca Giblin’s “Chokepoint Capitalism,” and policy people *still* aren’t doing anything about it.  

Here are some examples of independent cinemas in Canada acknowledging this delay:

This arbitrary throttling of access to film doesn’t happen with books or records - they are generally available for purchase at the largest retailers *and* independent ones at the same time, letting the customer choose where to purchase. Cinema is different due to the scarcity of screens overall (cinema’s comparative ‘shelf’ is naturally more constrained). The largest difference is how film distributors privilege Canada’s largest movie theatre, Cineplex, typically allowing the chain to show films first and granting exclusivity for a certain time period - sometimes forever. The equivalent would be Penguin Randomhouse only letting Chapters sell a book for months before your fave indie bookseller could offer it OR if certain labels only played songs on certain radio stations; which would be weird. For smaller distributors the choice is a difficult one. Without preferencing Cineplex, the chain may reject a film altogether meaning a distributor loses access to 75% of screens in the country.

When it comes to other mediums where we consume culture, like television, radio, books, and most recently, streaming, Canadian policy makers explicitly prioritise the distribution of Canadian content where they can through concrete legislative obligations. When it comes to cinema, the state could do more to ensure that independent cinemas are able to choose what films to screen and when; as they are similarly a channel for culture, Canadian or otherwise. Achieving autonomy in film selection is important, as the revenue from successful blockbusters can offset the investment of screening smaller/niche films that may have a more limited audience but deserve the opportunity to be enjoyed live ahead of the option to be viewed on-demand through a streaming service.

Cineplex’s dominance of the Canadian cinematic landscape is leading to other lousy outcomes, like lazy projecting and supply of buttered stuff. A lack of competition compromises quality, and the quality of projection from Cineplex has generally been poor. For the 70mm of Oppenheimer, the firm flew in projectionists from LA, apparently to avoid the projectionist union in Toronto.

Cineplex also has the power to set the landscape for movie suppliers (like food vendors). So when the firm Wallace & Carey runs out of popping oil bibs (to make popcorn), there’s no longer a diverse marketplace to support shortages.

Still, patronising the cinema (even Cineplexes!) in favour or ahead of streaming options is becoming especially relevant during the twin strikes by Hollywood writers and actors, who are currently protesting the potential of their talent to be replicated through artificial intelligence, low and opaque payouts from streaming services, and other issues threatening the future of a livable wage in the creative industry. Compared to streaming a film at home, watching a film at the cinema is a vote for the artistry and work of an entire sector, generating concrete returns that can flow back to the professionals that made it possible.  

Regulators are thinking about Cineplex, but seem to be overlooking how they push around  their smaller competitors. The firm is currently being sued by the Competition Bureau regarding their arbitrary $1.50 'convenience fee’ charged when someone purchases their own movie ticket online. It may be that this is an instance of ‘drip pricing,’ which was outlawed in 2022 amendments to the Competition Act. It may also be that the fee is a ‘junk fee,’ masquerading as a necessary premium to offset the digital architecture of selecting your seat online. For a movie buff that sees one flick per week, that adds up to $225 in fake fees annually. While the federal government pledged to look at junk fees earlier this year, it remains to be seen what if any action has actually been taken. Regardless of its potential necessity, the prospect of reducing that fee is an incentive that Cineplex uses to push customers to participate in their SCENE+ loyalty program (SCENE members pay $1.00 for this, and CineClub members pay $9.99/mo), which is jointly owned with Empire Company (a grocer) and Scotiabank (a bank). 

Any formal examination of Cineplex’s potential abuse(s) of its market power will start with defining the relevant marketplace within which it operates. It would be in the interest of Cineplex to cast that net as widely as possible, including streaming companies (infinite screens!) and other on-demand viewing opportunities like DVDs - even other sources of entertainment like live theatre and concerts. In contrast, it is in independent cinema’s interest to confine the relevant marketplace as being more narrow and limited to live cinema itself.

This benchmark of the relevant marketplace and how it is manipulated by firms means it would be more fruitful for regulators to focus instead on firm behaviour - specifically outlawing anti-competitive behaviour such as gatekeeping and exclusive dealing - without getting lost in the esoteric act of muddling through marketplace definitions. 

Gatekeeping and junk fees aside, there is speculation that the enthusiasm for “Barbie” and “Oppenheimer” could ‘save’ the cinema. The ‘hero’ arc is all-too-familiar: the story of a ~conquering champion.~ When it comes to Canadian cinema, we need to be clear about which dragon needs to be slayed to save the kingdom (and other cliches). The ability to access film cannot be overlooked.

Even in a streaming world, independent cinemas continue to play a role in Canada’s media landscape, and commercial practices that prevent them from competing fairly should be stopped to allow these businesses the best possible chance to thrive.

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📻 For more on Cineplex and Canada, listen to this episode of Canadaland from earlier this year.

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The co-author of this post, Keldon Bester, runs the Canadian Anti-Monopoly Project (“CAMP”) is a think tank dedicated to addressing the issues caused by monopoly power in Canada. CAMP produces research and advocates for policy to make Canada’s economy more free, fair, and democratic.

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