David vs. Goliath Battle Continues

IPic seating

In the continuing battle of big vs. small the David-sized cinema circuit IPic has sued the Goliath chains AMC and Regal as the legal wrangling over anti-competitive practices by the large circuits shows no let-up.

This past Tuesday, IPic Gold Class Entertainment (a high-end cinema chain with 12 luxury cinemas in various cities throughout the U.S.) sued both Regal Entertainment and AMC Entertainment (the U.S.'s #1 and #2 largest chains) alleging that both of these large circuits are using their "market power" to "squeeze out" IPic's new cinema in Houston and one planned to open in Dallas, Texas.

IPic food offerings

The IPic suit claims that Regal and AMC informed the major studios that any film they licensed to IPic theaters in Texas would not be screened at any of their theaters located in that area. Because of this illegal boycott, IPic's new Houston cinema has been unable to screen first-run movies such as 'The Martian', 'Bridge of spies', or 'Steve Jobs'.

CMG has written about so-called 'clearances' (the practice of shutting out smaller competitors from obtaining first-run films) which stifles competition.  IPic maintains that its cinemas do not compete with  AMC or Regal  because they are so much smaller, sell higher-priced tickets, and offer premium services such as luxury dining and alcohol beverage services.  IPic is seeking an injunction to remove the clearance practice.

In a statement, AMC noted, "Allocated film zones are a long-standing and well established industry practice and has a demonstrated benefit to all stakeholders, moviegoers, studios, and exhibitors."
Hmmm .... How so, AMC?  Regal had no comment regarding the IPic lawsuit.

IPic's lawsuit is the latest in a series of legal actions against the large U.S. chains.  Last year, Cobb Theaters sued AMC accusing it of having "monopoly power" to block Cobb from screening films at its upscale cinema in Atlanta, Ga.  That case is currently proceeding through the courts.

As previously reported in CMG, last summer, the U.S. Department of Justice began an extensive probe of Regal, AMC, and Cinemark (the U.S.'s #3 largest circuit) regarding anti-competitive practices and if they have violated federal antitrust laws - that investigation is now on-going. CMG will keep you informed as to the on-going DOJ probe.

It is fair to say that the large circuits, which don't really offer luxury viewer accommodations like the smaller chains are running scared.  Operating larger multiplexes is no longer the best strategy for cinema operators - it's just too much brick-and-mortar and too staff-heavy to support itself.  The cinema exhibition industry is moving toward fewer screens but of exceptional viewing comfort and quality - in presentation, seating, and concession.  Which leaves the large circuits in a bad position.