Now showing: Theater chains turn to advertising for new revenue

— Bob Morales and his wife sat through advertisements for the Cartoon Network, the NBC show "Boomtown" and AOL Broadband.

There was a pitch for the U.S. Army, another for The Tonight Show with Jay Leno.

Morales would have accepted the promotional barrage at home in front of the television, but it annoyed him to go through it at the movie theater.

"That's why we come to a theater, so we wouldn't see advertising," said Morales, at a Regal Cinemas Theater in Pasadena for a weekend matinee of "About Schmidt."

Going to the movies always has included some advertising -- usually low-tech, slide-slow style pitches -- and the coming attractions, of course. Now, cash-strapped theater chains are looking at increasing advertising, using digital technology, as a way to boost profits beyond the sales of tickets and popcorn.

While common in Europe and elsewhere abroad, the ads are annoying lots of U.S. ticket buyers. The industry believes customers will adjust.

Some ads appear just before the previews, the period known as "lights down," and have sparked complaints that audiences are being deceived about the true start time of a movie. The published time usually indicates the beginning of the whole program, including coming attractions, pitches for the concession stand and some paid advertising.


AP Photo

Theater worker Mike Raysh, right, looks at ads on a plasma screen as he and his co-workers, Sky Li, left, and Blake Pereira, center, wait for customers to arrive at the Edwards Grand Palace Stadium 6 theater in Calabasas, Calif. Regal Entertainment Group, created from the consolidation of three movie theater chains, formed a new division to create a nationwide digital network that can be used to beam ads, to be shown in 20-minute blocks before the start of a film, to theater screens, as well as flat-panel screens in theater lobbies, as seen here.

In the past year, theaters have been installing national digital networks and small digital projectors so they can show short films and national ads before the lights dim, replacing the decades-old slides for local businesses, trivia questions and scrambled movie-star name games.

The film-screen ad industry grew 20 percent last year and is projected to grow by 30 percent this year, said Matthew Kearney, president of the Cinema Advertising Council, a group formed to promote in-theater ads.

Regal says its internal surveys show that patrons react well to the pre-show ads and that acceptance is growing week by week.

The theater industry has recovered from its woes of the late 1990s, when a glut of screens and the debts from building state-of-the-art movie houses forced 12 chains into bankruptcy. Last year was the best box-office year since 1957, success that's expected to continue with the release of likely blockbusters this year including two "Matrix" sequels, "Terminator 3" and the last installment in the "Lord of the Rings" trilogy.

But profit margins remain slim. Theater owners are offering theaters for corporate meetings and pay-per-view events, and selling those commercials.

"Finding other ways to supplement that revenue base so we can keep ticket prices affordable is an important part of the business plan of our members," said John Fithian, president of the National Association of Theater Owners.


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