Final Regulatory Assessment and Final Regulatory Flexibility Analysis Final Rule - Nondiscrimination on the Basis of Disability by Public Accommodations - Movie Theaters; Movie Captioning and Audio Description

This section presents data on how the current number of auditoriums operating in the United States is distributed across venue types and estimates the number of auditoriums operating into the future for the purposes of the analysis.  It also estimates the number of auditoriums with digital projection systems.  The number of auditoriums by venue type and the projection systems they use provide the foundation of the cost estimation of the final rule.

Section 3.1.1 outlines the sources used for the current estimation of total U.S. auditoriums.  Section 3.1.2 distributes those auditoriums across the different venue types, and Section 3.1.3 explains how the number of auditoriums is projected into the future.  Section 3.1.4 specifies the movie projection system used by the auditoriums in each venue type.

The cost estimation begins with the estimated number of movie theater auditoriums or screens operating in the United States as of July 2015.  Table 3-1 presents a summary of this information.  The data is provided by Deluxe Technicolor Digital Cinema and United Drive-In Theatre Owners Association (UDITOA).

As explained in Section 2.1.4, movie theaters operating in the United States are categorized by venue type.  The final rule’s scoping requirements for captioning and audio description devices vary depending on the size of the venue (i.e., the number of auditoriums exhibiting digital movies within a movie theater complex).  Therefore, the analysis first breaks down the total number of indoor movie theater auditoriums (approximately 39,338 as presented above in Table 3-1) across the various venue types.  The Motion Picture Association of America’s (MPAA) Theatrical Market Statistics – 2009 contains statistics of the 2009 breakdown of movie theater auditoriums in the United States by four venue types:

• Megaplex (16+ auditoriums);

• Multiplex (8–­15 auditoriums);

• Miniplex (2–­7 auditoriums); and

• Single-Auditorium movie theaters.

There has been no update to this distribution since the 2009 MPAA report.¹³  Recently, however, the 2014 MPAA report provided the percentage of U.S. auditoriums across different venue size categories (i.e., eight or more auditoriums and seven or fewer auditoriums).¹⁴  This section shows how the distribution of auditoriums by venue type in 2015 is derived using data from the 2009 and 2014 MPAA reports.

Table 3-2 presents the percentage of auditoriums operated in each venue type, according to the 2009 MPAA report and the 2014 MPAA report.  According to the 2009 report (first column), the number of auditoriums in Megaplex and Multiplex movie theaters (venues with 8 or more auditoriums) accounted for about 75 percent of all auditoriums in the United States in 2009.  In the 2014 MPAA report (second column), approximately 84 percent of all auditoriums are operated in venues with eight or more auditoriums, up from 75 percent in 2009.  The final, rightmost column in Table 3-2 shows the estimated current distribution of auditoriums by venue type, using the data in the 2009 and 2014 MPAA reports. 

The period of analysis in the Final RA spans 15 years.  As a result, the cost estimation requires projecting the estimated number of auditoriums by venue type into the future.  The 2014 MPAA report provides statistics on the growth rate of auditoriums by the venue size categories.  Table 3-4 shows the average annual growth by such movie theaters from 2010 to 2014.  Between 2010 and 2014, the number of auditoriums in venues with eight or more auditoriums (Megaplex and Multiplex movie theaters) grew by an average of 2 percent each year.  The number of auditoriums in venues with seven or fewer auditoriums (Miniplex and Single-Auditorium movie theaters) has steadily declined since 2010, decreasing by an average of nearly 7 percent each year.

Finally, auditoriums are categorized based on the movie projection system utilized (digital vs. analog).  According to the data presented in Section 3.1.1, approximately 98 percent of all indoor auditoriums exhibit digital movies.¹⁶  Most of the large movie theaters are operated by the largest firms in the industry (Regal, AMC, Cinemark, etc.), and these firms have already converted their auditoriums to digital projection systems.  Therefore, the Final RA assumes that all auditoriums operated in Megaplex and Multiplex movie theaters have converted to digital projection systems and are exhibiting digital movies.  All remaining auditoriums exhibiting digital movies are assumed to be distributed proportionally across Miniplex and Single-Auditorium movie theaters.  

As a result, the Final RA assumes that 90 percent of indoor auditoriums operated in Miniplex and Single-Auditorium movie theaters exhibit digital movies.  Table 3-6 shows how this percentage is applied to the number of indoor auditoriums in 2015 (Section 3.1.1) to calculate the number of auditoriums exhibiting digital movies by venue type in 2015.  All indoor auditoriums exhibiting digital movies are subject to the rulemaking, and their costs are estimated in the Final RA.  The potential costs to indoor auditoriums exhibiting analog movies exclusively¹⁷ are analyzed separately in an analysis in Section 6.3 as part of a discussion concerning regulatory alternatives the Department decided not to pursue.

Table 3-6 : Calculation of Number of Indoor Auditoriums Exhibiting Digital Movies

*Totals may differ due to rounding

All new auditoriums opening after the 18-month compliance date are assumed to exhibit digital movies.  The Final RA assumes that new auditoriums will purchase the necessary captioning and audio description equipment in the first year of operation.  Auditoriums that close during the analysis period are assumed to be proportionally distributed among auditoriums that exhibit digital movies and auditoriums that exhibit analog movies.

Figure 3-2 shows how the percentage of auditoriums exhibiting digital movies increases over the period of analysis. In 2016, approximately 98.3 percent of all auditoriums exhibit digital movies.  By 2030, the final year of the analysis, nearly all auditoriums (99.5 percent) are assumed to exhibit digital movies.  This is consistent with the industry trend as very few new movie releases are available in analog film format.