Movie Theaters' Latest Gamble: Ads Mixed in With Trailers

Movie Theater Curtains - H - 2019

Regal and Cinemark have signed on — but AMC won't — for a potentially controversial bet to air commercials post-showtime.

In the biggest disruption to in-theater advertising in nearly two decades, regular commercials will run for five minutes after the lights go off and before the trailers at two of the country's largest circuits, Regal Cinemas and Cinemark Theatres. And one 60-second "platinum" spot from a top-tier brand will roll before the second-to-last or last trailer.

National CineMedia's potentially controversial bet, unveiled Sept. 17, has sparked concern among Hollywood studios, which are under pressure to keep consumers interested in the theatrical experience. Execs say they want to see how the format works before speaking publicly.

Since launching its in-theater preshow in 2003, NCM's commercials have been relegated to airing 20 minutes to 25 minutes before the official showtime, when the lights are still on and moviegoers are getting settled in their seats.

With the advent of reserved seating, some advertisers worry that their spots aren't reaching the intended audience, though NCM's ad revenue has generally been on the rise (in 2018, it was $441 million, up 12 percent from 2014).

NCM CEO Tom Lesinski assured investors that theaters in much of the rest of the world have mixed ads in with trailers for years — that includes mega European chain Cineworld, Regal's parent company— with no significant consumer backlash. He said the new offering in the U.S. will be readily embraced by advertisers.

“I think in the world where it’s very hard to find consumers and to prove that they really watch the inventory, when the lights go out in a movie theater and the phones are gone, it’s one of the few places where you literally have to see an ad,” Lesinski said, adding that “our typical audience is only 31 years old compared to broadcast television, which is 57, and cable, which is 48 years old.”

But the country's biggest U.S. chain, AMC Theatres, took immediate umbrage in a tersely worded news release refuting it was in talks with NCM to join the new initiative (AMC already has the longest trailer block of any circuit, or 20 minutes on average). The company took particular issue with the idea of a platinum spot being sandwiched between the final trailers.

"What is rue is that in April of this year, NCM proposed this concept to AMC of commencing a platinum advertising program during the end of trailer play, which AMC flatly rejected at the time because of concerns that U.S. moviegoers would react quite negatively to the concept,” the company said in its release, issued hours after NCM touted the new plan to Wall Street.

Lesinski noted that NCM's new initiative will roll out amid a year-end schedule that includes such high-profile tentpoles as Frozen 2, Star Wars: The Rise of Skywalker and Jumanji: The Next Level.

And while Cinemark declined comment, sources say the circuit will likely move one trailer to pre-showtime, off-setting the additional six minutes of ads that will air after the theater goes dark. As of now, Cinemark generally shows 15 minutes worth of trailers before the actual movie begins. Regal's trailer block generally runs 15 minutes to 20 minutes, depending upon the location.

Cinemark and Regal, as well as other participating cinemas, will get a 25 percent cut of the platinum spot, plus an an increased fee per patron from NCM.