The movie theater business offers insights as to how firms can find new opportunities for turning around dying businesses by understanding consumers and their needs better. For movie theaters in the US and Western Europe, viewership peaked in the late 1940s and has since slid by 80% or more, depending on the market. Television made the initial dent, followed by home videos, and most recently the likes of Netflix and Amazon Prime. A common thread that ties all the competition together is the television set. Given this, movie theaters have recently built on their offering to give movie viewers an experience that cannot be replicated on TV at home.

First came the big screen theaters and sophisticated sound systems, which create a more immersive experience. Technology has provided THX, IMAX, and 3D experiences, experiences that cannot yet be matched on home systems. Some theaters today are offering a 4D experience! At these movie theaters the seats respond to what one is watching on the screen with piped in smells, smoke, and even water sprays!

But, technology is just the beginning. Movie theaters are doing much more to bring back the crowds, and they are succeeding. Recently, my wife and I went for a movie at a theater that offered a dramatically different experience. On arrival at the theater, we were ushered to a table in a thoughtfully lit space laid out with tables just like one might expect at a nice bistro. We were brought a menu that offered treats that were more bistro-like, going way beyond the basic fare of “Coca Cola and popcorn” that has been the mainstay of the snacks and theater revenues. The menu offered the opportunity to have our own bottle of chilled Moet et Chandon champagne, canapes, a cheese platter, burgers, and much more.

We ordered champagne and canapés and were served at our table with the champagne chilling in a bucket of ice. When it was time for the movie we were escorted to our seats inside the theater which was next door. And what a seat it was; they made business class seats on most airlines seem basic an they offered an almost-private viewing experience. Reclining in our plush seats side by side, with our own blankets and pillows, we soon had someone bring the champagne and canapés from the table outside to our theater seat-side.

Sipping on champagne and nibbling canapés, ensconced in a super comfortable seat, and watching a movie together was special. We enjoyed it thoroughly and, importantly, look forward to doing it again! Perhaps not every time we watch a movie, but certainly from time to time, as an evening out on town!

So, what are the lessons here? First, the movie theater industry appears to be segmenting the market and developing targeted offerings. For certain audiences and movie genres, the 4D experience makes a real difference. Think teenagers and young adults at an action or horror movie. For, other audiences, for instance, couples, the opportunity to enjoy a movie accompanied by one’s favorite beverages and finger foods might be a real draw.

Second, in developing the targeted offerings, the theater business is considering the target consumers’ consumption experience. It’s not just the movie and its ability to draw, or the screen size, or the sound, or…, which has been the consideration for decades, but the total in-theater experience.

Third, the benefits combination offered is distinct and, importantly, coherent. The technology (e.g., IMAX and THX) and creature comforts (e.g., seats) are significantly superior. There are entirely new benefits, never previously offered in movie theaters (e.g., 3D, 4D, fine foods, wine and champagne, blankets, pillows). And, earlier mainstay items like popcorn have been eliminated! To create an authentic experience one needs to keep in mind what goes together, offering superior and new benefits on the one hand and balancing it with the reduction or elimination of other and often conflicting benefits. In this case dining while watching a movie and popcorn do not go together, and the movie theater has wisely removed popcorn from its menu!

Last but not least, it’s not focused on technology.  It’s looking around and combining experiential aspects from different industries–restaurants and airlines, to name two, to offer a completely new experience.  If you haven’t been to a movie theater recently to take in a movie, go check it out. You might be in for a very pleasant surprise!