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#DigitalSkeptic: Tiny, Independent Charlevoix Cinema III Has Film Industry Cure

Stocks in this article: DIS, NFLX

NEW YORK (TheStreet) -- Mary Kurtz knows the sad ending if Netflix can ever release big movies the same day theaters do.

"I rent from Netflix all the time, but if they can get in and get movies ahead of everyone else," said Kurtz, co-owner of Charlevoix, Mich.-based Cinema III, a roughly 420-seat, resort town commercial movie house. "It will be bad for the film business."

Kurtz and I have been picking through the heap of new-media trash talk piling up on theater owners. "The big, big movies that Hollywood spends billions on are pretty much released the same way they were years ago," said Ted Sarandos, chief content officer at Netflix, back in October. "Premium on-demand models that could change that have been tried over and over again. But it's the theater owners who have stifled that innovation at every turn."

Kurtz is polite, but as she explains it, that Web-above-all attitude misses the business point: "If Netflix gets the movies at the same time we do, I think you are going to see both a lot of theaters close and a lot of studios make less money."

Investors would be inviting a flop of simply Mars Needs Moms scale if it dismisses Kurtz as out-of-touch theater owner refusing to adapt to the Information Age consumer. In fact, the articulate 25-year-old got her accounting degree online while working full time as a commercial credit officer at Charlevoix State Bank -- where she started when she was 15. Her husband, Luther, the other owner of the theater, is also co-owner of Bucket List Skydiving, a sophisticated adventure experience firm that manages roughly 30,000 jumps annually in eight locations across the U.S.

And a celluloid dreamer Mary Kurtz is not: Though she grew up in Charlevoix and knew the original Cinema III as a girl, she not only never dreamt of owning the place, she never even dreamt of going to the place.

"I never came to this theater as a child. I never liked it. I got into this business because the theater went into foreclosure and my former boss at the bank joked with me that maybe I should manage it," she said. "And the more my husband and I looked at it, the more we felt that if we invested in the proper technologies, made the theater a real experience, people would come out. And we could make a profit. "

So 10 months ago, the couple took ownership of the Cinema III for an undisclosed sum and began a $300,000 gut renovation that included fancy new seating, carpeting, digital projection, sound system, concessions and -- most of all -- the right to compete for first-run Hollywood movies.

"We looked at other models, like live events and nonprofit art houses. But we felt that if we made the place special enough so the older audience would come out for date night and still had the properly marketed, major hit movies to bring the kids, it would work," she said.

So far, the plot is playing out: Ticket sales are up 40% this year over last, she says, mostly from showing first-run movies such as The Hunger Games: Catching Fire and Despicable Me 2. And buckle up, Netflix groupies -- itty-bitty Charlevoix Cinema III did something the streaming media company never did: turn a profit in its first year in operations.

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