Decree-Free and Loving It: Sony's Bold Move with Alamo Drafthouse
The only major studio that didn't launch a streaming service makes a play in theaters
In a groundbreaking move, Sony Pictures Entertainment has acquired Alamo Drafthouse Cinema, marking the first time a major Hollywood studio has owned a movie theater chain since the Paramount Consent Decrees were rescinded in 2020. This deal could signify a major shift in the movie theater industry and raises questions about the future of exhibition in an era of streaming dominance.
The Paramount Consent Decrees, which arose from a 1948 U.S. Supreme Court ruling, prohibited film distributors from owning exhibition companies to prevent anti-competitive practices. For over 70 years, this decree kept Hollywood studios out of the theater business (for more, see here). However, in 2018, the DOJ began the process of terminating the decree, citing the significant changes to the industry and new streaming entrants as the reasons why the risk of a return to the monopolistic "studio system" was low. The decree was officially lifted in 2020, paving the way for Sony's acquisition of Alamo Drafthouse.
Under the deal, Alamo Drafthouse will continue to operate its 35 locations under the same brand but within a new division called Sony Pictures Experiences. This is a clear signal from Sony of the importance of getting closer to its customers and leaning into experiential offerings. A similar move has been seen from Netflix with the Stranger Things Experience partnership with Fever.
Ravi Ahuja, president and chief operating officer of Sony Pictures Entertainment, said, "We believe strongly in engaging entertainment fans outside the home in fun and distinctive ways, as seen most recently with our Wheel of Fortune LIVE! traveling tour and the opening of Wonderverse in Chicago. Alamo Drafthouse's differentiated moviegoing experience, admired brand, and devoted community fit well with this vision. Our Crunchyroll business also aligns well with their audience's interests. We look forward to building upon the innovations that have made Alamo Drafthouse successful and will, of course, continue to welcome content from all studios and distributors."
Interestingly, Sony was the only major studio not to launch its own streaming platform, the last industry attempt to get closer to consumers (until they all realized that acquiring and retaining customers is much more difficult and expensive than they believed). It could be that they have decided that Alamo is a cheaper and more effective way of reaching customers, providing opportunities for real-world experiential interaction instead of fighting on the bloody battlefield of in-home streaming.
Native streamers have also entered the cinema purchasing game, albeit on a much more selective basis and for different reasons—award show consideration. Netflix purchased the Egyptian Theatre in Los Angeles and the Paris Theater in New York to showcase their films on the big screen and qualify them for awards consideration. Similarly, Amazon acquired the former ArcLight location in Culver City, Los Angeles, for the same purpose.
Sony's acquisition of Alamo Drafthouse Cinema represents a significant shift in the movie theater industry, as major studios once again venture into the realm of exhibition. This move not only provides a lifeline to the struggling Alamo Drafthouse chain, which filed for bankruptcy during the COVID-19 pandemic, but also reflects Sony's strategic focus on experiential offerings and customer engagement. As the lines between production, distribution, and exhibition continue to blur, Sony's decision to invest in a unique, experience-driven cinema chain could prove to be a savvy alternative to the highly competitive streaming market. It remains to be seen how this acquisition will impact the industry as a whole, but it undoubtedly marks the beginning of a new chapter in the ever-evolving world of entertainment.