Alamo Drafthouse Remains Bullish on Moviegoing Amid Expansions

Alamo Drafthouse
Alamo Drafthouse / Zane Roessell

“Wish us luck on opening a new video store in 2019.”

That’s Alamo Drafthouse Cinema CEO Tim League talking, and he’s only half joking about the seemingly contrarian gambit playing out at the newest outpost of his company’s chain of drink-in-seat movie theaters. Alamo Drafthouse Cinema opened in Los Angeles earlier this month with 12 screens, a bar, a display of vintage posters from League’s personal collection, and the so-called “Video Vortex,” stocked with 45,000 videocassettes that patrons can borrow at no cost.

Asked how he expects to make a profit by lending customers free videos, League tells Fortune, “I still think it’s a capitalist move. We’ve already … got the box office staff, the air conditioning, the utilities, so it’s not that much more of a cost for us. We look at the free video rental as a unique facet of this particular movie theater that you’re not going to get anywhere else. And it’s also a community service move. I’ve been told that on Netflix, there are fewer than 400 movies before the year 1980, whereas we have 42,000 titles before 1980.”

“Video Vortex” exemplifies the type of one-thing-leads-to-another thinking that has transformed Alamo from a mom-and-pop single-screen operation into a multi-business film geek culture machine. Alamo enterprises include Mondo, which produces vinyl soundtracks and collectible “tribute” posters honoring classic sci-fi movies; the Neon distribution company; Mondo Games, which co-produces Jurassic Park-themed video games; Fantastic Fest, the annual Austin film festival co-founded by League that specializes in horror, sci-fi and fantasy genres; and the nonprofit American Genre Film Archive.

“For movie lovers by movie lovers—that’s the crux of everything that we do,” League explains. “All the businesses are tied into that idea, which is why they work so well together. For us, it’s all about building a community around like-minded people who are passionate about movies.”

Alamo Drafthouse Video Vortex
Patrons can borrow video cassettes at no cost from Alamo Drafthouse’s Video Vortex. (Alamo Drafthouse / Zane Roessell)
Alamo Drafthouse / Zane Roessell

Hardcore genre fans have been buying into that mission ever since 1997, when League and his wife Karrie opened up their first beer-serving movie theater in Austin. The company now operates venues in 38 markets nationwide but until this month, Alamo had never staked a claim in Los Angeles.

The movie-making capital of the world already hosts plenty of venues devoted to specialty fare including New Beverly Cinema, Landmark Theatre, American Cinematheque at the Egyptian Theatre, Sundance Cinema, and two locally owned Laemelle theaters along with two iPic Entertainment dine-in theaters. But League believes there’s plenty of room for Alamo in downtown L.A. “I don’t necessarily think Los Angeles is a crowded market,” he says. “It’s really more of an assemblage of towns all jammed up next to each other, so the way we look at it, we’re a neighborhood theater for the downtown community.”

Still, the very notion of opening new movie theaters anywhere in 2019 challenges this summer’s conventional wisdom predicting a grim future, in the face of Netflix-dominated streaming competition, for theatrically released features that fall outside the blockbuster franchise wheelhouse.

Anxious Hollywood execs point to this summer’s Booksmart and Late Night as examples of mid-budget pictures that under-performed at the box office despite critical acclaim. League says he’s not worried.

“There probably is a little bit of a tip [downward] in the number of days that your average human being goes out for entertainment as opposed to staying at home watching streaming programs on their laptops, but the sky is definitely not falling.”

League does not see Netflix as the enemy. “In fact, I care deeply about documentary films and last year, four documentaries grossed more than $10 million, which has never happened before in the history of films. I credit Netflix, because they’ve built an audience for documentary films, and guess what? That audience wants to get out of the house sometimes and experience documentary films in cinema.”

Alamo’s continued ability to draw a movie-going crowd relies in part on its fan-friendly promotional prowess. “Of course what happens on screen at Alamo Draft House is important, but what happens off-screen is just as important,” says Alamo Drafthouse Cinema Los Angeles marketing chief Anam Syed. “There’s a lot of ways we plug into that.”

Working alongside programming head Rachel Walker, fresh off her stint as a Comic-Con events coordinator, Syed and her team stage events including social sing-along movie parties celebrating kitschy cult classics, Terror Tuesdays featuring vintage scary movies, the Anime Wednesdays series, 35 millimeter screenings of movies like Once Upon a Time in Hollywood, and filmmaker Q and A sessions.

And while movie talent meet-and-greets are fairly common within the industry-intensive confines of Los Angeles, it’s a safe bet that no other L.A. theater offers “Afternoon Tea.” “That’s one of my favorites,” Syed enthuses. “It comes with a little prix fixe menu where you get three rounds of tea and a few snacks from servers dressed up in period costumes that go with a theme, like Marie Antoinette. Our space is designed to be a meeting place where people can talk about film and share a social experience.”

For two decades, jaunty promotions and fanboy-friendly satellite projects bolstered Alamo’s reputation as a trusted purveyor of cool, but the brand took a hit in 2017 when several women lodged sexual assault complaints against Devin Faraci, the editor of Alamo-owned film site Birth.Movies.Death. The scandal prompted League to shake things up.

“We had to hold up a mirror to ourselves and to this organization we’d built from the ground up,” he says. Among the reforms, League says, “We set up this cool anonymous feedback engine where anybody in the company can provide me feedback directly. We also doubled down on sexual harassment training and created a code of conduct for all our staff, our vendors, and our customers, which is basically, a no-jerks policy about just treating people better. It was a very humbling experience but valuable to go through. At this point I feel the company’s more mature and our culture is better.”

Incorporating #metoo lessons, the newly sensitized Alamo plans to complement its fledgling Los Angeles operation with a 12-screen Alamo Drafthouse Cinema in Manhattan’s Financial District (at 28 Liberty tower), tentatively set to open within the next few months.

For League, the New York City venue represents one more opportunity to make money while championing the cause of underdog cinema. “Being on the distribution side of things with Draft House Films and now Neon, I’m keenly aware of the challenges involved in releasing small independent films,” League said. “Their performance in L.A. and New York sets up their success for the whole country. That’s an obligation I take very seriously. In L.A., we built 12 theaters—big screens but small seat counts—so we can support independent films. One of the things that makes me happiest as a moviegoer is that sense of discovery when you find a new voice that blows your mind with something you’ve never seen before.”

More must-read stories from Fortune:

—Inside Danny Trejo’s journey from ex-con character actor to taco mogul

Woodstock 50 lives on for now. But here’s how it all unraveled

Once Upon a Time in Hollywood debut overperforms—but can its spell last?

—Amazon’s TV bosses want to remind you (again) why they’re not Netflix

—Listen to our new audio briefing, Fortune 500 Daily

Follow Fortune on Flipboard to stay up-to-date on the latest news and analysis.

Subscribe to Well Adjusted, our newsletter full of simple strategies to work smarter and live better, from the Fortune Well team. Sign up today.