Can Movie Theaters Survive? It’s the Most Enduring Question in Hollywood

The exhibition end of the motion picture business — where moviegoers go when they leave their domiciles and travel thorough geographical space for a communal, in-person experience before a big screen — is in trouble. Again.

Whether at the repertory house or the multiplex, box office has not yet rebounded from the one-two punch of COVID-19 and Roku. The first virus has lifted but the second seems to have converted a huge slice of a once-loyal demo to the homebody comforts of digital streaming. At times last year, domestic revenue was down 40 percent from pre-pandemic 2019. Among motion picture exhibitors, there is a gnawing sense that the defection may be permanent, that the full houses and packed concession stands of the world before March 2020 may never be seen again at the same levels.

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By way of perspective and maybe solace, it is worth remembering that the present emergency is not the first time that exhibitors have been beset by a sickening plague and a hot new media rival. In the nadir of the Great Depression, a flatlined economy and the siren call of radio had audiences deserting theaters in droves. It was the movie house version of a bank run, only the customers were running away from the venues.

Of course, the economic catastrophe of the Great Depression was the main cause of the rush to the exists, a prolonged convalescence for which not even FDR could fast-track a vaccine. Twenty-five percent unemployment, no safety net, widespread hunger and hopelessness — a soul-crushing trauma that scarred the psyche of the greatest generation more than World War II. (“The Great Depression ruled our home,” a fellow baby boomer once remarked to me.)

For Hollywood, the swiftness of the descent into hard times proved especially wrenching. Since the days of the nickelodeon, the motion picture industry had considered itself immune from the normal cycles of boom and bust. When the crash hit, it was left cold-cocked by what industry veterans called “its first real churning in the economic maelstrom.”

From a jazz age high of more than 100 million loyal moviegoers a week in a population of roughly 120 million, Variety estimated in 1931 that average theater attendance had plunged to 65 million by 1931, a drop of 40 percent. That made it “the worst year financially in the history of pictures,” but only until 1932, which then took the title for “the industry’s sickest year.” 1933? All that could be seen was a box office landscape of “Stygian blackness.” The decline was precipitous, steady and seemingly irreversible. The Great Depression, lamented an exhibitor, had left most theaters in the United States “places where tickets were mostly kept not sold.”

THE BOWERY, marquee at the Rivoli theater in Time Square, New York city, 1933.
The marquee at the Rivoli theater in Times Square, New York City, 1933.

The macroeconomic catastrophe inflicted the most crippling blow, but an entertainment medium that required no paid admission provided an alternative readily at hand. Radio had formally arrived on the American scene in 1920, with broadcasts of the election victory of Warren Harding. Though still very much a luxury item for most of the jazz age, the mushrooming presence of the new-fangled furniture caused immediate concern among exhibitors. As early as 1924, they sought reassurance that the living room rival was no imminent threat. “The public cannot be kept privately at home by the radio or by anything else,” asserted Exhibitors Herald, telling readers what they wanted to hear. “Human beings insist upon gathering together, going places where they will meet other human beings and where they may join in a common entertainment objective.” The need for community would never be satisfied by cocooning at home.

Nonetheless, Hollywood heard the rumblings on the horizon. Sam Warner, the most tech-wise and farsighted of the four Warner brothers, understood that the movies would need to incorporate sound rather than ignore it. The blockbuster success of The Jazz Singer (Oct. 6, 1927) and especially The Singing Fool (Sept. 19, 1928) suggested that singing and speaking onscreen would easily outperform a noisy box with no pictures.

Radio, however, soon reached the tipping point for what media scholars call penetration — the mysterious moment when a mass communications technology truly enters the bloodstream of a culture. Depending on your druthers, the arrival can be measured in hard statistics or cultural conversation. In 1929, what everyone was talking about was The Amos ‘n’ Andy Show, on the air weeknights at 7 p.m., the first appointment software in broadcasting history and the best reason to purchase the requisite hardware. In 1930, the “lowest-priced high quality” version of the name brand RCA Radiola would set you back $112.50, serious money (roughly $2,000 in today’s dollars), but for $5 down you could walk away with it. In 1931, NBC president Merlin H. Aylesworth estimated that Americans owned some 15 million radio sets, serving some 50 million listeners. Rather than sitting “spellbound in darkness” before the big screen, audiences were staying home with their ears “glued to the set,” as the newly coined expression had it.

Reliable metrics about how big a chunk of the motion picture audience radio was siphoning off were hard to come by. As late as 1936, the Motion Picture Producers and Distributors of America claimed that the surveys it commissioned had proven “inconclusive in determining whether or not box office takes are injured directly by competition from radio programs,” but savvy exhibitors figured the moneymen just didn’t want to deliver the bad news. They could scan the house and tell on a nightly basis that a hit radio show (called a “keeper-inner” or a “keeper-at-homer”) depleted the crowds. On a Sunday afternoon in 1932, an enterprising trade reporter walked down the hallways of his apartment building and listened at his neighbors’ doors. Behind every door, he heard the music from conductor Arturo Toscanini’s two-hour concert series with the New York Philharmonic.

Outside the Olympia Theater in Boston, Massachusetts advertising EAST LYNNE, 1931
Outside the Olympia Theater in Boston, Massachusetts, 1931.

To unglue the ears of listeners, exhibitors responded with an array of desperate countermeasures.  Prices were lowered, double bills were programmed and hucksterism abounded. In many locales, a moviegoer might see two features, a cartoon and a newsreel for one thin dime. At those prices, many theater managers could not make their “nut” (the break-even point for operating costs) and were forced to shutter the venues permanently.  The number of theaters in operation declined from 22,000 in 1930 to 15,000 in 1933.

Giveaways, gimmicks and novelty come-ons of all sorts proliferated. If the marquee could not lure customers, then perhaps they would be seduced by lotteries (“bank nights”), (“screeno,” a game resembling Keno, only with the numbers called off from the screen), passes to football games, Thanksgiving turkeys, roller skates, dishes and cutlery. An art house in New York offered free cigarettes and coffee. “The way things look like right now, the management will run out of things to give away after a while and may be forced to give away the theaters,” said Variety. Theaters also teamed up with hard-pressed local merchants, who gave away movie tickets with the purchase of groceries or gasoline.

A sense of what exhibitors, not the mention average Americans, were up against can be gleaned from a comment by mini media mogul L.B. Wilson, who spoke with unique authority: He was both the owner of WCKY radio in Covington, Kentucky, and the manager of all four of the local theaters. “Hard times have added millions of persons to the radio audience, while taking millions from the theater audience,” Wilson said in 1933. “You can get Eddie Cantor on the air for nothing. It costs you 50 cents or more to see him at the theater. You may need the 50 cents for food or clothing.” He was not exaggerating. Families everywhere were counting pennies to pay for the bare necessities.

Exhibitors also scrounged for extra income. One of the few bright spots in the bleak season was the discovery of a snack with a huge profit margin that first became widely popular in the South and then spread northward: popcorn, the thirst-inducing kernels that lead to the sale of beverages. Income accrued at the concession stand, which traditionally belonged exclusively to the exhibitor (a guy named George Lucas changed that), made the difference between solvency and bankruptcy for many theaters.

Off-limits, however, was an obvious way for exhibitors to generate revenue — by selling screen space for paid advertisements. Audiences were willing to endure commercials on the radio but despised being bombarded by ads after paying admission. They booed, hissed and catcalled. “Screen advertising may be a source of revenue to the theater, but it is a dangerous one,” Fox Film told its managers in 1931. “Cheap screen advertising” offended theater patrons, who will “wisely choose to voice their disapproval by staying away from your theater.“ The ad-phobia extended to product placements — hence the hegemony of the monopolistic Acme Company in lieu of authentic brand names. Not until the 1980s would more bovine generations of moviegoers sit still for screen ads both before and inside of the featured attraction.

RKO Palace theater, 1936
RKO Palace Theatre in New York City, 1936.

Gradually, with anguishing slowness, the lost audience came back to the theater. New Deal relief and make-work programs provided something of a cushion for many destitute Americans who might now treat themselves to a small indulgence. Recognizing how essential movies were to American well-being, some government programs even handed out movie tickets. Radio fans learned to stagger their schedules around favorite programs and found they could partake of two kinds of entertainment without snubbing either one. 

In the last half of 1934, glimmers of daylight peaked through the stygian blackness and, in 1935, the downward trajectory began to reverse itself and tick upward. By the next year, exhibitors dared to hope that the worst was forever behind them. “Pictures came out of a slough of despond in 1936 and with open terrain ahead began to run as though they couldn’t be stopped by a Kansas cyclone,” enthused a year-end wrap-up in Variety.

The remainder of the 1930s tracked a rising graph of prosperity that, during the war years, shot off the charts. Homefront Americans, loaded with discretionary income for the first time since 1929 and with no consumer goods or flank steaks to spend it on, flocked to the movies as if radio never existed. The postwar horizon looked even more promising. In 1946, Hollywood was flush and fat, at the height of its powers as an art and an industry with 90 million moviegoers a week filling the theaters.

Only a few Cassandras in the exhibit end of the business worried about the competition from another newly available broadcasting medium.

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