FILE PHOTO: Patrons sit in a theater in Burbank, California, U.S., March 15, 2021. REUTERS/Mario Anzuoni/File Photo

By Harshita Mary Varghese and Dawn Chmielewski

(Reuters) - With a $5 million makeover, Phoenix Theatres transformed a 10-screen cinema at Cleveland's Great Northern Mall into a cinematic escape where wall-to-wall screens, thundering sound, and luxurious recliners lure movie lovers back to the big screens.

The investment appeared to pay off this summer, as moviegoers sold out upscale screenings of blockbusters like "Superman" and "Jurassic World: Rebirth."

Theater chains in North America, including AMC Entertainment, Regal Cinemas and Cinemark, invested more than $1.5 billion in the past year to upgrade auditoriums, adding larger screens, enhancing sound systems and providing other amenities, according to trade organization Cinema United.

AMC told investors last month that its upgraded auditoriums attract close to three times the occupancy of a regular theater.

"In terms of seating, picture quality and sound quality, it's got to be better than what you can get at home," said Cory Jacobson, president and owner of Phoenix Theatres.

Auditoriums with enhanced visual and video formats, such as IMAX, Dolby Cinema, and ScreenX, account for a record 14.9% of all tickets sold in the U.S. and Canada this year, up from 9.8% in 2019, according to data from research firm Comscore exclusively compiled for Reuters.

Texas-based Cinemark has invested $225 million this year to maintain and enhance its global theaters, according to Cinema United's Cinema Investment Report.

Theater owners charge an average $5 per ticket premium for these more luxurious experiences, according to EntTelligence, helping to offset the 23% decline in ticket sales since 2019.

"The box office can get back to where it was pre-pandemic, but that's really going to be driven by the higher prices and (premium large formats), versus attendance actually coming back," said Eric Wold, analyst at Texas Capital Securities, using the industry's term for upgraded auditoriums.

Although upgraded auditoriums fill up faster, and fetch higher prices, box office revenue remains well below pre-pandemic levels, suggesting recovery is ongoing. Theater owners continue to make investments as they bet on the future.

"The reinvestment that we're doing is evidence of the fact that we believe that seeing a movie on the big screen is unique and cannot be matched anywhere," said Michael O’Leary, president and CEO of Cinema United.

More than 200 screens with enhanced formats have been added globally since 2023, taking the total to nearly 6,000, Cinema United's report said, citing researcher Omdia.

EXPERIENCE OVER PRICE

Magnolia Neu said she watched the latest "Captain America" movie in the Screen X format - which projects visuals onto the side walls of the auditorium for a 270-degree viewing experience - at the luxury experience-focused Apple Cinemas in Greece, New York.

"If it weren't for the large format or premium screening, I probably would not pay money to go to the movies in the first place," Neu said.

The summer of 2025 was widely viewed as a major test for the film industry, with studios betting that a packed slate of sequels, reboots, and high-profile originals would help theaters recover revenue lost since the pandemic.

After a record-setting Memorial Day weekend, buoyed by ticket sales for the live-action remake of the animated "Lilo & Stitch" and the latest "Mission: Impossible" movie, summer box office proceeds totaled $3.67 billion, down 0.1% from the prior year, according to Comscore.

"If movie theaters were not recovering -- which they've done, pretty amazingly considering they were shut down in March of 2020 -- premium wouldn't even be on the table," said Paul Dergarabedian, Comscore senior media analyst.

(Reporting by Harshita Mary Varghese in Bengaluru; Editing by Dawn Chmielewski and Patricia Reaney)