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Champagne Cinemas Target Big Spenders

At the Everyman Cinema in London’s Hampstead, an area where celebrities such as Ricky Gervais and Ridley Scott are often seen, quiche and cocktails are replacing bucket-sized popcorn and all-you-can drink soda as some theaters aim for bigger-spending customers.

Cristal champagne, stylish décor and valet parking are some of the luxury provisions being offered by cinemas for a few dollars more. Theaters are increasingly competing with video-on- demand services such as Netflix Inc., as well as catch-up TV and a shorter delay before DVD releases. U.S. motion picture ticket sales declined 14 percent through May 1, and attendance dropped 15 percent, according to researcher Hollywood.com Box-Office.

“Film these days has to be a complete night out,” said Andrew Myers, chief executive officer for Everyman Media Ltd., which runs a chain of theaters in London and south England that offers bars, lounges, table service and plush sofas. “We have to battle hard to provide our customers with a diverse range of films and events.”

Customers are willing to pay a premium for the service. A ticket for a leather armchair at the Everyman Hampstead this week for an evening show of spy thriller “Hanna” is priced at 16 pounds ($26), according to the theater’s website. That compares with 9 pounds to see the same film at the Cineworld multiplex at London’s West India Quay.

Cinemas are also building bigger screens and spending $70,000 per auditorium to install digital equipment to show 3-D films, live concerts, plays and opera. As the industry gathers at the Cannes Film Festival this week and the summer movie season gets under way, a deal between DirecTV and some Hollywood studios for earlier DVD releases also threatens ticket sales.

Dinner at a Movie

“It’s no longer just dinner and a movie, but dinner at a movie,” said John Fithian, president of the National Association of Theater Owners, or Nato, in the U.S. “The cinema industry is trying to improve its competitive posture.”

Though global box office revenue totaled $31.6 billion last year, video-on-demand movie sales grew quickly at $3 billion, according to Richard Broughton, a senior analyst at IHS Screen Digest, a media research firm, in London. Consumer spending on DVD rentals was $13 billion while DVD retail amounted to $28 billion, he said.

“Video-on-demand has the convenience factor going for it, and more people are staying at home, especially if you have children,” he said. “Still, there is a range of technologies that haven’t yet hit the TV or computer, like 3-D.”

James Cameron

Universal Pictures, Warner Bros., Sony Corp. and Twentieth Century Fox are releasing some films in the U.S. two months after the date of their theatrical release for $29.99. Sony’s “Just Go With It,” Warner Bros.’s “Hall Pass” and Universal’s “The Adjustment Bureau” have all been released under this program, according to Nato.

The plan has been criticized by cinema owners in the U.S. as well as filmmakers including James Cameron and Peter Jackson.

In January, The Walt Disney Co. (DIS) trialed the early release of the animated film “Tangled” in Portugal through media company Zon Lusomundo, according to a Disney spokesman. The film was shown through video-on-demand six weeks after its theatrical release, at a baseline price of 24.99 euros ($35).

Disney didn’t give results of the early release, though the company made waves last year in the U.K. when some cinemas threatened to boycott Tim Burton’s “Alice in Wonderland” after Disney proposed cutting the DVD window to 12 weeks from 17 weeks. Disney eventually reached an agreement with the cinemas.

‘Gatekeepers’

“We are not the gatekeepers for film,” said Tim Richards, CEO of Vue Entertainment Ltd., which has more than 650 screens in the U.K. “All we ask is studios respect the window of four months or it could wipe out the majority of cinemas.”

Vue is converting 40 of its screens to “extreme screens,” the height of four double-decker buses, Richards said. While some Vue locations also offer champagne and reclining seats, they’ve generally proved unpopular.

“I think food service during a film is disruptive,” Richards said. “We’ve tried and customers weren’t crazy about it.” Vue has decreased the number of screens offering luxury service to about 30 from 70.

Cinemas owners say they aren’t just competing with at-home entertainment. Sporting events, live concerts and opera are all seen as threats.

“The public has never had so many leisure choices like today and arguably people have so much more pressure on their time,” said Phil Clapp, head of the Cinema Exhibitors’ Association in London. “The cinema must stay steps ahead.”

‘Fork & Screen’

In the U.S., the two biggest cinema chains, Regal Entertainment Group (RGC) and AMC Entertainment Inc. are offering premium services. AMC offers a dinner program called “Fork & Screen” at some cinemas, while Regal offers beer, wine, pizza and homemade desserts at locations under its joint venture Cinebarre LLC.

In the U.K., theater chain Cineworld Plc plans to open a boutique cinema with a bar, leather seats and three auditoriums holding 39 people each at the end of June in Cheltenham.

Everyman Cinema is seeking planning permission to build a cinema inside a former restaurant in west London.

“The cinemas who will do well in the marketplace will look at the industry with a fresh view,” CEO Myers said. “We don’t have the financial power or muscle to influence the studios’ DVD window so we have to keep evolving to attract as well as maintain loyalty.”

To contact the reporter on this story: Kristen Schweizer in London at kschweizer1@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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