Coupled with the economic woes of the 1930s and the costs of wiring theaters for sound films, exhibitors also faced the increasingly widespread popularity of radio (with its "free" entertainment). In addition, a burgeoning nontheatrical market for moving pictures had emerged with the growing availability of 16mm sound projectors in the later 1930s. Exhibitors increased efforts to attract audiences to the theater by lowering ticket prices and relying on special promotions, contests, and double-feature programs. Decreased costs made air conditioning a more available amenity by the later 1930s, so that the movie theater became one of the first public sites to offer ordinary citizens the luxury of climate-controlled comfort. At the same time, the sale of candy and, especially, popcorn emerged as a crucial source of revenue for the exhibitor, with carbonated soft drinks soon to follow in the 1940s. Vending machines and, eventually, a larger and more elaborate concession stand became a standard component of the movie theater. Concession sales often brought more profit to the theater than box office receipts.

The 1930s also saw a marked drop in the number of new theaters—and picture palaces, in particular—being constructed. However, even small-town venues that depended on rural audiences had long realized that periodic renovation and updating to decor as well as equipment was a sensible business practice that associated the theater with the "modern." Art deco design, with cleaner lines and less surface decoration, became a more prominent feature in renovated theaters and the relatively few newly constructed theaters. This style was featured in one of the few new theatrical ventures to emerge in the midst of the Depression: the small but sleekly designed newsreel theaters operated by Trans-Lux and other companies in major metropolitan areas. Equipped with an innovative rear-projection system, the first Trans-Lux theater opened in New York City in 1931, creating a trend that flourished during World War II and continued until the introduction of commercial television.

One architect who did continue to design striking new and remodeled theaters during the 1930s was S. Charles Lee (1899–1990), who worked principally in California. For example, Lee's streamlined aesthetic, which made ample use of rounded forms, horizontal lines, and industrial material (aluminum, glass, and chrome), was especially evident in the Academy Theatre, which was built in 1939 in Inglewood, California. Other architects, including, most notably, Ben Schlanger, also argued in the mid-1930s for an even more austere and efficient type of modern theater, designed and built exclusively for screening moving pictures and intended to maximize the viewing experience. In some respects, these ideas were not fully implemented until the emergence of the megaplex theater complexes of the 1980s and 1990s.

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