Alamo Drafthouse Creates Home-Video Option With Theaters Shut

(Bloomberg) -- Alamo Drafthouse, a theater chain that built its business on in-person niceties such as gourmet food and a bar, is trying to adapt to a stay-at-home world.

The company is rolling out a video service, Alamo On Demand, partly in response to the coronavirus. It’ll offer films like “Parasite” and “Call Me by Your Name” for home rental and purchase after they’ve finished their run in cinemas. It’ll also have older movies suggested by its cinema geeks.

The service may help Alamo replace some of the revenue lost to the coronavirus, and promote Fantastic Fest, a film festival the company typically stages in September or October.

Like other theaters, Alamo Drafthouse was forced to close its 41 locations in March because of the coronavirus pandemic. Though the Austin, Texas-based chain was already working on a streaming platform, the shutdown gave it an opportunity to complete the project. Management still isn’t sure when the chain will reopen.

“On the positive side, when the business is shut down, we can improve the underpinnings,” Executive Chairman Tim League said in an interview. “We’re going to come out, dust ourselves off and work hard to grow the business.”

The marketplace for on-demand services is already crowded, and sometimes contentious. Movie fans can buy the latest releases from Amazon.com Inc. or Apple Inc.’s iTunes. Normally, movies play for two months in theaters before they can’t be bought or rented -- a period known as the theatrical window.

Film Fight

With theaters shut down, some studios have made movies available for home viewing sooner. That’s angered some exhibitors. AMC Entertainment Holdings Inc., the largest theater chain in the U.S., vowed to stop showing movies from Universal Pictures after the division of Comcast Corp. touted the success it’s had skipping the window.

Alamo Drafthouse’s service won’t compete with the theatrical window because the movies it’s showing will be older or ones that wouldn’t play in cinemas, League said. It’s working with a company called ScreenPlus to set up the video-on-demand system.

League doesn’t think the pandemic -- or AMC’s clash with Universal -- is going no ultimately make moviegoing less attractive.

“I don’t read into the current dispute anything that’s like a massive sea change,” he said. “Going to the movies is too special. It’s going to be around.”

Alamo On Demand is intended to increase loyalty to the chain, which is a favorite of die-hard movie lovers. For example, renting and purchasing movies using the service generates credit customers can use later. Additionally, the chain intends to strike deals with some filmmakers who showed movies at Fantastic Fest but couldn’t line up distribution, in order to get their films on the platform.

The service is available now, while League and new Chief Executive Officer Shelli Taylor are working on reopening plans. Though Alamo Drafthouse is allowed to reopen in Texas, League said it has no plans to do so immediately. Executives have to retrain staff and change processes, such as wrapping up food that’s served and putting space between customers.

©2020 Bloomberg L.P.