WHICH IS REALLY KING - CONTENT OR DISTRIBUTION?

Movie studios can go from zero-to-hero or vice versa in any given year. Boxoffice hits drive movie attendance and revenue, so one would expect the studios to continue to focus on fantasy and character films that can be leveraged into other licensing and ancillary products/outlets which is also good news for exhibitors. However, in the digital age, more and more, it's control of distribution channels and not content that is paramount.

The large studios are housed within media/industrial conglomerates (Time Warner, Disney, GE, Sony, News Corp., Viacom) and although they are relatively modest profit contributors to the consolidated operations of these media giants there are huge barriers to industry entry, most notably, the control of a global distribution network - which is based upon a worldwide media standard - 35mm film.

For the media giants music distribution is gone. Yes, Apple will share royalties for iTune downloads but the day of the media industry's control of music is history; and easily demonstrated by a web search where thousands of songs can be downloaded via hundreds of music "file sharing" sites.

Currently, it is the publishing business that is battling for survival. Newspapers are closing, books are being digitalized, and even the AP news service is under attack as they cannot control content as they could in an analog world. Media companies, worldwide, are scrambling to find new business models to cope with the digital (content free) onslaught and find new ways to charge for content with subscription fees and ad revenues - but it's a losing battle. Could the cinema follow the same fate if it goes digital?

In the digital future what would prevent a content provider from going directly to exhibitors for distribution. There is no shortage of movie content, each year thousands of movies are produced but only a few reach the silver screen, but only because the studios control an analog based distribution network.

Digitizing the movie industry's distribution channels will change forever the business model for both the studios and exhibitors and probably not for the better in terms of revenue and profits. As the adage goes - analog dollars/digital dimes - and it couldn't be more apropos in this case.

History has shown that the digital revolution has changed many industries in many unforeseen ways - spawning new, altering some, and killing others. The changes the digital age has and will bring to the cinema industry are and will be profound and unforeseen - and that is the only certainty that can be counted on. Hollywood should think hard before completely committing to digital cinema, for as archaic as it is, film allows the studios worldwide distribution control. Yes, with film there is piracy at the periphery but not the wholesale duplication and ease of distribution that could very easily and unforeseeably occur with digitally formatted content.

CINEMA TRAINING CENTRAL (CTC) - FLASH 4/24/09 - REPRINT

CTC TRAINING

Today is the wrap party for the April Cinema Training Central Seminars & Workshops which took place this past week. Somewhat bucking the general trend of companies reducing their training expenditures, attendance at CTC - particularly for the technical and marketing workshops - remains strong.

All of the seminars and workshops were updated and refreshed for 2009 to take into consideration new trends and technologies in the cinema industry. We look forward to the September training week (14th - 18th) and, as always, anyone having an interest should contact us for a free CTC 2009 Guidebook.

WHY GO GREEN?

Having and implementing a meaningful and verifiable environmental sustainability program is a value judgement but is also a very smart goal for any enterprise as it saves money, water, and energy and improves employee and community relations. Although new "Green" construction catches most of the headlines the primary focus for improving the environment should be on existing commercial and residential buildings - which number over 120 million in the U.S. and of which 99 out of every 100 have not, as yet, implemented any significant green initiatives.

ARBOREEL GREEN TIPS

Water is one of our most precious resources and yet it is the resource we take most for granted. However, it's a certainty that potable water (water that is suitable for drinking or cooking) will become much more expensive and face restricted usage if we don't start conserving and altering the ways in which we use our water resource. For example:

- To take a bath requires 60 - 70 gallons of potable water. In contrast, a 5 minute shower uses only 15 - 20 gallons - which can be even lower if a water-efficient showerhead is used - that's a savings of 250 - 300 gallons per week! If you must take a bath - do so occasionally.

- Leaking faucets or running toilets are huge water wasters. A single leaky faucet can waste thousands of gallons of potable water in a year. It is imperative that leaking faucets be repaired or replaced - sometimes only a new gasket is required. Running toilets demand immediate attention and should be fixed or better still replaced with low-flow flush toilets. A traditional toilet will use 7 gallons per flush, low-flows use 3.5 gallons and the newest use only 1.6 gallons.

- The average washing machine uses about 41 gallons of potable water per load. New, high-efficiency washers use 28 gallons. So when replacing a clothes washer it is best to select the most efficient machine in terms of water use, and always wash full loads or be sure to use the appropriate load size setting for less than full load washes.

IS CONTENT KING OR IS IT DISTRIBUTION?

More and more it's control of the distribution channels that is paramount in the digital age. For the media giants it may be that keeping content on film is their best defense against a partial or (worst case) complete loss of movie distribution. Music distribution for the giants is gone. Publishing is battling for survival and losing, be it newspapers, books, or AP news service. If movies go digital the same fate may await. Hollywood should think hard before really pushing digital cinema, for as archaic as it is, film allows the studios worldwide distribution control. Yes, with film there is piracy at the periphery but not the wholesale duplication that could very easily occur with digital formatted content.

Best,
Jim Lavorato - Entertainment Equipment Corporation

ARBOREEL GREEN TIPS

One of Arboreel's main components is recycling, which is a concept everyone embraces. Yet, when it comes to electronics the EPA estimates that only 14% of all e-waste was recycled in 2007. This low rate of e-waste recycling is compounded by the unrelenting production/consumption of electronic products throughout the world. For example, 71 million computers were sold in the U.S. last year. Worldwide 300 million were sold. That one product category generated a huge amount of high-tech garbage that is much more toxic than cans or bottles and in many cases winds up in dump sites in the U.S. or (even worse) in foreign countries - this is not good!

Arboreel assists businesses in adopting and implementing non-burdensom recycling and reuse programs which, moreover, can be successfully tied into a business's overall community relations program. Keep in mind that over 80% of the public favorably views and supports local businesses that are eco-friendly and promote environmental issues.

1080p & BEYOND

The native resolution of a 1080p HDTV and that of a 2K DLP Digital Cinema Projector are essentially the same. However, that standard is rapidly evolving in the world of HDTVs. At the January International Consumer Electronics Show I viewed HDTVs with resolutions of 1380p. So, home viewing, in the not too distant future, will surpass D-Cinema's image quality. Hmmm...not a very rosy prospect for the standard DLP based D-Cinema systems - 3D may be a different story - only time will tell.

ARBOREEL LAUNCHES @ SHOWEST

Join us at the Bellagio - Gauguin Room #1 on Thursday, April 2nd for breakfast @ 9am or afternoon refresher @ 1pm for the launch of Arboreel. There will be casual conversation and expert advice regarding increasing environmental sustainability of buildings and the implemlentation of energy, water, and waste programs for all types of businesses in the cinema industry. Please RSVP for the morning or afternoon session.

RELEVANCE OF TRAINING STAFF - LAWSUITS

One of the topics thoroughly discussed during our Cinema Management Workshops is that of sexual harassment. I can't stress strongly enough the importance to the movie exhibition industry. You may have viewed the Sunday, February 22nd airing of "NOW" - a weekly current events program on PBS. The show addressed teenage sexual harassment in the workplace. One of the prime examples given was a lawsuit brought against UltraStar Cinemas, a small theatre circuit in San Diego, that was sued by several female employees. The lawsuit - which alledged sexual harassment by several male Managers and Asst. Managers - was found in favor of the plaintiffs who won a multi-million dollar settlement. UltraStar has appealed the ruling; however, this points to the requirement by all cinemas to pay special attention to training and policies regarding teen sexual harassment.

Even those companies that feel they have policies in place need to know those policies are properly working to protect staff and yourself (the theatre owner). Look to CTC for training, guidance, and proper policy developement and implementation on this and other pertinent issues.

CINEMA TRAINING CENTRAL 2009 WORKSHOPS

All of CTC's 2009 seminars and workshops have been updated and refreshed to bring you the latest information, technology and developments impacting the cinema industry. Additionally, new products and equipment servicing techniques are being introduced into the technical training workshops. Training dates for 2009 are the weeks of April 20 - 24 and September 14 - 18. Request to entequip@aol.com and we'll send you the 2009 CTC Guidebook. The CTC training facility is an 8plex movie theatre that has been equipped with a variety of movie projection and sound equipment - film and digital formats. Contact Entertainment Equipment Corp. through our website at gotoeec.com.

PICTURE PERFECT?

I recently heard an exhibitor call the 2K Digital Cinema image 'picture perfect.' That got me thinking. Just how good is the 2K D-Cinema presentation compared to other images we see on a daily basis?

High Definition Television (HDTV) is 1080P or 1080 lines of vertical resolution/Progressive scan, with an aspect (image) ratio of 16:9 (length-to-height) or 1.78:1. 2K D-Cinema has (as the 2K implies) 2048 lines of resolution, but not measured vertically as is HDTV, but horizontally with an aspect ratio of approximately 1.9:1.

If you convert HDTV's 1080 vertical lines to horizontal lines the resolution goes to 1922 lines (1080 x 1.78 = 1922); therefore, 2K D-Cinema and HDTV are, more or less, equivalent in terms of image resolution. Result: the moviegoer gets essentially the same "look" at a cinema with a 2K D-Cinema projection system that he/she gets in their living room, den, or home theatre. Hmmm...not too compelling and certainly not "picture perfect."

So, why purchase and install a 2K projector? The technology is now over 10 years old and has been obsolete for some years as Sony's D-Cinema technology delivers a 4K image (4096 lines) having not twice but four times the pixels (i.e. resolution) of the 2K projectors.

In comparison, 35mm film has a 6 - 8K resolution and IMAX films, (70mm/15 perforations per frame) are literally off the resolution scale. Yet there is a movement to install 2K D-Cinema projectors in IMAX Theatres - talk about taking a giant leap backwards!

Why is it that some in the movie industry continue to embrace a technology that results in offering the moviegoing public a poorer presentation and one that is getting less relevant by the day. As I write this article, it is late December and I'm preparing to attend the International Consumer Electronics Show in early January at which time I fully expect to be viewing HDTVs at a resolution of 1380P or perhaps higher. So, in the not to distant future, home viewing will be more "picture perfect" than 2K D-Cinema.

So, to all Digital Cinema proponents - I'm begging you, stop the madness! You lost and the least you can do is leave the playing field with a little dignity.

(December 2008)

THE MOVIE INDUSTRY 2009

A sub-sector of the larger Media and Entertainment industry, the 'movies' are under much less pressure from the cyclicality of the global economic downturn as their venerability is driven more by the absence of boxoffice hits than economic weakness. Moreover, movie attendance does not make up a significant enough proportion of a consumer's overall entertainment/recreation spending to be cut dramatically in a downturn.

For 2009 the U.S. cinema's performance, both boxoffice attendance and revenue, should match or exceed 2008's results with continued hit-driven films and the absence of the Olympics and Presidential election, which negatively impacted this year's results. Additionally, in-cinema advertising, which grew by 17% in 2008 to $860 million, will buck the more general slowdown in overall advertising expenditures and can be expected to increase 9 - 12%, and touch the $1 billion mark.

Exhibitors although somewhat burdened with escalating operating expenses and high fixed costs, carry limited inventory and all sales are essentially immediate (cash or credit card), making for a very low level of receivables while payables are extended and paid on traditional business terms. Although the movie exhibition business does have some concentration - with large circuits like Regal, AMC, etc. - there are limited benefits to industry concentration given strong buyer (moviegoer) and supplier (studios) power present in the industry. Exhibitors are highly susceptible to top-line volatility as they are completely reliant on the studios for the quality and quantity of their product stream, making for limited opportunities to differentiate particularly in the case of the large circuits. However, direct competition for exhibitors is low, their threat comes from indirect competition - the distribution of movie content through non-traditional channels such as DVD, VOD, and the Internet coupled with a collapsing window of exclusive theatrical release.

Nonetheless, movie going remains popular and affordable, although I would be cautious regarding exhibitors ability to maintain boxoffice and concession pricing increases over the next several years. Therefore, movie operators must pay particular attention to operating costs as debt levels and lease obligations are high on average, as are capital expenditures meaning that excellent cash flow and operating expense management is imperative.

OUTLOOK

Digital initiatives, such as Digital Cinema, are not consequential to the movie industry's overall profitability and can be viewed as being more detrimental than positive to stability and profitability for exhibitors.

The movie industry is a hit-driven business. The large studios are housed within media/industrial conglomerates (Time-Warner, Disney, GE, Sony, News Corp., Viacom) and are viewed as relatively modest profit contributors to the consolidated operations of these media giants. However, there are huge barriers to industry entry by outsiders, the most notably being control of a global distribution network. Moreover, there is limited direct competition between the studios as they do not compete on price but on content delivery that can fluctuate significantly year-to-year. Quality of film product (or should I say the public's perception of quality) will continue to be the main driver of movie attendance and revenue. Going forward, I would expect the studios to focus more on titles, characters and stories that can be leveraged into other licensing and ancillary products and outlets. This should be good news for exhibitors as well given that these concept/character-driven movies - particularly the fantasy and superhero films - are the current boxoffice center spikes.

Moving forward exhibitors should look to improving operations by increasing productivity and efficiency. Implementing environmental sustainability programs which reduce energy, water, and waste costs, improving local community relations, introducing non-movie (alternative) content and activities, and finding ways to enhance their patrons' entertainment experience.

(December 2008)

ARBOREEL

BUILDING FOR THE FUTURE

WHAT IS ARBOREEL?

ARBOREEL is an environmental initiative for managing the ongoing operations and maintenance of existing cinemas, industry suppliers and service providers. Arboreel identifies and rewards best practices and provides a plan/template to:

• use less energy and water,
• improve the indoor environment, and
• uncover and correct wasteful operating inefficiencies

Arboreel is about transforming businesses into an invironmentally sustainable building through the implementation of a compliance and certification process.

WHAT ARE THE BENEFITS OF ARBOREEL?

Arboreel helps reduce operating costs, saves on utilities' expense, reduces a business's environmental impact, enhances its marketability, and greatly improves customer goodwill - without the requirement of major infrastructure upgrades. Additionally, attaining industry-recognized Arboreel Certification ensures a business reaches its minimal sustainable potential and energy and environmental efficiency.

HOW IS ARBOREEL DIFFERENT FROM OTHER SUSTAINABILITY PROGRAMS?

Arboreel certifies a business's sustainable operations and creates a plan for ensuring that performance over time. Arboreel evaluates the physical systems but, more importantly, the way it is managed and maintained. A rating and certification system specific to the Cinema industry, Arboreel is based upon and is a path toward attaining the globally-recognized U.S. Green Building Council's LEED (Leadership in Environmental and Energy Design) Certification.

HOW DO I KNOW IF ARBOREEL IS RIGHT FOR MY BUSINESS?

Arboreel is a three level program. The prerequisites for each must be met before moving to the next level. Arboreel is unique in that it is entirely at the client's discretion as to what level of compliance they attain. They can stop or postpone the process at any time if they believe they have attained the level that meets their standard of environmental sustainability. The three levels are: Acorn, Sapling, and Oak. Participating in Arboreel is cost-effective and its implementation guarantees savings and efficiencies over the life-cycle of the building.

HOW WAS THE ARBOREEL PROGRAM DEVELOPED?

Arboreel was conceived and developed through the joint efforts of Screentrade Magazine and Entertainment Equipment Corporation and is based upon the U.S. Green Building Council's LEED Rating System. USGBC is an affiliate of the International Green Building Council - the global authority on construction and operation of environmentally-sustainable commercial and residential buildings.

HOW DO I GET STARTED WITH ARBOREEL?

Register your project and review the start-up procedures with an Arboreel representative and arrange for a site visit to develop an implementation plan. It's that easy!

To register or for more information contact:

• In the U.S.:

Jim Lavorato, President, Entertainment Equipment Corporation - 800-448-1656 - entequip@aol.com

Pam Stanton, North America Editor and Events Manager, Screentrade Magazine - 616-847-0144 - pam@screentrademagazine.com

• In Europe:

Philip Turner, Editor, Screentrade Magazine -

+44 (0) 1689 833117 - philip@screentrademagazine.com

D-CINEMA IS DEAD - LONG LIVE D-CINEMA!

As predicted weeks ago the funding for the much touted Digital-Cinema rollout has evaporated and with it the misplaced hopes of many in our industry. The lethal combination of high investment/no return (in itself a reason to dismiss the concept outright) and the global economic downturn rendered the D-Cinema initiative a non-starter and hopefully puts it to final rest.

Funding reconsideration - if ever - will not occur for 3-5 years, so independent exhibitors can breath a sigh of relief and return to a normal business posture in managing their cinemas. Further, a 3-5 year hiatus will find the technology upon which D-Cinema is based to be completely obsolete. The studios will hopefully and finally dismiss this misconceived method of movie distribution and accept the fact that film - although burdened by huge logistical baggage - is still the best way to combat piracy as the ease and sophistication of digital copying strengthens by the day.

CTC INTROS NEW Eco-nomic TRAINING WORKSHOP

For 2009 CTC will be adding a new training workshop to its curriculum devoted specifically to helping cinemas with their environmental sustainability issues and initiatives.

The workshop can be attended by management and staff (at all levels) within the cinema industry - exhibition, manufacturing, distribution, and film production. Action-oriented with emphasis on immediate on-the-job implementation the training will be beneficial to the business, employees, and customers.

2009 CINEMA TRAINING CENTRAL GUIDEBOOK

The new 2009 CTC Guidebook will be available in mid-January but contact us NOW to reserve a copy. This comprehensive booklet provides all the info. you'll need regarding the world's only training facility devoted exclusively to the cinema exhibition industry.

ARBOREEL - "BUILDING FOR THE FUTURE"

If you are planning to attend ShoWest in Las Vegas this coming April - mark your calendar now to join us for a complimentary breakfast or afternoon refreshments at the Billagio Hotel, Thursday, April 2, 2009 for the introduction of Arboreel.

Arboreel is an environmental initiative developed specifically for the cinema exhibition industry. Its purpose is to implement operating and management practices that enhance the green sustainability of a cinema and certify those initiatives. It is very important that our industry become more environmentally aware and institute day-to-day policies and practices which, at least, reach a minimum level of environmental sustainability and energy efficiency.

In April, get introduced to Arboreel and begin "Building For The Future". Spending just a short time to learn and increase your awareness of Arboreel will be well worth the effort and could change the course of your business for years to come.

Look for more on Arboreel in the coming weeks!

ECO-FACTS

In the United States, commerical builidings account for:

- 65% of electrical consumption
- 36% of energy use
- 30% of green gas emissions
- 29% of raw material use
- 28% of waste output, and
- 12% of potable water consumption

What are your cinema's consumption levels?

ABOREEL GREEN TIPS

Even simple on-the-job green initiatives carry significant environmental impact. Here are several easily implemented ones:

- Where possible print all documents double-sided
- Use recycled paper as much as possible
- Utilize paperless communications and save emails on line instead of copying them
- Encourage telecommuting by employees when feasible
- Provide indoor bicycle racks
- Have employees use non-paper cups, mugs, and dishes when at work vs. disposables
- Encourage the use of water fountains or coolers vs. single serve bottles

ARBOREEL - GREEN TIPS

Starting with this article, we will be featuring "Green Tips". These are actions any business or person can adopt which will have a positive environmental impact - and keep us Eco-conscious.

GREEN TIPS FOR FUEL CONTROL & DRIVING

- Use Cruise Control - maintaining a constant speed saves gas.
- Consider Speed Limits - speeding (as we all do) uses up more gas. Most vehicles maximize
fuel efficiency at 50 mph.
- Maintain Your Vehicle - change air filters and spark plugs on a scheduled basis.
- Remove roof racks when not using.
- Maintain proper tire pressure - low pressure costs lots in wasted fuel.
- Reduce Vehicle's Weight - remove heavy objects from trunk and rear seats, i.e. sand bags
used during the winter months.
- Consolidate Your Driving - organize your to-do list and plan ahead to minimize time and
distance.

SPEAKING OF VIDEO PROJECTORS!

Make no mistake, every cinema must have a video projector for pre-feature presentations, for rentals and parties, for film festivals and gaming, but you must insure (and I can't stress this strongly enough) the projector that you purchase produces on-screen image that is equal to a high definition TV image. That means purchasing a projector with enough lumens (at minimum 75 - 100 lumens per foot of image throw) and the appropriate lens necessary for the image to fill the screen.

EEC sells Christie, Sony, and Panasonic video projectors each having a large selection of projectors suitable for cinema operation. Don't make the mistake of buying a small, inexpensive consumer model from one of the big box retail stores - it won't and can't do the job.

DETERMINING LUMEN REQUIREMENTS

In the article above (published in Cinema Training Central Flash #5/08) it was brought to my attention from several readers that my recommendation on lumen calculation in determining what size video projectors would be best suited for a particular auditorium and screen size was not as accurate as other calculations. This is true. I recommend the use of a simple lumen calculation based on length of image throw. Simply, throw times 75. For example: a 50 ft. throw x 75 = 3750 lumens.

A more precise calculation, as was pointed out to me, would be image height times width x 14FL (FL = foot lamberts of reflected light). For example: a 12 ft. high x 22 ft. wide image would calculate to 264 sq. ft. x 14 = 3696 lumens required. The simple throw calculation will always be higher (which in and of itself is OK) but not as precise. Where the problem may arise is when you have a situation where there is a large image and a short image throw. Then it's best to use the more precise sq. footage calculation.

To receive the CTC Flashes, email entequip@aol.com and request to be added to the email listing.

ARBOREEL

As you are aware Entertainment Equipment is putting forward a concerted effor to address the environmental sustainability of the cinema exhibition industry. To this end we have partnered with Screentrade Magazine to put forth a program which will guide and asisst cinemas in improving their environmental impact.

Termed the Arboreel Program, it addresses the initiation of actions which will greatly improve the usage of energy and water, and the minimization of waste through recycling and reuse. We can all agree that improving a building's sustainability is a good thing and it's NOW time to act! Arboreel will be good for you, your family, your community, and your bottom line as it will foster significant saving on the spiraling costs of energy and water. In the future, the real estate marketplace will strongly favor and place a premium value on green buildings; therefore, it behooves every cinema owner/investor to build or upgrade to green standards and that is where Arboreel comes in.

You will be hearing more about the Arboreel Program and the many benefits it will bring to your cinema and the exhibition industry. Its formal introduction will be in April at the 2009 ShoWest convention. More information on the where, when, and who will be forthcoming. Plan on attending! It will be well worth your time and effort.

OF NOTE

Providing valid information always helps to visualize a problem - so here are a few reasons why you should consider participating in the Arboreel Program and which demonstrate the enormity of the problems we all face:

• According to the Consumer Electronics Association over 426,000 cell phones are "retired" in the U.S. EVERYDAY!
• If every commuter carried just one more passenger the U.S. would save 600,000 gallons of gasoline and reduce carbon dioxide emissions by 12 million pounds EVERYDAY!
• PC screen savers DON'T save energy! - Turn PCs and Laptops OFF!
• The average office worker discards over 175 pounds of office paper every year - use recycled paper - which takes 64% less energy and 58% less water to manufacture than new paper.

MILDLY HOSTILE CUSTOMER PRACTICES

According to the U.S. Department of Commerce the number one reason customers stop dealing with a business is because of indifference, rudeness, or lack of service on the part of the employees (see inset).

All businesses - but particularly service oriented ones, and certainly cinemas - must be constantly attentive with regards to practices that are what I term - "mildly hostile" - towards their customers. These are the small annoyances that by themselves may not garner sufficient weight to motivate a customer to cease dealing with your business but tend, over time, to compel customers to look elsewhere to satisfy their needs.

WHY CUSTOMERS LEAVE

1% Die
3% Move
5% Buy From Friends
9% Prefer Competition
14% Judge All Like Businesses The Same
68% Indifference, Rudeness, Lack of Service By Employees

Examples of mildly hostile customer practices are fairly widespread particularly in the retail/consumer products and services areas and I'm sure each of you reading this are fully aware of what I mean and can recite horror stories from your own experiences in the retail jungle.

As cinema owners/operators, being aware of mildly hostile practices requires constant vigilance for, like wrinkles and graying, their precise beginnings are hard to determine until the day when their grim evidence is impossible to refute.

There are a myriad of mildy hostile customer practices, and include such things as:

• Employing under-qualified staff
• Poor & unfriendly service
• Thoughtless policies, such as inconvenient show times
• Slow response in resolving customer queries and problems
• Inconsistent service standards
• Messy, semi-clean facilities
• Untrained staff

Many of these practices are derived from weak, ineffective management which usually emanates from a tolerance for poor staff performance. Others may come from a company's fuzzy notion of customer satisfaction or from inconsistent service fortified by a lack of corporate support and funding for proper staff training.

Remember; it's not only blatant mismanagement and major mistakes that cause customer dissatisfaction and defection, but also those practices that are mildly hostile but which over time cause customer departure.

Before ending I would like to mention a trend that has developed over the last several years in corporate America and is worth mentioning. That is the creation and staffing by large organizations of a position called Chief Customer Experience Officer or CXO. A CXO is a senior level executive charged with evaluating, directing, and overseeing the customer experience effort and its implementation throughout the entire organization. The CXO position started to appear in 2005, and now, almost 25% of the largest 100 U.S. corporations have a CXO.

Reporting to the CEO, the CXO's responsibilities cut-across all product, service, and distribution channels and they have significant input into the corporation's marketing, promotion, and advertising activities. The CXO position will quickly become relevant for both large and mid-sized companies, in both the services or manufacturing sectors, and you'll be hearing more about this new and critical position as time goes on.

Reprinted from Spring 2008 Screentrade Magazine

DROP YOUR SHORTS

Now that I have your attention, let's talk about something less provacative but, nontheless, serious and perhaps even dearer to an exhibitor's heart. Drop Your Shorts is one of over 25,000 film festivals held annually across the globe. Forget Cannes and Sundance. We're talking about Toronto's Hunk of Junk Fest, Tokyo's Short Shorts, Sydney's Homebrewed Fest, Hollywood's Scream Fest, and London's Food Film Fiesta. The list and topics are endless. So with all these film festivals why should I be writing about cinemas sponsoring their own digital film fest? Because - it's an easy way to make money and (perhaps more importantly) connect your cinema to the local community in a very positive way. Film festivals fall under my current pet business premise for cinemas: Think Global / Act Local.

THE HOW TOs OF SPONSORING A FILM FESTIVAL

• Advertise locally that your cinema is sponsoring a film festival. Start the promotion at least 6 - 8 weeks before the Festival. You should be able to get free local press coverage before and during the event. Also use the Cinema's website and in-theatre notices.
• Charge entrants a minimal submission fee - say $15 - $25. Limit all submissions to 10 minutes or less and accept only DVD formatted entries.
• Shortly after the deadline submission date review each submission for integrity (you set the entry rules), and then compile the accepted works onto a single "Festival" DVD.
• Form a 3 person judging panel (awards will be given). Staff the panel with people who know something about the cinema or have local stature - professors/teachers at local schools or universities are a good source, as are local media people (radio, TV, press). You'll find most are ready and willing to assist.
• Determine where and when to hold the Festival (provide a name). Have it at least two or three presentation times over a two/three day period - preferably weekend mornings/early afternoons.
• Produce copies of the Festival DVD which would be available for sale during the Festival and through your Cinema's website.
• For the presentations, use a video projector that is putting out 50 - 100 lumens of light per foot of picture throw. This is your benchmark projector size.
• Give out awards - trophies, certificates, cash prizes - and have a number of awards, by: age group, submission genre, length of submission, etc.
• Sell concessions!

YOUTUBE ON THE BIG SCREEN

The key in having the community participate is to get the word out early and often. If promoted properly you'll be surprised on the number of entries submitted. Get local schools involved. Another good idea is to link up with a community arts group as co-sponsor - this will provide a promotional jump start and further encourage local participation. The trick in having a digital film fest is not to get too fancy or too complicated. This is all about reinforcing the link between the cinema and the local community - it's that simple but that imperative.

Being a big proponent of cinemas offering up a full range of "alternative content" - be it a film festival or an in-cinema video gaming initiative, over the long haul cinemas will have to gravitate toward the use of non-movie entertainment to survive. Single theatre operation or chain it doesn't matter, sponsoring a digital film festival is easy, straight forward, and profitable - try it!

3-D Cinema: A 2-D Perspective

Already faced with the problem of conversion to digital cinema, exhibitors now have the added worry of 3-D. Just as Cinemascope was created and adopted by theatres to get people away from that new gadget, the TV, now Hollywood’s newest lure is to give people that extra dimension they can’t get at home (yet).

On the distribution end, this concept will definitely float, because even if only a fraction of theaters are equipped with 3-D projection equipment, their film can still be screened on both formats. They already get the majority of the box office and nothing comes out of their pocket for the equipment on which it is projected.

However for exhibitors, it’s more sink or swim. If you’re not already equipped with 3-D (and chances are you’re not, since digital screens alone in the U.S. are only around 4,000 out of 38,000), here are your options. If you already own a D-Cinema projector, great, you only have to drop around $15-20,000 per screen to kick it up to the 3-D notch. If you’re looking to upgrade from your 35mm to 3-D, the sticker will be $100-150,000 per screen. For the big chains who are publicly traded, where’s that money going to come from, we’ve seen your numbers. And for the small circuits, good luck in finding the bank that’s willing to back you.

Once you have the money, here are some options. Real D, out of Beverly Hills, has developed software that upgrades your 2-D digital projector into the third dimension, but at a price of $20,000 per screen for the conversion and maintenance. The good news is you can gradually pay them back with a royalty fee of $.50 per ticket. After subtracting what the distributor takes off your box office, that $.50 can add up. And, just so you’re aware, with Real D you will need a silver screen. There’s good news if you don’t like the sound of installing a new screen, Dolby Laboratories has developed technology that uses your existing one.

To combat the bite of the price tag, exhibitors have been charging a higher admission for 3-D films over the boring old 2-D. So pose this to your average customer, would you pay $15 over $7 to see Indiana Jones come off the screen? Sure, but would you answer the same for Made of Honor, Baby Mama, and the rest of the 90% of releases that are not the heavy hitting blockbusters? Right now only ten films are slated to be released in 3-D in the next year, with possibly 20 following in the next. It is still a small number compared to the number of releases annually – over 450 for the year 2008.

And let’s not forget about the 3-D glasses. They’re not your parents’ glasses, they are special polarized ones, that, with Real D, will run you $2 a pair (recyclable yes, but they don’t have that environmental friendliness that more and more people are looking for), while Dolby’s glasses have a price tag of $40 a pair (reusable yes, but they will need to be cleaned by your staff and closely watched to prevent theft).

Let’s look to Hannah Montana for further analysis. “The Best of Both Worlds” 3-D concert film scored well, considering it only opened on 683 screens. $30 million was grossed in its first week in that handful of theatres, but Disney took 90% of it back before you blinked, and many of those $40 a pair glasses were damaged or walked off. It’s success could also be largely in fact due to that tweener demographic that has made Hannah Montana a sold out arena phenomenon. That, and the pressure of those little girls, “Well Kaitlin’s Mom is taking her to see the movie!”

With technology there’s always risk involved. The software and hardware you install today, could be replaced by the software and hardware they develop tomorrow. At least with 35mm, it’s the same device that has been used for over a hundred years, it’s mechanical, a belt breaks, you replace it. You oil its gears and it does its job. It won’t crash, it won’t require periodic system upgrades. Technology’s lifespan is somewhat short to that of something mechanical. Just as CD’s became MP3s and movies can be watched on laptops and iPods, it’s predicted that in the next five to ten years, 3-D will reach the home theater, at which point then, what will be the next fad to get people back?

- Tracy Janis

The NextLEVEL: Video Gaming Phenomena Presents Business Opportunities For Cinemas

It’s difficult to assess the impact video gaming has had on global entertainment – its growth and universal acceptance is nothing short of incredible. According to the Consumer Electronics Association:

- Video gaming business for 2007 exceeded $32 billion globally with an expected growth rate of 30 – 40% per year through the decade.

- Upwards of 1.5 billion people participate in some form of video gaming on a daily basis – up from only 300 million in 2004.

- Gaming consoles and accessories was the strongest growing product category for on-line sales in 2007 up 130%.

Gaming’s glowing statistics arise from its’ universality. With the possible exception of television, gaming has the broadest reach of any other form of entertainment, as it spans age, culture, gender, and economic levels.

Gamers classify games into deep or easy – the very most successful being both. Singular play still dominates but social and multiplayer gaming is rapidly increasing (be it on-line or in physical group interplay as the Nintendo Wii gaming platform encourages). Additionally, unlike most other entertainment, games are easily accessed having the widest variety of user platforms: PCs, consoles, on-line, hand-helds, cell phones, wireless networks, etc. Easy access, coupled with its recent emphasis on self- improvement and social interaction make gaming the most versatile of all recreational activities.

The couch gamer is now getting up and socializing with an activity that can be compared, contrasted, created, and communicated with others. For example, Activision’s Guitar Hero, introduced in the fall of 2005, is an interactive and social game now in its third version. Since its launch over 14 million units (valued at over $1 billion) have been sold in North America alone. But Guitar Hero is more. It is a media distribution platform as songs to play are downloaded for a fee from the Internet. The latest version, “Guitar Hero III: Legends of Rock” generated over 5 million song downloads in the first 10 weeks of its debut.

The Guitar Hero franchise’s broad appeal confirms that video games have reached the status of a true mass medium.

PLAYER vs. SPECTATOR

More so than viewing an event – be it sports, music, concert, T.V. program, or movie – video gaming offers an enhanced adrenaline high, as it fully engages the consumer. When viewing a sporting event, for example, there is a lot of boring space between exciting moments – in contrast video games offer full-time engagement.

Consumers are becoming players vs. spectators. They are interacting with and controlling much more of each activity they engage in, be it working, traveling, playing, or shopping - at home, office, or wherever they may be.

HOW CAN CINEMAS TAP INTO THE GAME CRAZE?

The movie and gaming industries have had a symbiotic relationship for quite some time – movies inspiring game creation, games inspiring movie creation. Now, that relationship is triangulating: as content, gaming, and advertising/marketing merge, each mutually benefiting the other.

With the socializing aspects of gaming, with competitive gaming on the brink of going mainstream, and with the existing link between movies and gaming, a cinema offers a logical platform to fully enjoy the gaming experience. The local cinema provides a convenient, safe, and familiar venue, and one (with little effort) that is “gamer” ready.

To address this phenomena Entertainment Equipment Corporation created NextLEVEL. A stand-alone, turnkey, day-one revenue generating business resident within a cinema. The concept of NextLEVEL is simply to have movie exhibitors tap into the gaming phenomena in a meaningful way by filling a need – offering a place where people can go to play video games and interact and socialize at the same time.

The goal is the utilization of available space within a cinema for a business tied to a social activity that is growing exponentially and linked via the common thread of entertainment. Requiring small investment, NextLEVEL has significant and evident benefits:

- Play Time Fees

- Increased Concession Revenues

- Sales of Games and Gaming Accessories

- Cross-fertilization with Box Office Attendance

NextLEVEL offers a great opportunity for those exhibitors that want to expand the entertainment scope of their cinema and broaden its’ business reach.

For more information on NextLEVEL please contact EEC at entequip@aol.com or call 716-855-2162.

2008 CINEMA TRAINING CENTRAL SCHEDULE

APRIL 2008 TRAINING SCHEDULE

MONDAY 4.14.08
Primary Technical Training (Day 1 of 2)
Advanced Technical Training (Day 1 of 3)
Marketing Your Cinema (Day 1 of 1)

TUESDAY 4.15.08
Primary Technical Training (Day 2 of 2)
Advanced Technical Training (Day 2 of 3)
Pre-Feature Entertainment & Alternative Content (Day 1 of 1)

WEDNESDAY 4.16.08
Managing a Cinema (Day 1 of 2)
Digital Cinema - Present & Future (Day 1 of 1)
Advanced Technical Training (Day 3 of 3)

THURSDAY 4.17.08
Managing a Cinema (Day 2 of 2)
Intermediate Technical Training (Day 1 of 2)

FRIDAY 4.18.08
Intermediate Technical Training (Day 2 of 2)
Modern Theatre Design & Planning (Day 1 of 1)
Concessions: Where the Money Is (Day 1 of 1)

SEPTEMBER 2008 TRAINING SCHEDULE

MONDAY 9.15.08
Primary Technical Training (Day 1 of 2)
Advanced Technical Training (Day 1 of 3)
Marketing Your Cinema (Day 1 of 1)

TUESDAY 9.16.08
Primary Technical Training (Day 2 of 2)
Advanced Technical Training (Day 2 of 3)
Pre-Feature Entertainment & Alternative Content (Day 1 of 1)

WEDNESDAY 9.17.08
Managing a Cinema (Day 1 of 2)
Digital Cinema - Present & Future (Day 1 of 1)
Advanced Technical Training (Day 3 of 3)

THURSDAY 9.18.08
Managing a Cinema (Day 2 of 2)
Intermediate Technical Training (Day 1 of 2)

FRIDAY 9.19.08
Intermediate Technical Training (Day 2 of 2)
Modern Theatre Design & Planning (Day 1 of 1)
Concessions: Where the Money Is (Day 1 of 1)

CIRCULAR ENTERTAINMENT

With one-quarter of all entertainment being created and shared within peer groups by 2012 a seminal transformation is taking place in the entertainment industry. Termed “Circular Entertainment” – for its transference from one individual to another – this form of entertainment is not passive, but provides the consumer an active role in their entertainment.

The next episode in entertainment will allow consumers to “compare, contrast, create and communicate” their entertainment with each other, states Tom Savigan, Trends Director of The Future Laboratory, which conducted the survey.

The survey’s results indicated that:

- 23% of the respondents buy digital movies
- 39% watch TV on the Internet
- 46% regularly use instant messaging
- 28% regularly visit social networking sites
- 17% played multiplayer on-line games
- 17% upload to the Internet on a mobile device
- 29% regularly blog

The research has identified four key outlying trends that, as they mainstream, will set the stage for the Circular Entertainment phenomenon.

Immersive Living – the rise of lifestyles which blur the reality of being on and offline. Entertainment will no longer be segmented but accessible and created wherever.

Geek Culture – consumers will shift to more sophisticated interactive entertainment which has visible recognition and rewards. Entertainment purchased and that which is created will merge.

G Tech – an immersing social force which effectively feminizes technology so as to make things – particularly entertainment – more collaborative, democratic, emotional and customized.

Localism – there is a locally-minded move in entertainment consumption. Localism and community-centrism will become a key as consumers take pride in seeking out the local and home-grown.

VIDEO GAMING BRINGS OPPORTUNITY FOR CINEMA

In the U.S. this year, sales of packaged video games will exceed box office revenues and worldwide their sales will be twice that of movie grosses. Total this with on-line gaming subscriptions, gaming consoles (which will outsell PCs by a factor of 10 in 2007), gaming software (which increased by more than 40% in the first half of this year over 2006) and hand-held games – your looking at a $40 billion video gaming industry. Additionally, all aspects of the video gaming industry are expected to soar for at least the next five years.

The big three console makers – Microsoft, Nintendo and Sony – are currently hitting new heights in gaming and scores of software gaming manufacturers are producing hundreds of new games for each console platform. But, that’s not all. The consoles are being developed to accommodate other entertainment functions as well. For example, Microsoft’s Xbox 360 console has the capability to use Microsoft’s Live Marketplace which allows 360 owners to download new games, as well as features films, TV shows, movie trailers, etc., some of which are fee based and some of which are free. Oh, and did I mention the 360 can also playback high definition DVDs. Going forward, the console will be used as a set-top receiver for internet TV.

If carried to its logical end, accessing entertainment for the home will be entirely virtual – with consumers never having to leave their homes to experience viewed or interactive entertainment.

All this being said, the gaming phenomenon also has a social aspect. Not unlike going to the movies, the camaraderie component of sharing the entertainment ‘high’ is even more pronounced with gaming. In fact, many video games are constructed for simultaneous play by two or more gamers. This is where the use of a cinema as a gaming destination comes about – as almost the perfect venue for “social gaming.” Designed as a turn key business established within a cinema, it provides the optimum setting for game enthusiasts (the demographic of which is male and female ages of 5-75+ with the average being a 37 year old female) to play their favorite games while experiencing the social aspects of gaming – shared fun and excitement, camaraderie and the emotions of human interaction – taking place in a comfortable, safe and customer friendly setting. The added availability of concessions, gaming accessories and a gamers swap shop make for a trendy, multi-demographic business which addresses a current and future entertainment juggernaut.

To arrange a meeting to discuss a video gaming center in your theatre please contact Entertainment Equipment at 800-448-1656 and ask for Jim Lavorato or Tracy Janis.

ADVERTISING EXPENDITURES FOR CINEMAS

Broken into seven categories, television will lead in global advertising expenditures for 2008 with a forecasted 38% or $182 billion of total ad revenues – which are anticipated to reach $478 billion. With expected viewership of over 3 billion for the Beijing Summer Olympics (which will be the most watched television program in history) and the U.S. Presidential elections, TV will get a big boost in 2008 of over $13 billion.

GLOBAL ADVERTISING EXPENDITURE BY MEDIUM

(US$ in millions, current prices Currency conversion at 2006 average rates)

2007/2008

Newspapers - 124.9 / 128.4
Magazines - 56.1 / 58.3
Television - 169.9 / 182.4
Radio - 36.3 / 37.5
Cinema - 1.9 / 2.1
Outdoor - 25.6 / 27.5
Internet - 33.7 / 41.6

TOTAL 448.4 / 477.9

On-line video and local search continue to display the highest growth rate – which has increased 22% each year since 2006. Print media’s, particularly newspapers, share of total revenues will be declining from 28% of total 2007 expenditures to 26% of 2008’s although the aggregate number increases by $1.5 billion.

Surprisingly, Central and Eastern Europe (up 18.3%) and the Middle East/Africa (up 17.2%) will experience the fastest growth in advertising. North America the lowest.

The ten fastest growing markets are listed below.

THE TEN FASTEST GROWING AD MARKETS
(Growth % 2009 vs. 2006)

Serbia - 308.8
Qatar - 214.7
Kazakhstan - 164.1
Egypt - 117.7
UAE - 108.9
Russia - 108.3
Ukraine - 100.5
Moldova - 97.1
Belarus - 96.8
Romania - 93.0

DEAR SANTA: A CINEMA MANAGER'S WISH LIST by Tracy Janis

Santa, I've got enough stuff. This year, surprise me with something a little more difficult to attain:

1. A tree on which good employees grow - I have yet to find that renaissance concessionist who can stay productive, sell snow to an Eskimo AND comes built with common sense.

2. Customers who keep their mouths shut about the prices - "$5.00 for a popcorn?!?" I mean, really, what was the last movie you saw at a theater, Jaws? And do you question the station attendant every time you buy gas?

3. Parents who actually attend movies with their children - when did I start running a babysitting service?

4. Solar powered cell phones that don't work in the dark.

5. And last, world peace...and affordable digital cinema for all.

DIGITAL CINEMA: MOSH PIT OR BLACK HOLE

I have been dealing one way or another with Digital Cinema for over 10 years and I see no reason to be anymore enthusiastic about it now than I was a decade ago and, in fact – the way things have evolved – I’m coming to the conclusion that D-Cinema could lead to the ultimate demise of the cinema industry. Similar to what has occurred to the music business, once movies vacate their analog format chances are the studios will lose distribution control and the industry (as it now exists) will begin its decline.

At best, I can categorize D-Cinema as a mosh pit – semi-controlled chaos with the potential for inflicting lot of damage. At worst, we’re witnessing what could be a black hole – sucking in the entire cinema industry. What would remain? DVDs and variations of alternative content. My concern would be eminent but D-Cinema continues to fall short of its expectation and is not the transformational acquisition it has been dubbed.

ADMISSION TO THE MOSH PIT

What is the cost of Digital Cinema? I get this question a lot. “About $100,000 to $120,000”, I say, “and then there’s the ongoing operating and maintenance costs, and oh yeah, the 3D option if you want that”. It’s not a very good answer but then again it is in keeping with the nebulousness of the whole D-Cinema saga. However, least I be accused of perpetuating the notion of D-Cinema as the industry’s ‘black hole’ I’ll quantify this mosh pit.

Big-D requires a cadre of basic components; as well as, ancillary items and services. The detail below depicts average pricing from component manufacturers less 20%. All amounts are stated in incredible shrinking U.S. dollars.

COMPONENTS

- Show Player – for image decoding and data feed to D-projector, also provides digital audio output to sound system

- Show Storer – stores digital movie (received from studios in DCP packages) for playback through Show Player

- Show Manager (System Software) Player, Storer and Manager: $20,000

- Digital Media Adapter – interfaces Show Player to existing cinema sound system: $2,500

- Network Automation Interfacer – interfaces Digital System to existing cinema automation system: $2,500

- Digital Cinema Projector w/Power Supply (2K Version) Lenses, Lamp, Pedestal: $80,000

-Alternative Content Formatter – for playback of alternative content through digital cinema projector: $6,000

- PC/Laptop w/work station: $3,000

- Installation - Equipment setup, interfacing, alignment, testing, & training, including all cabling, wiring, interconnections, etc.: $5,000

TOTAL: $119,000

3D OPTION

- 3D Filter Controller & Filter Wheel Assby.: $18,000
- 3D Glasses – Regular Type: $35 each
Calibration Type: $100 each
- Silver Theatre Screen - $3.75/sq. ft. – if required for 3D Option
Screen Installation: $1,000 – 2,500

OTHER COSTS

- Annual Service/Maintenance Fees: $1,500 – 3,000
- Build-out costs for any enhanced electrical power and/or exhaust & cooling requirements in Projection Room: Unknown

So, at the present time, the cost to convert one auditorium is approximately $120,000 – 140,000 with an undetermined useful life. Additionally, although not published, there are indications that the failure rate of the digital cinema components is higher than that of film projection. It is also worth noting that the various digital components making up the ’system’ are manufactured by various companies. In some cases, being “sold through” other manufacturers/vendors under contractual arrangement.

SURVIVING

Big D’s reason for being – with all of its inherent complexities and costs – is Hollywood’s attempt to retain control of movie distribution while increasing their share of pre-feature advertising revenues. Otherwise, films could be transmitted to theatres via the internet or sent on encrypted HD-DVDs.

Film is the glue that keeps the relationship between the studios and the exhibitors from falling apart and provides the studio’s distribution control. As is happening with other media that has experienced digital conversion once the bits are out it is impossible to get them back. Currently, piracy is a problem but the copies are inferior and it is not an industry killer. Digital piracy could be.

Late last year I forecast the U.S. box office would reach $10 billion in 2007. As it now stands it should come in between $9.8 – 10b, a 6 – 7% increase over ’06, but bolstered by a stellar summer box office (which was anticipated), and a good holiday finale (also in the cards). Internationally, there is higher growth but as compared to other (competing) forms of entertainment particularly internet and video gaming, the cinema’s growth is modest. Toying with the cinema’s fragile business model could prove disastrous – best to leave it alone.

KEEPING UP WITH TECHNOLOGY Read Fast: This Article Expires in 5 Minutes

Technology is moving so fast it’s difficult, if not impossible, to keep up – change is the only constant. Communications technology is one such area and its advancement is having a profound impact (good and bad) on all businesses including cinemas. Several communication technologies, including IM and Texting, along w/portable storage devices (such as flash sticks) clearly represent this good vs. evil clash.

THE IM DILEMMA

IM (instant messaging) has become ubiquitous in every day work and play environments. Used to communicate with other employees, vendors, and certainly friends & family IM should be viewed as a good and valuable technology but one that is also a potential security risk. As many cinema owners/operators have discovered, IM is very hard to control in the workplace as its convenience and speed make controlling it nearly impossible. Compounding the problem is the fact that telecommunications companies knowing that many businesses are trying to control and/or block IM, frequently (and randomly) change the requisite messaging protocol, as they constantly endeavor to keep user traffic high – effectively increasing monthly billings.

On the other hand, IM has its benefits. For one, it does improve employee productivity. People can work at a faster pace as IM takes less time than emailing while using up much less band width. Additionally, as compared to voice communication, IM saves vast amounts of time in eliminating both unnecessary conversation and phone tagging.

To alleviate control problems while maintaining IM’s benefits, businesses that allow IM should implement control software as, if unmanaged, IM can put any company at risk for potential internal security breaches and/or theft of intellectual property, not to mention, law suits. To illustrate, in the U.S., Britain, and most other developed countries, IM is governed by the same civil laws as emails so, for example, if an employee were to IM a sexually explicit or aggressive message to another employee the company could be held liable for harassment just as if those sentiments were expressed by email or verbally. So the potential for legal ramifications is a very real one. Affordable enterprise-class IM software products to address these control issues is available and inexpensive. For instance, both Lotus and Microsoft offer very refined products to meet this need and every cinema with more than two locations should be using it.

TEXTING: THE GENIE OUT OF THE BOTTLE

That’s all well and good for IM but there is currently no way to control Texting between cell phones. Cinemas face a dual problem with Texting: internally (employees) and externally (customers). Unlike IM, Texting has not been addressed by any type of regulation and there are no legal mandates surrounding it. For example, if a company provides a mobile phone to an employee and pays the bill there is the risk that if that phone is used in any illicit way the company may be held liable. Additionally, cell phone(s) and PDA(s) present other (perhaps more relevant) security issues. “Cell slurping” – the term used to describe the action of plugging a cell or PDA into a computer and downloading files (not unlike the use of flash stick or memory card) - presents very specific security risks regarding both viruses and corporate data theft.

ACTION STEPS TO HELP

There is no doubt that IM is fast becoming a critical and useful form of communication within companies – large and small. The key is in having employees use the technology (they probably will anyway) with its obvious advantages over voice or email by implementing good usage policy and practices. Here are several that every cinema should adopt:

* Take the existing email usage policy (if you don’t have one you should) and extend it to include IM and Texting.

* Make it clearly understood to all employees that company supplied technology tools, particularly communication devices, can only be used for business communications.

* Employees should be informed that their IM sessions may be archived on the company network.

* Take an informal survey within the company to see if a lot of IM is occurring, if so, determine the company’s needs for this practice to continue. If there is a corporate benefit then enhance company policy and standards and purchase the required enterprise software to control it.

Trying to keep up with technological advancements is virtually impossible. Additionally, technologies used by individuals and organizations are blending at a faster and faster pace, giving rise to unforeseen benefits, as well as, drawbacks. Take a look at your cinema operations and determine what technologies are being used (those formally sanctioned and those being used informally) weigh the benefits and drawbacks of each and decide what is best suited for the cinema and its employees, and which is not.

LATEST CINEMA STUFF

PHISHING - PHARMING - MALWARE - WHAT?

If you don't know what these words mean - you should! These are the buzz words used to describe digital data theft. We're not talking about teen-hacker's downloading worms but very advanced data and identity theft of individuals and companies which fuel an immense underground economy. Defending and protecting data processing equipment and contents from sophisticated high-tech theft is an issue fast becoming a necessity for businesses and individuals.

What warning signs to look for. How to defend against data theft. What protective actions to implement. It's all part of the two day "Managing A Cinema" training workshop being held September 17 & 18 at Cinema Training Central. Don't miss it!

SECOND SOURCE CINEMA INCOME

Standard video projection has beome a significant second source revenue generator at cinemas. Used for a variety of activities - from pre-feature ads and entertainment to DVD-based film festivals - a digital projector is a low-cost necessity for optimizing a cinema's entertainment value. And, yes - your heard me - low cost. A high definition digital projector suitable for cinema use can be purchased for under $4,000. And, cinema customers that have purchased digital projectors inform us that the payback on their investment averaged 6 months or less.

Easy to install, operate, and maintain, don't miss the opportunity to enhance your cinema's operations and profitability. And don't let all the tech jargon that surrounds digital projection intimidate you - we're here to help you through the tech-talk minefield. Call us with any questions or concerns, we'll be happy to provide information and expertise on the subject.

D-CINEMA - WHERE IS IT AT?

What's up with Big-D? Digital projection technology keeps advancing. As we predicted JVC has introduced a prototype 4K D-Cinema projector to rival Sony's SXRD 4Ker and Texas Instrument's won't be far behind. That will leave the current 2K machines resident at cinemas (which jumped the gun) obsolete after only 18 months. Another question is how will the advancing computer server virtualization software - such as VMware's hypervision - impact Big-D? Which it will.

Learn all about the latest technologies regarding Big-D, as well as, the latest advances in conventional digital projection by attending CTC's "Digital Cinema Training Workshop" to be held Wednesday, September 19th, as part of CTC's annual cinema training week. Call us for details.

SEPTEMBER TRAINING BRINGS IN MANUFACTURERS/SPONSORS

Osram Sylvania, Kneisley Manufacturing and Yamaha Pro Audio will be several manufacturers along with Speco Systems that will be sponsoring a luncheon or other social event during CTC's training week - September 17 - 21. Manufacturer sponsorships offer a great marketing opportunity at minimal cost and benefit the manufacturer, as well as, the CTC participants.

FALL'S BACK IN

Coming off a very good summer the box office lineup for the fall looks impressive. From September to years end Hollywood releases will total over 125 and, like the summer films, will concentrate on fantasy and comedy - the two main audience drawing genres. We are sticking with our prediction of a record $10 billion U.S. box office for 2007 and solid revenue numbers for exhibitors which will partially make up for 2006's lackluster performance.

EXHIBITION REALITY CHECK

The large U.S. publicly traded cinema exhibitors' stocks look grim. Although Carmike (symbol: CKEC) touted their conversion to Big-D as the next coming, the stock market has taken a much less heavenly view. Even with a stellar summer B.O. Carmike's stock is currently $1 above its 52 week low at $17+ change and the company is projected to lose $4.50/share this year.

Regal (symbol: RGC) at $22+/share is doing better but is still under-performing as it is projected to earn only 80 cents/share on revenues of $2.9 billion. As for AMC, well, their initial public offering (IPO) was cancelled on the eve of its scheduled May "coming out" party - due to a lack of market acceptance.

EXHIBITORS: Get back to basics. Exhibit (I couldn't resist) some showmanship. You're getting sidetracked with Big-D. FLASH - Big-D isn't a revenue generator and the box office isn't going to get any better than it was this summer.

MANAGING A CINEMA FORWARD

ASSESSING THE LANDSCAPE

Effective managers today need to be constantly expanding on their expertise. For example, those in the cinema industry should be absorbing information on the digital domain, advertising trends, telecommunication and data processing advancements, the entertainment and leisure industries, food and commodities markets, etc. However, good managers should possess a filter which forces them to discard input that is opinion or point-of-view, and instead search for events which spark trends. This allows one to obtain clues with which you may make inferences on events and trends that may impact your business and also give you the right view of the landscape you’re working in.

Listed below are some current trends:

· In developed countries, populations are getting older, but also more diverse.
· Consumer businesses, no matter how large, are community-centric.
· Today all businesses must specialize in marketing and development.
· Companies must be organized for maximum advantage with flatter structures. Pyramid structures increase frictional loss and are energy consuming.
· Staff is the value added for any business and staff development a key success factor in today’s talent driven economies.

TODAY’S CORE SKILL SET

Whether your field is cinema management or any other consumer industry, today’s environment requires a specific skill set. Managers must:

· Possess a high tolerance for ambiguity. They must have a capacity for understanding uncertainty and know that things are capable of being understood in more ways than one.
· Have a generic curiosity. They should be constantly wondering about how business works, what impacts it and how to improve it.
· Assess their own nature and biases and be able to discount its effect on their decision-making.
· Be strategic thinkers not strategic planners.
· Place coaching skills as a top personal strength.
· Be talent driven. They must strive to hire dynamos and pay and train them well. When hiring, think in terms of roles or functions rather than specific job placement.

MOVING FORWARD

After assessing the landscape, keeping abreast of trends and establishing a set of core skills, now you need to hone prioritization, empower staff while providing guidance, and emphasize in-house and outside training which focuses on areas that need development. If the organization is structured correctly, the cinema manager is the key person who will move the cinema forward.

ENTER THE DRAGON

Two decades, perhaps less, how long before China becomes a force in worldwide entertainment? Competition with the U.S. is inevitable. The Dragon will expand into global entertainment with the cinema – the King of Mass Media – as its ultimate target.

China is currently spending billions on a massive branding mission to make its companies and products as well known as Apple, Coke and Sony. The Chinese Communist Party (CCP) has a derived national development agenda termed “Advanced Product Force” which is intended to promote communistic social harmony while employing capitalist business practices.

To accomplish this act, the CCP must be forward thinking economically while maintaining control over China’s 1.3 billion inhabitants who are diverse in terms of language, customs, social development and prosperity.

An example of the implementation of the Advanced Products Force is the Haier Group, a large Chinese durable goods manufacturer who has spent two years and tens of millions of dollars developing a line of flat panel LCD products. Haier finalized an agreement with the National Basketball Association to runway their HDTVs at basketball games and NBA promotions across the U.S. Haier is focused on consumer electronics, a difficult global market to penetrate and one where branding is essential, especially now that prices for LCD TVs have dropped so much that consumers choose brands (Sony, Panasonic) over price.

The Chinese realize that producing a quality product and marketing it require very different skills. Along with electronics, they are zeroing in on industrial and consumer durable goods markets and the entertainment industry, which has significant national import. Entertainment products have high margins, long life cycles and tremendous export value. For example, the U.S.’s arts and entertainment export revenues run neck-and-neck with its aerospace industry. Entertainment (particularly the cinema) is at the cutting edge and pushes the envelope with regard to digital imaging, microchip and computer processing advancements, connectivity development and other high-end technologies. With over one-fifth of the world’s population, China is also aware that a vibrant entertainment industry connotes a country’s prosperity, influence and social sophistication, which will prompt the nation to develop a homegrown cinema industry over importing Hollywood films.

Piracy is rampant in China with first-run Hollywood movies available from street vendors in DVD format in every city and town. Although cinema attendance has been shrinking, an agreement between Warner Bros. and Dalien Wanda (a Chinese developer) may lead to the opening thirty new multiplexes over the next two years. As the Chinese population prospers, people will opt to view a movie at a cinema over a low quality DVD.

Leaving behind the Hong Kong chop-socky films of the 70’s and 80’s, modern-era Chinese cinema began developing in the 90’s into the well financed, sophisticated, fantasy laden morality plays of today. Films like Crouching Tiger, Hidden Dragon (2000) and Hero (2002) have had wide international distribution and earned critical acclaim, but the U.S. studios maintain control over global movie distribution. The Chinese know they need to open up to more Hollywood-produced film imports, but they want to develop and control the production side and internal distribution while slowly exporting Chinese made films and cultures to the rest of the world.

As a new member of the World Trade Organization, China has had joint ventures with Hollywood, producing films shot entirely in China that are scheduled for release in both countries. Films made exclusively for distribution in China are also scheduled for production, which should nurture the Chinese film industry and provide the CCP a reason to clamp down on piracy.

For the last decade China’s economy has been growing at an unprecedented rate, but to continue growing, it will have to develop new products in addition to taking market share away from well established and well financed global competitors.

Their strategy is to move up the economic food chain into high yielding, high tech products and services. The entertainment industry is high yielding, but also high risk. Evidence of this is China’s development of its island Macau into a world-class gaming and resort destination. Almost all of the Las Vegas casino/resort developers have or are constructing mega-casinos in Macau, which exceeded Las Vegas in terms of monthly casino gaming revenues in January 2007.

The CCP is using the “leap frog” effect, leaping over old technology in order to develop China’s economy, which is most clearly seen in mobile communications. In 2003, there were 269 million cell phones in China, 498 million are expected by 2008. The Chinese will “leap frog” in all products and markets they enter, certainly in the entertainment industry. Modern cinema sound technology will aid the Chinese in this endeavor. Any movie can now be screened in native language if the soundtrack is mastered with a DTS timecode. This timecode is synced to a formatted DVD soundtrack which is then played back during film’s presentation, meaning a film in Mandarin can be exhibited at a U.S. cinema in English, eliminating the cost and nuisance of subtitling.

Reshaping a feudal, agrarian society into a high tech manufacturing and services economy over several decades is unprecedented, but the trick to it is developing, instituting and managing a new and youthful socio-economic phenomenon before it matures and the pace of growth slows dramatically. If the CCP imposes on individual expression or human rights, it could lead to the stifling of economic growth and civil unrest. Contentious policies have yet to foster widespread discontent. For example, Chinese citizens are allowed to protest against government policies, but only as individuals, not organized groups.
A society’s maturity and influence is measured in large part by its arts and entertainment, and in the 21st century this means electronic arts and entertainment; cinema, music, gaming, sports and literature at the core and supported by high-end audio/visual components and the Internet. China’s formal debut in global entertainment will be its hosting of the 2008 Summer Olympics. That’s when the world will get a preview of how the Chinese will try to influence global entertainment.

SIZZLING SUMMER SPURS RECORD 2007 BOX OFFICE

This summer the cinema industry will witness its biggest box office in history. Driven by the fantasy and comedy genre films - which are voraciously consumed by audiences worldwide - Cinema Mucho Gusto is predicting that the 2007 box office will top $25 billiin globally and hit $10 billion in the U.S. And better still, that the $2+ billion increase over last year will be due principally to increased attendance vs. higher admission pricing.

We are also predicting that cinema's activities including: pre-feature entertainment, digital film festivals, video gaming activities, auditorium rentals, etc. will continue to enjoy strong growth and we anticpate revenue from these activities growing by 15-20% in 2007 and annually through 2010.

THE SPLICE IS RIGHT

Beginning June 1, EEC will launch "The Splice Is Right," a web blog devoted to facilitating transactions between buyers and sellers of cinema equipment and services. If you are in need of cinema projection or sound equipment, concession equipment, lobby accessories, as well as spare parts or want to sell any of these items, you will be able to log on to accomplish transactions. We will keep you posted on its impending premiere.

PIRACY: HURTING OR HELPING HOLLYWOOD?

According to the June 2007 issue of The Atlantic, all it takes is one culprit in New Jersey to share a newly released film with 30,000 people globally. The culprit directly recorded the film reels onto eDonkey, a person-to-person file sharing network.

While file sharing has steadily grown over the past decade, downloading movies is at a minimum level due to the amount of time it requi

Customer Service: The Inexpensive Upgrade

When preparing notes for my last employee meeting, I wanted less of reviewing policy, and more of a theme that my staff could reflect upon. Then it struck me: I was so accustomed to working in a movie theater, that I almost forgot what it was like to go to one.

In an attempt to regain customer consciousness, I visited a competing theater. There was a long line at the box office and after finally making it to the front, there was no smile or warm greeting to convey an unsaid thank you for my patience. The attendant at the concession stand had no line, but possessed an attitude of annoyance, like I was pestering him by placing an order. My pretzel bites were hard and the focus on the film was soft.

All of my complaints were results of poor customer service. Not just the manor of how you interact with patrons, customer service encompasses every aspect of your daily operations. From the accuracy and articulation of your recording, to the temperature of your auditoriums, customer service is the unseen entity that gives your theater its image. The bad experience I had at the competing theater was good for my meeting.

"Sure, you get to eat popcorn every time you work," I said to my staff. "You make it, sling it and sweep it." I wanted my staff to remember what made the movie going experience so fun, and to keep in mind that the popcorn to our customers is a treat, something to look forward to. The meeting then became a pep talk, "Let's neatly fill the bags with as much popcorn as you can, and always scoop from the top, so no one gets any crumbs. Let's give people the best popcorn in town!"

As corny as that sounds, motivating your staff is critical to customer service. You can have ear bleeding digital surround sound and seats modeled after those on Air Force One, but if you have cold cheese for your nachos and the ladies' room has no toilet paper, you're lacking good customer service. Especially with all the other entertainment options available to consumers. Superb customer service gains repeat business.

To ensure your customer service machine operates smoothly, keep yourself in the center of it.

A staff is only as motivated, friendly and competent as the manager who leads it. You are the model that your employees follow. You set the standard of service for your theater. I always tell my assistants that they should be able to do everything ten times better and faster than a floor staff member. A higher state of service exists when managers act as both coach and teammate, taking part in the work that the whole team needs to accomplish.

Working as a team is but one way to keep your staff happy. Remind your staff that you value their work by giving verbal pats on the back. "You did a great job of moving that line quickly." Make "thank you" a part of your daily repertoire and acknowledge your employees' efforts. While these ideas are not revelatory, you will notice results if your continually implement them. Happy employees are friendlier and care more about the needs of your patrons, which creates an ideal customer service environment. Happy customers means less complaints and that equals less stress for your staff.

Theater managers have the dual burden of operating both an entertainment venue and a food service enterprise, the former showcasing a product that is out of your hands. While you have no control over a film's quality, you have total control over the quality of customer service. "The movie was awful," a customer recently said to me, "but the popcorn was terrific!"

Tracy Janis
District Manager, Dipson Theatres

SELLING DIGITAL CINEMA/ WHAT ELSE IS THERE?

A recent Dolby Labs newsletter headlines D-Cinema. And states, "a milestone year for the digital cinema industry". I'm not sure what the digital cinema industry is. What I am sure about is the fact that Dolby, a publicly traded company( with a share price in the $33 - 38 dollar range, and a high current price/earnings ratio of 38) is put into the box of every other public company. To improve sales and profit margins on a regular and in most cases, quarterly basis, so as to endear themselves to the Wall Street analysts who follow and rate their performance. What drives a stock's price is earnings and/or its earnings potential. In Dolby's case it is currently the marketing and sales of its D-Cinema based products to the movie exhibition side of its business that will contribute to its overall growth and profitability- as the sales of sound processors and peripheral products to theatre exhibitors is not growing as it once did.

I'm not faulting Dolby. There Digital Cinema products are stellar and perform extremely well. Additionally, Dolby has one of the greatest brands and certainly an insiders place in Hollywood - one which is well earned and deserved.

It is only natural that Dolby push its D-Cinema products. The recent JPEG2000 upgrade tweeked its share price up but with P/E in the high 30's Wall Street will be looking for higher sales and earnings.


Jim Lavorato

CORN and GAS vs.THE CINEMA

The price of corn has skyrocketed on the futures markets and farmers are increasing their acreage of corn to an all time record. Why, because of the promise of ethanol as a replacement for gasoline. To make matters worse, this summer, gas is expected to rise to the $3/gallon price as crude oil hits the $70/barrel mark.

So cinema exhibitors get hit with a double whammy. Higher popcorn prices and higher gas prices, both of which impact theatres negitively. What's the answer, if any.

Watch your popcorn suppliers pricing, and if possible purchase corn now for stock through the summer or better still contract with the supplier for set pricing now with delivery later.

Look closely at your popcorn pricing. If possible nudge up your pricing or recast your pricing to force more moviegoers to purchase middle or large sized popcorn portions. Make these sizes the value buy, force customers to the middle price popcorn size.

Think up promotions: Gas discounts on concession purchases. For example $1 off on all concession purchases over $10. Offering Pic n' Play concession giveaways. Colaborating with local gas stations for fillups and a movie. Be creative.

The price increases for gas and corn will impact every movie exhibitors bottom line. So take action now. The roster of summer films looks very good but you need to be proactive and begin to impliment tactics to offset the gas/corn issue.

Good luck!
Jim Lavorato

2006 CINEMA STATS.

The 2006 numbers are in and the Boxoffice improved over 2005 - a dreadful year. Domestic B.O. was up 3% over '05 at $9.1b, while overseas did even better, increasing over 11% to $14.6b.
However, the numbers are still quite skewed, as the Top 10 films of the year generated 24.5% of total Domestic B.O. The Top 25 films alone accounting for 42.7% of total domestic B.O. for the year. And the genre of films pretty much was in line with the prior 5 year trend. With audience preference toward Fantasy/Drama and Comedy/Drama movies. Of the Top ten films in 2006, 7 were Fantasy, 1 Comedy, and 2 Dramas. Of the Top 25 there were 7 Fantasy, 11 Comedy, 6 Drama, and 1 Horror.

Although holding its own in the cut-throat world of entertainment, the cinema will remain a static performer. The 2007 crop of films appears to have promise but the fact remains that audiences are completely content driven and - as the stats support - genre driven as well.

The 2007 B.O. should show marginal improvement over '06 - which at $23.7b was certainly not stellar; however, the foreign markets will continue to outpace the domestic B.O. in terms of both organic and incremental growth. With 62% of total 2006 B.O. the overseas markets are where its at for the studios, as these markets continue to have strong growth. It's also where future potential is greatest, and where predicting audience film perference is much less challenging.

Jim Lavorato

NEW BLOG LOOK

We have updated Cinema Mucho Gusto and have a new look. Which we hope will serve you better and make our Blog more interesting visually.

LIVE FROM THE CES

A visit to the CES never fails to stimulate the senses. You get caught up in with the energy and buzz which is always present. And every year you marvel at the immensity of this Convention. Seeing and experiencing everything at the CES is no longer an option. You have to pick and choose what interests or excites and plot out a travel route.

THINGS I SAW ON MY TRAVELS

Sony's Blu-ray vs. Toshiba's HD DVD High Definition DVD warring formats. Not to worry LG (the large Korean electronics firm) introduced the Super Multi Blue, a DVD player designed to play both Blue-ray and HD-DVD discs. Peace at last?

Sling Media showcased the SlingCatcher, a device that transmits multimedia images from the Web to TV set. Cost: Under $200 by mid-2007.

Texas Instruments announced that many of its OEM partners, including: Samsung, RCA, Mitsubishi, Panasonic, NuVision, Toshiba, etc. will be offering "slim DLP HDTVs" and that LED-based DLP and HDTVs are coming to market, which are touted to have a contrast ratio of 100,000 to 1! DLP is proven to be a great technology for both projection and HDTV use.

Similar to Sling, Dell introduced a digital home entertainment suite that sends HD video to Dell TV monitors. Dell also unveiled a new PC specifically designed for Game Players, with a liquid and ceramic cooling system. Cost: $5,499,

Sharp Electronics showcased the world's largest LCD display. At 108 inches.

Not to be outdone, Optoma BigVizion demonstrated a 100 inch DLP based display and has plans to introduce a 120 inch model later this year. Designed for the professional home theatre market the 120 incher will carry a price of $49,999.

Apple, as every one knows, introduced the iPhone. Although Apple may not be able to use the name iPhone (which has been copywrite owned by Cisco Systems for many years) Apple did get a lot of buzz but the Apple iPhone is not unlike other smart phones, such as Motorola's Q phone, which are already on the market.

TidBit: Samsung was the number one seller of digital TVs in the U.S. last year.

TidBit: DLP has 43% of display market. LCD and Plasma 57%.

As displays get larger and less expensive, video projectors are getting better and smaller. Projectors are being used for not only TV and movies, but for gaming, showing photos, presentations, sales and marketing calls & demos, etc., etc.

A number of point of purchase displays using portable digital projectors were showcased at the CES. Additionally, palm-sized DLP projectors were shown by Samsung,
Toshiba, and LG. These are low cost, extremely compact projectors which can be linked to cell phones, PDAs, PCs, etc. Samsung's Pocket Imager can fit in the hand.
Can link to a DVD player or DVD in laptop, Smart Phone, and provide up to a 54" image. Cost: $799 w/carry case.

Not to be outdone, Toshiba introduced the palm-sized TDPFF1AU that can provide an image up to 68 inches diagonal and comes complete with a foldable 23 inch screen, and a rechargeable 2-3 hour battery. It is compatible with phones, DVD players, digital cameras, laptops, game consoles, and USB memory sticks. Cost: $699. Let the games begin.

CES launched mygreenelectronics.org to assist companies and individuals in recycling tech devices and equipment.

TidBit: Within the next several years, Web-to-TV interfacing will be widespread. You can see it coming.

Tidbit: Funniest product at the show: Combo iPod dock station and toilet paper holder. Cost: I didn't get a price. As I don't own an iPod. Now what about a mini flat panel and toilet paper.....Hmmmm. Let's not go there.

By the way all the products mentioned and lots of others currently on the market can be purchased through Entertainment Equipment, just call 800-448-1656 or email.

Best - Jim Lavorato

CINEMA BUYING GROUP: A FAILURE FROM THE GET-GO!

The so-called Cinema Buying Group - the brain-child of the National Association of Theatre Owners (NATO) and some misguided cinema owners/operators - was a misconceived and terrible notion from its inception.

The CBG does not offer best industry practices, does not offer best suppliers, does not offer best service, does not offer advice, does not offer training, does not offer expertise, and has no industry recognition.

I'm not sure how many exhibitors joined the original (for profit) CBG - but it is now going to be "reconstituted" as a not-for-profit entity under the NATO corporate umbrella, according to G. Kendrick Macdowell, NATO VP & General Counsel. Why? To save on costs (insurance, accounting, legal, etc.) and "thereby greatly simplify CBG's organizational and financial burdens" states NATO's Macdowell.

Why join? The original premise for the creation of the CBG was to form a buying cooperative so independent cinema operators could purchase D-Cinema Projection Equipment in quantity and thus pay less because they would be buying in volume. Since this has and will not happen, for a whole variety of reasons, the CBG has religated itself to purchasing projection booth supplies and spare parts, xenon lamps, and concession supplies/parts from a total of five so-called "prefered suppliers". These five suppliers do not offer the best products or services in the cinema industry, and using this ridiculous CBG endorsement is really just a means for them to end-run their competing - and superior - cinema equipment manufacturers and suppliers/dealers.

For, at least 75 years, there has been a symbiotic relationship that has served the cinema industry extremely well - that is the relationship between the theatre owners, the equipment suppliers/dealers/service providers, and the equipment manufacturers.

Exhibitors beware! Like cartels, cooperatives (especially those based solely on the motive of lower prices) don't work well for their members. Thinking you can go on the cheap and purchase a quality xenon lamp, popcorn, or splicing tape to save a few bucks is very short-sighted thinking. What exhibitors (like all other businesses) need are strong and trusting relationships with their suppliers/dealers. This is the only way to get the best products suited to your cinema, the best expertise and customer service and the best technical advice, service, maintenance and installation, not to mention training. Disregarding this type of relationship for one with a co-op makes no business sense.

The Cinema Buying Group is done. It was a bad concept from the get-go and offers no real benefit to the cinema industry let alone NATO members. Its creators demonstrated a total lack of appreciation and understanding of the cinema industry and its workings and the relationship between the exhibitors, the dealers/suppliers, and the equipment manufacturers. The CBG will fade away, as it should, without fanfare or recognition and retire to the annuls of cinema history.

THE DIGITAL CINEMA STORY

THE DIGITAL CINEMA STORY
HOLLYWOOD DRAMA DOESN'T GET ANY BETTER THAN THIS
BY JAMES LAVORATO


It's a complex and provocative story rife with high stakes drama and a cast to rival any Hollywood blockbuster. Intricately woven into its plot are all of the major movie studios (and their global media parents), the world's largest electronics firms, leading edge digital imaging and microchip technology, the worldwide cinema exhibition business, billions of dollars, Hollywood's biggest movers and shakers, and, arguably, the very existence of the cinema as we know it.

Digital Cinema (the name given to digitally exhibited movies at theatres) has been in serious development since the mid 1990's and many believe it is now at the breakout point. But is the cinema ready for the systemic and seminal changes that the adaption of digital technology will instigate? It's time to unravel the complexities of this intriguing saga and see if we can determine how it will evolve -and (perhaps more importantly)the impact it will have on the entertainment industry.

THE TECHNOLOGY - NOW YOU SEE IT/NOW YOU DON'T

Until recently, there were two imaging technologies that supported Digital Cinema. Texas Instruments' DLP and JVC's D-ILA. Both systems currently offer what is referred to as 2K image resolution. Sony then introduced a 4K imaging system - SXRD -which, more or less, threw a spanner into the D-Cinema works. Termed 4K for the number of horizontal pixels per frame (4096 horizontal pixels x 2160 vertical pixels)the SXRD system offers 4 times the quality of 2K by more than doubling the per frame pixel density.

Without going into all the nuances of each technology, following is a brief overview of each.

JVC's D-ILA (Digital Image Light Amplification)

Developed by Hughes Electronic's in the 1980's for military displays, Hughes later partnered with JVC to refine the technology. D-ILA uses a derivative of a chip technology termed LCoS (Liquid Crystal on Silicon) and a holographic color filter. Capable of producing a 4K display to rival Sony, JVC is currently working with Aurora Semiconductor to produce an advanced LCoS chip for higher resolution projection.

TEXAS INSTRUMENT'S DLP (Digital Light Processing)

Sometimes referred to as a DMD (digital micro-mirror device) the DLP chip contains millions of tiny mirrors which switch on and off thousands of times per second either reflecting light or not. Capable of very high resolutions (some estimate as high as 10,000 lines) the DLP system currently uses three DMD chips (red, green, blue) to generate all the required colors for the 2K DLP D-Cinema projectors. A four chip system is likely in the future with one chip dedicated to the gray scale (i.e. black level) for improved contrast. In time, DLP may be capable of producing true 6K to 8K 35mm film resolution, but this will come at a high cost.

SONY'S SXRD (Silicon X-tal Reflective Display)

The Sony SXRD 4K projectors use GLV or grated light valve technology. GLV (a DMD derivative) uses red, green, and blue lasers reflected off ribbon patterns on a chip.

Below is a comparison of the current image resolutions:

35mm Film - 6-to-8K resolution
SXRD - 4K
DLP and D-ILA - 2K
HDTV - 1K

There are currently about 1000 D-Cinema installations worldwide - which represent less than 1% of total screen count - and the majority of these theatres have redundant 35mm film projectors as well. To my knowledge, there has been no long term use of a D-Cinema projection system operating as would a 35mm projector at a multiplex cinema or "grind house" (as they are referred to in the industry). That is, operating 12-14 hours per day, every day. So, whether or not the current generation of D-Cinema equipment could hold up under these conditions is unknown.

Digital Cinema Initiatives (DCI) was the creation of the Hollywood studios whose main function was to recommend universal standards for the Digital Cinema Distribution Master (DCDM) file, (the format by which every digital film is to be distributed) in what are called Digital Cinema Packages (DCP).

The DCI was to set the specifications for all "theatrical" films and other "alternative" content (such as, in-theatre sports, concerts, and other pre-feature entertainment) to be distributed and exhibited at cinemas via DCI compliant D-Cinema equipment. DCI was to fulfill this task and then disband - which it has. In a nutshell, DCI proposed three D-Cinema projection formats:

- 2K projection at 24 frames per second
- 4K projection at 24 frames per second
- 2K projection at 48 frames per second

For the full read on DCI D-Cinema System Specifications go to: www.dcimovies.com/DCI_Digital_Cinema_System_Spec_ul.pdf.

FOOTING THE BILL

D-Cinema is a potential cost saver (no need to process or distribute film prints throughout the world) not a revenue generator. Since the cost savings (estimates range from $1-$3 billion annually) accrue solely to the studios, financing the film-to-digital conversion has always been a sticky issue, as the expense of the required D-Cinema projection equipment (currently estimated at $90,000-$120,000 per movie auditorium) and its continued upkeep and maintenance falls on the exhibition (theatre owners) side of the industry.

Currently, film distributors (principally the studios) charge the cost of the production of film prints against each movie (each movie is accounted for as a separate product). This cost varies depending upon the movie's length and the number of release prints struck. Typically, each film print costs between $1,500-$2,500 to produce with exhibitors paying for shipping to and from their theatres. However, that formula doesn't work with D-Cinema for a variety of reasons, one being that it would take the studios far too long to write off the large investment D-Cinema is currently burdened with.

Several financial schemes - such as issuing bonds against the film production savings, charging virtual film fees, having the exhibitor carry a subsidized mortgage-type instrument - have surfaced. But none have been adopted.

To make matters worse, given the quick atrophy of the digital projection equipment, first (and probably second or even third generation) adopters may well require replacement equipment.

"Star Wars Episode II: Attack of the Clones" (in the summer of 2002) was, the first commercially released digital movie using the current D-Cinema technology. At that time, I happened to be doing consulting work for a small theatre chain (UltraStar Cinemas) based in San Diego. Because of my and the theatre owners' interest in D-Cinema I negotiated, on behalf of UltraStar, a deal with the Boeing Company. The arrangement was for Boeing to install six D-Cinema platforms at four UltraStar theatre locations (which, at that time, represented the highest concentration of D-Cinema installations in the world).

Boeing's interest was in testing the transmission and encryption mechanisms of their communication satellite network. The test worked flawlessly; however, when completed, the inclusive cost of the six platforms had totaled $3 million and within six months the equipment was obsolete. For Boeing, the proof of concept of their transmission capability and encryption technology was worth every penny as that knowledge could be utilized by other industries (such as the medical industry) even if the cinema industry never availed itself of it.

Besides the technical issues a financial agreement between Boeing and UltraStar was structured and agreed to by both parties.

- UltraStar was charged a minimal cost per D-Cinema platform of $300/month
- UltraStar agreed to pay Boeing 10 cents per ticket on all digital prsentations
- Boeing reserved the right to exhibit advertising and alternative content with a
50/50 split
- Boeing paid for the equipment and the cost of installation

A similar arrangement, however, would not be feasible for the entire industry given the large upfront cost and lengthy time of payback.

3D "ADDS" ANOTHER DIMENSION

Although D-Cinema may not be a revenue generator, 3D films might, as the 3D effect cannot be replicated elsewhere (most notably in the home). Around for decades, 3D may get a free ride if the industry moves to digital. Remember the DCI proposed formats? Well the 2K at 48 frames per second could be used for 3D movie presentations.

All well and good, but 3D has problems of its own. The ideal would be autostereoscopic 3D which doesn't require glasses, but that technology is currently only available on small digital displays because of the limited sweet spot (where the viewer must sit in order to get the 3D effect). So, glasses will be required. There are several types of 3D glasses but all are cumbersome and the best are expensive to purchase and maintain.

Big proponents of 3D movies are filmmakers James Cameron, George Lucas, and Peter Jackson. They feel 3D may well "save the cinema". In fact, Lucas wants to re-release both "Star Wars" trilogies in digital 3D. And In-Three, Inc., a California based company, is here to help him. In-Three has perfected a process termed "dimensionalization". This process restores depth in films shot in 2D. A rival firm, Three Dimensional Media Group also has a 2D-to-3D conversion process. These 2D-to-3D conversions work but are extremely labor intensive. The human touch is required because too much or too little depth will give viewers a headache (literally). Currently, it takes six people to judge each converted frame. Cost? About $4.5 million for a feature film (although this can vary greatly depending upon such factors as the film's length and scenic complexities). However, this could be an option for re-releases of older movies or for those currently being shot in 2D.

PROS AND CONS

With approximately 10 million seats, and operating at a chilling 12-15% utilization rate, U.S. cinema exhibition needs to bolster attendance - however it can. In 2005, global box-office attendance was down 7% from 8.4 billion to 7.8 billion admissions. Total worldwide box-office was $22 billion, certainly not a small number, but highly skewed toward certain genre - namely, escape/fantasy and comedy/drama movies. For example, of the top 10 grossing films (which generated a whopping 25% of total box-office) 8 were fantasy, and 2 comedy/drama. In the U.S., the number was even more skewed, with the top 10 grossing 27% of total box-office.

Although D-Cinema won't help box-office revenues, it will drastically change the landscape for the industry players and clearly presents advantages and disadvantages to each. For example, it would allow the studios to tap into the estimated $600 - 800 million in pre-feature advertising revenue, which is now going to U.S. exhibitors, and is expected to continue to have rapid growth.

Listed in Exhibit I are some of the advantages and disadvantages to the various industry players.

DAZED & CONFUSED

Rumor has it that.....Christie Digital (parent Ushio Electronics, Japan) and its subsidiary Access Technologies say they will roll-out 4000 DLP based systems by 2008.....Warner Bros. (parent TimeWarner) announces plans to test JVC's upcoming 4K projector in Japan to test transmission of DCMD from L.A. to the Far East via fiber.....Sony announced a deal to install their SXRD 4K projectors in Landmark Theatres which wants to integrate independent films with Hollywood mainstream features.....Thomson announced a deal with DreamWorks, Sony Pictures, Universal, Warner Brothers and other studios to install 15,000 (principally SXRD units) throughout the U.S. and Canada over the next 10 years, with 5,000 in the 2006/7 period.

To add to the confusion, a business model using a watered-down version of D-Cinema already exists. Emerging Cinemas, a New York City based firm, specializes in digitally distributing and exhibiting a variety of content. Its play list consists of first-run foreign, independent, docus, and film fest movies. Internet based, Emerging's business model (like D-Cinema) works well from a technical standpoint; however, whether or not its content has the widespread appeal to generate a profitable box-office remains to be seen.

So, the big issues surrounding the movie industry's convergence to digital technology remain unanswered. Should industries always adopt advanced technology and does that adoption add value? In the future, more and more companies will be asking that question. It just so happens it's being asked in the movie industry right now.

EXHIBIT I - DIGITAL CINEMA GAME PLAYERS ADVANTAGES AND DISADVANTAGES

Studios (Distributors) - Advantages

- Saving on film prints & distribution
- Conduit for ad and pre-feature entertainment revenue
- Streaming "non-movie" content into cinemas, i.e. concerts
- Retains distribution control
- Potential use for 3D movies
- Fights content piracy
- Easier day & date releases - globally

Studios (Distributors) - Disadvantages

- Not a revenue generator
- Antitrust/Legal issues
- Possible loss of distribution control
- Loss of exhibition outlets
- Dual movie inventories (digital & film) for unknown period of time
- Atrophy of digital equipment
- Funding complexities & high cost
- Lengthy conversion time frame

Exhibitors - Advantages

- Ease of projection operation
- Potential use for 3D movies
- Ability to exhibit premium "alternative" content
- Expands possibilities for increasing theatre utilization
- Opportunity to become content providers

Exhibitors - Disadvantages

- Funding complexities & cost to convert
- Partial loss of current ad and pre-feature entertainment revenue to distributors
- Potential high cost of equipment maintenance, spare parts, electrical power
- Risk to early adopters
- No box-office revenue enhancement
- Requires very high-end components

D-Cinema Equipment Manufacturers - Advantages

- Spurs innovation
- High sales opportunity
- Technological cross-fertilization of product lines

D-Cinema Equipment Manufacturers - Disadvantages

- Too long a transition period
- High cost of equipment
- May need to finance or partially finance conversion
- Long conversion time

Cinema Equipment Suppliers - Advantages

- Expanded installation/service business
- Post-conversion maintenance business
- Expanded sales of ancillary A/V products
- Rejuvenated sales opportunity to static industry

Cinema Equipment Suppliers - Disadvantages

- Cost to train service staff
- Few opportunities to sell 35mm equipment due to D-Cinema overhang
- Exhibitors not inclined to expand or invest in unknown environment

The Moviegoer - Advantages

- No price increase for possibly improved movie presentation
- Potential to view currently unavailable "alternative" content
- Helps satisfy thirst for entertainment variety

The Moviegoer - Disadvantages

- More lengthy pre-feature ads and promotions
- Doesn't address other movie attendance issues, i.e. cell phones, etc.
- No perceived on-screen image enhancement

CINEMA TRAINING CENTRAL 2007 TRAINING SCHEDULES

CTC 2007 WORKSHOPS AND SEMINARS ARE SCHEDULED FOR: MARCH 26 - 28,

MAY 7 - 11, SEPTEMBER 17 - 21 AND NOVEMBER 12 - 14.

TRAINING PROGRAMS WILL INCLUDE:

• Managing A Cinema (2 Day Workshop)
• Concessions: Where The Money Is (1 Day Workshop)
• Digital Film Festivals - Why Have Them & How (1 Day Workshop)
• Pre-Feature Entertainment & Alternative Content - Why Embrace It (1 Day Seminar)
• Digital Cinema - Present & Future (1 Day Seminar)
• Marketing Your Cinema (1 Day Workshop)
• Modern Theatre Design & Planning (1 Day Seminar)
• Primary Technical Training (2 Day Workshop)
• Intermediate Technical Training (2 Day Workshop)
• Advanced Audio Technical Training (3 Day Workshop)
• Advanced Projection Technical Training (3 Day Workshop)
• In-Home Cinema - Designing/Equipping/Installing (1 Day Workshop)

All workshops and seminars start at 9:00 am and end at 4:00 pm each day.

For a virtual tour of CTC go to our website (gotoeec.com).

Regular tuition rates: 1 Day Programs - $295, 2 Day - $395, and 3 Day - $495. Discount tuition rates are available, please contact us for more information.

To receive a copy of the Cinema Training Central 2007 Guide please provide a ship-to address or call 800-448-1656.

Since I've Been Away

Sorry for the pause in adding to Cinema Mucho Gusto. As it turns out there will be a number of new postings in the next several days. To update. There is be a 2007 Cinema Training Central Program Schedule, which is much expanded from prior years. An article entitled "The D-Cinema Story" which discusses the present state of Digital Cinema and its future, with a detailing of the advantages and disadvantages to all of the Cinema Industry players. And finally, an article on the role China will play in the entertainment industry over the next decade.
Look for these items and more. And it's good to be back.
Jim Lavorato

DIGITAL PROJECTOR LUMENS CALCULATION

Darryl Jones, of Eastman Kodak, informed us that a way to determine the required lumens for the selection of a digital projector is the following formula:

Image width x Image height x Foot Lamberts. For example: if the image is 20ft. wide by 12ft. high at 14 fl (normal light reflection on a matte white screen) then the calculation would be 20 x 12 x14 or 3360 lumens. So, a projector with a 3500 to 5000 lumen capacity would perform very well.

Thanks Darryl.

NOW AVAILABLE FOR DOWNLOAD/CINEMA REFERENCE GUIDES

Now available Reference Guides on:

- Film & Digital Projection Supplies & Equipment, and

- Concession Equipment & Lobby Furnishings

Send your request for the Guides to: entequip@aol.com

PLUG AND 'PRAY'

CHOOSING THE RIGHT DIGITAL PROJECTOR

Selecting and purchasing the appropriate digital projector for your cinema's pre/post feature entertainment, advertising, alternate content, and other uses can be daunting.

With hundreds of models from numerous manufacturers on the market it's difficult to make a selection as to which is best suited for your requirements and which offer the best value with those features.

BRIGHTNESS (Lumens)

The first decision will be how large a projector. This means, how many lumens (a measure of brightness) will be required - given the screen size and picture throw (distance from projector to screen) - to provide a very good (i.e. HDTV quality) on-screen image.

There are no fixed rules for determining brightness; however, I have found that to get a good, bright image on a typical matte white, peforated cinema screen requires about 50 - 100 lumens per foot of picture throw. For example, an auditorium with a throw of 50 ft. will require a projector with 2500 - 5000 lumens (and it's preferable to error on the high side). This will provide a bright image whether running a PowerPoint presentation (with house lights up) or a DVD movie presentation.

There are small, desk-top projectors on the market that advertise 3, 4, or even 5,000 lumen capability, but don't make the mistake of purchasing a small (less expensive) projector as the internal components, standard features, and expandability options you desire, may be lacking. Also, make sure the projector you select has a lot of internal cooling capability. Heat, dirt, and erratic power levels are the worst enemies of all digital projectors.

As noted, it's always better to error on the side of more lumens so as not to be operating the projector "full out" all the time. This will put less stress on the internal components and the optical system as well. Rule: It's better to purchase a 3,500 lumen projector and run it at 2,500 than a 2,500 lumen projector and run it at maximum capacity.

DIGITAL PROJECTOR MANUFACTURERS

Acer - Christie - IBM - Panasonic
ASK - Dell - InFocus - Philips
Barco - Epson - LG - Sanyo

BenQ - HP - NEC - Sony
Canon - Hitachi - Optima - ViewSonic

OPTICS

Determining the appropriate lens can be tricky. In the world of digital projection, as a general rule, dividing the image throw by the screen width will determine the lens size. For example, if the image throw is 50 ft. and the screen is 30 ft. wide the lens required is 1.62. Most cinemas require long-throw lenses and most of these have variable (zoom) focal lengths.

Be prepared, as most cinemas cannot use the standard lens which normally comes with the projector and in most cases will have to be upgraded to the rquired lens. Also, a projector with a motorized lens shift (vertical & horizontal) is best, particularly if placing the projector off the screen's center line of view.

CONNECTIONS

What content sources will you be interfacing with your projector, DVDs, VHS, laptop, HD video, BETA, USB Flashcards, High Speed Internet? Rule: Make sure the projector you are purchasing can accept a wide variety of source components. Additionally, a projector with internal switching and scaling features is well worth the extra cost if you plan on using various source components.

Best Bet: Don't purchase any projector unless it has at a minimum the following inputs: DVI (digital input) HDMI (high definition multimedia interface) composite video, s-video, and USB ports.

LAMPS

A multi-lamp modes feature is very desirable. A lamp economy mode will prolong a lamp's burn life. If you envision the projector getting a lot of use or you are exhibiting content you are charging for then it's imperative to purchase a projector with dual lamp capability.

REMEMBER

Never purchase a projector based solely on price. Plan ahead and use the information in this article to give you a start, to calculate: image size, minimum lumens required, lens sizing, minimum connection interfaces, and content source components.

Also check out the projector's required servicing and maintenance. As with all digital projectors the biggest problems stem from dust and dirt accumulation, inadequate cooling and improper maintenance.

By James Lavorato, excerpted from Summer 2006 issue of The Marquee magazine, published by Entertainment Equipment Corporation.

CINEMA TRAINING CENTRAL FLASH

TRAINING - MORE CRITICAL AT THIS TIME THAN EVER BEFORE

Relevant training for a cinema's management and staff is a critical necessity. Today, cinemas are at a fork in the road. They can proceed on the old path of simply exhibiting films or take a new road that will begin to transform their cinema into a multi-dimensional entertainment venue.

Training programs which focus on effectively marketing and branding your cinema, the introduction and management of new products and activities, the re-assessment and enhancement of concession and other revenue generators, and the profitable use and implementation of digital technology are vital.

To accomplish this requires learning new skills and techniques through expert training and counselling which is available only at Cinema Training Central.

CTC SEPTEMBER 2006 TRAINING PROGRAMS SCHEDULE

September 18 & 19 - Primary Technical Training (2 Days)
18 - 20 - Advanced Projection Training (3 Days)
18 & 19 - Operating A Cinema (2 Days)
19 - 21 - Advanced Audio Training (3 Days)
20 - Marketing Your Cinema (1 Day)
20 & 21 - Intermediate Technical Training (2 Days)
21 - Maximizing Concession Profits (1 Day)
22 - Alternative Content & Digital Cinema (1 Day)
22 - Modern Cinema Design & Planning (1 Day)

For information on registration, travel, lodging, and in-depth course descriptions, contact CTC at 800-448-1656 or email: entequip@aol.com.

CHANGES IN 2007
While enhancing and updating the core courses we will be adding new courses in 2007. Look for a number of surprises, including:

Tech Training Courses Specific To Women
Currently CTC's technical training courses are dominated by men - over 90% of all tech training participants are male. However, as more and more women are filling theatre management and operations positions it is critical that they obtain a working (if not thorough) knowledge of the technical and mechanical aspects of a cinema.

To address this, CTC will be offering technical training tailored for women. The courses will be designed by and taught by women and structured for women currently working in or wanting to enter the cinema exhibition industry.

Organizing & Managing A Digital Film Festival
Recently I was asked to be a judge at a new film festival - the Endless Mountains Digital Film Fest - managed by the Bradford County Regional Arts Council of Pennsylvania. The festival was sponsored by 5 cinemas in the region, as well as, businesses and the Pennsylvania Council on the Arts. Based upon the entries submitted - by individuals aged 12 to adult - this festival is destined to be a great success.

Because of what's involved in the setup, planning, marketing, and logistics of even a small film fest, a one-day training course on organizing and managing a digital film festival will be offered next year.

SUMMER 2006 ISSUE OF THE MARQUEE

The Summer 2006 issue of The Marquee is attached to this email as a pdf file. If you are on our regular mailing list a hard copy will be sent to you. If for some reason you cannot open or print the pdf file or if you would like to receive an original hard copy of The Marquee, please provide your post address.

Hope all is well.

Jim Lavorato - Entertainment Equipment Corporation

CREDITOR'S NOTE: When quoting any or all of the data in this 'Cinema Training Central FLASH' please credit "Entertainment Equipment Corporation". Copyright 2006 Entertainment Equipment Corporation and Cinema Training Central.

"BEHAVE" YOURSELF

Is social behavior in cinemas getting worse or are social norms changing? If you polled cinema patrons and asked: "What do you consider to be good or bad behavior at a cinema?" I think you are going to get responses that may surprise you. Unlike the past, when social norms were much more homogeneous, what is considered acceptable behavior today varies widely between demographic groups.

For example, 15 year olds think nothing of using a cell phone, text messaging, or video game playing while in a cinema. They are very adroit at double or triple tasking and truly believe that text messaging while watching a movie is perfectly "normal and good" behavior. Remember, this group has grown up with PCs, cell phones, and iPODS. However, this teen behavior would be annoying, distracting, and certainly considered bad behavior to the thirty-something couple who came to the theatre to "enjoy" the movie.

Accordingly, the 30's couple may find laughing aloud or whispering during the film presentation to be perfectly acceptable behavior, and considered part of the movie-going experience. However, whispering and laughing might be considered very distracting to the senior's group, which also insists the theatre's sound system is too low or too high for their taste anyway.

The worst thing about bad behavior is that those that feel they have been offended don't always take their complaints to management, but express their displeasure by not coming back to the theatre. You also witness this non-confrontational posture when something goes wrong with the movie presentation. People will just sit in their seats and not get up to complain about the out-of-focus or frame image, the lack of sound, or a scope movie being played in flat format.

What can be done? Well, it's up to the theatre's management to set the rules for acceptable in-theatre behavior. Having ushers in the auditoriums - as was the custom years ago - goes a long way toward establishing the kind of behavior that is acceptable in theatres. Additionally, signage and pre-feature notices, i.e. "no cell phones, please" are good, but these work best if backed up with staff presence. With pre/post features, ads, and entertainment becoming meaningful income generators it becomes all the more important that partons feel comfortable in the cinema's surroundings. Of course, this takes more staff, expense and management commitment. Helpful aides, like cell phone signal blockers can be utilized but patrons must be alerted of their use.

In behavior enforcement preemptive measures must be taken. For example, inform boxoffice staff that a patron with a very small child or infant should be discouraged admission (there is nothing worse than a crying baby in a cinema). You can alleviate confrontation within the auditorium by preempting the trouble at the boxoffice.

Setting your cinema's behavior rules takes thought and perseverance but in the long run will be supported by even the most egregious patrons as they know they'll be enjoying a movie free from annoyance and distraction.

3D "ADDS" ANOTHER DIMENSION

Although D-Cinema may not be a revenue generator, 3D film might, as the 3D effect cannot be replicated elsewhere (most notably in the home). Around for decades, 3D may get a free ride from the industry's migration to digital. The recently developed D-Cinema Standards include a 48 frame per second format, which is suitable for 3D.

All well and good, but 3D has problems of its own. The ideal would be auto-stereoscopic 3D which doesn't require glasses - but that technology is currently only available on small sized digital displays because of the limited sweet spot (where the viewer must sit in order to get the 3D effect). So, glasses will be required.

There are two types of 3D glasses: LCD shutterglasses or polarized anaglyph glasses. LCD shutterglasses (as their name implies) are synced with the projector to open and close each glass based upon whether the left or right image is on screen. Their drawback - shutterglasses cost between $200 - $300/pair and must be cleaned between viewings so each cinema would require multiple sets per auditorium - commonly at a 3:1 ratio. For example, with a 300 seat auditorium, 900 pairs of glasses are required. On to the second option.

Polarized glasses (those most people are familiar with) put a red lens over one eye and a green over the other to separate the left and right images. Typically with plastic or cardboard frames they are inexpensive and new innovations - such as clear lens and circular polarization - allow viewers to move their head while watching a movie. But these too are cumbersome, inconvenient, and hard to wear, particularly for patrons who wear corrective glasses.

Big proponents of 3D movies are filmmakers James Cameron, George Lucas, and Peter Jackson. They feel 3D may well "save the cinema". In fact, Lucas wants to re-release both Star Wars trilogies in digital 3D. And In-Three, Inc., a California based company, is here to help them. In-Three has perfected a process termed dimensionalization. This process restores depth in films shot in 2D. This 2D-to-3D conversion process works but is extremely labor intense. The human touch is required because too much or too little depth will give viewers a headache (literally). So, currently, it takes six people to judge each converted frame. Cost - about $4.5 million for a feature film (although this can vary greatly depending upon such factors as the film's length and scenic complexities). However, this could be an option for re-releases of older movies or for those currently being shot in 2D.

Although somewhat optimistic 3D may increase boxoffice attendance if the right content is presented. Disney's recent 3D film release of Chicken Little was certainly not a boxoffice smash.

DEFINING THE DIGITAL DOMAIN / "THE BIG BLUR"

The Digital Domain is getting more and more complex and the products and functions available are turning into what I call "THE BIG BLUR". Listed below are some definitions and linkings that my help your focus.

Content: Creation-Software-Production Technology

Connection (Distribution) : Hardware-Delivery Mode (Web,Cable, Satellite,Podcast, etc.)

Conveyance: Phone-PC-Setbox-TV-Cinema-iPOD

Gaming: Boxes-Online-PC
D-TV-Interactive TV-HDTV
Music: CD-Web-Radio-Satellite Radio-Concert-PodCast
Film-Digital Cinema
VOD-DVRs-Interactive TV
Video-DVD-HD/DVD
Cable-Broadcast-Satellite TV
Wireless-WiFi-Bluetooth
Cell Phone-Streaming-VOIP

FILM PIRACY HAS TURNED INTO GUERILLA WARFARE

Piracy in the theatre industry takes all forms. Camcorder piracy is a major threat to U.S. film distributors and exhibitors both at home and abroad, typically involving organized criminals that illegally record theatrical films with camcorders in some instances, even prior to their U.S. release. Once made, these copies appear in a matter of hours on the Internet on peer-to-peer networks, file transfer protocol (FTP) sites, or Internet Relay Chat (IRC) rooms.

At the same time, the pirates sell these master recordings to illicit "source labs" where they are illegally duplicated, packaged and prepared for sale on the black market, then distributed to bootleg "dealers" across the country and overseas. Consequently, the film appears in street markets around the world just days after the U.S. theatrical release and well before its international debut.

WAIT...It Gets Worse

The above scenario plays out every day - but wait - it gets worse. Cinema piracy has become guerilla warfare. So if you think your cinema is immune - it's not. And it's not all overseas or just in large urban areas. Even drive-in theatres are under attack.

Parking lot cinemas (more commonly referred to as Guerilla Drive-Ins) are popping up from Los Angeles to Ann Arbor. Cinema Guerillas commandeer parking lots to project films onto the outside walls of large building. Lawrence Bridges, the pioneer of parking lot cinemas, calls his illegal activity "a gift and tribute" to LA. When police arrive Mike Lesousky, the film's projectionist says, "we BS them." I say, "I've talked to the owner and he gave me permission." These Guerillas post their show times and locations on the internet. Kate McCabe, of Ann Arbor, says her group ("rad-art") likes to project movies onto the back walls of movie theatres. McCabe states, "That's real irony and gives us an emotional boost." In Chicago, Pilot (which terms itself a "movie collective") lights up interior warehouse walls with movie videos and Wes Modes of Santa Cruz says, "Just enjoying a movie for free is motivational."

Motivated to do what we're not sure. Guerilla Drive-Ins are currently only a fringe activity but should not be taken lightly by the cinema industry. Lawrence Bridges on his website www.12org. states you can bring a makeshift drive-in to your town. In fact, if he likes your project he'll fly you to LA for training and send you home with a video projector.

Characteristics Of Pirated DVD Product

• Disc Burned not Replicated
• Poor Quality Artwork
• No Studio Logos on Disc
• Multiple DVD Discs per Movie
• Movie in Theatrical Release
• No Overwrap Packaging
• No Hologram Label or Security Sticker
  

The Motion Picture Association of America (MPAA) and its members are dedicated to ensuring that the sources of piracy are eradicated and to educating people about the gravity of the issue. Among the current measures to mitigate the level of illegal camcording activity are:

• Investing in security
• Changing legislation
• Nationwide hot-line (800) 371-9884
• Public education and training
• Camcording jamming
• Forensic watermarking
• Advanced in-theatre camcorder detection

Another battle in the war is Optical Disc Piracy. This form of piracy refers to the illegal replication and subsequent sale, distribution, or trading of copies of motion pictures in digital video disc (DVD) or video compact disc (VCD) format. These illegal hard goods are then sold on web-sites, online auction sites like eBay, via e-mail solicitations and by street vendors at flea markets and swap meets. The most common format seen in the U.S. is the DVD.

The bottom line on piracy is that it's not some college kids in their dorms downloading a movie onto their PC's. This war is large, organized, and intent on seeing the industry disappear. To be replaced by what? What do these Guerillas think will replace a form of entertainment that has enlightened, motivated, thrilled, and charmed millions and millions for over 100 years.

Everyone involved in the cinema industry(0r for that matter any of the arts) should be proactive in the vigilance against entertainment content piracy. Be involved in your community and let people know and understand the signifigance of the problem and what they can do to help prevent it.

Reprinted from Entertainment Equipment's "The Marquee" magazine. For a copy or for more information on this topic, contact: Entertainment Equipment at www.gotoeec.com

Just The STATS/ Videogaming

The facts on videogaming and the cinema:

• 60% of Americans (over 145 million) play videogames
• Average age of videogamer is: 28
• Over $6.4 billion of computer & videogame software was sold in '05
• Online gaming, the fastest growing segment, is expected to reach $1.7 billion by '07
• Nearly 50% of online gamers are women (attracted by the social nature of the games)
• For '05: there were $3 billion of videogame consoles sold vs. $2 billion of DVD players

GAMING IS HUGE! So much so that we have advised clients on having video gaming tournaments in their cinemas to take advantage of this cultural iconoclast.

For information and advice on how to develop and manage video gaming at your cinema contact us for a VGT Kit.

FYI:Entertainment Software Rating Board (ESRB) Rating Symbols

EC - Early Childhood - Titles rated EC (Early Childhood) have content that may be
suitable for ages 3 and older. Contains no material that parents would find inappropriate.

E - Everyone - Titles rated E (Everyone) have content that may be suitable for ages 6
and older. Titles in this category may contain minimal cartoon, fantasy, or mild violence
and/or infrequent use of mild language.

E10+ - Everyone 10+ - Titles rated E10+ (Everyone 10 and older) have content that may be suitable for ages 10 and older. Titles in this category may contain more
cartoon, fantasy or mild violence, mild language and/or minimal suggestive themes.

T - Teen - Titles rated T (Teen) have content that may be suitable for ages 13 and older.
Titles in this category may contain violence, suggestive themes, crude humor, minimal
blood, simulated gambling, and/or infrequent use of strong language.

M - Mature - Titles rated M (Mature) have content that may be suitable for persons ages
17 and older. Titles in this category may contain intense violence, blood and gore, sexual
content and/or strong language.

A - Adults Only - Titles rated AO (Adults Only) have content that should only be played
by persons 18 years and older. Titles in this category may include prolonged scenes of
intense violence and/or graphic sexual content and nudity.

RP - Rating Pending - Titles listed as RP (Rating Pending) have been submitted to the
ESRB and are awaiting final rating. (This symbol appears only in advertising prior to a
game's release.)

VINDICATION : GAMING @ CINEMAS / Who Would Have Thunk It.

If you read this Blog, you are probably aware that I have been a proponent of offering alternative (non-movie) content at cinemas for about 10 years. In the late '90s, in an effort to get cinemas to increase their utilization rates, we began touting the idea that cinemas should present alternative content via video projection. We now see this as commonplace in everything from pre-feature ads and entertainment to mini-film fests at cinemas.

In '02 I began pushing the notion of using cinemas for video gaming and gaming tournaments as a viable and easy source for additional revenue. The idea was to put gaming stations in cinemas consisting of tables and 27" TVs (cost about $300/station). Participants would bring their own game boxes, games, and controllers and be charged a nominal tournament fee. The quarter finalists on up in the tournament would get to game-battle on a cinema screen- winners receiving either monetary rewards or gaming gear. This is a guaranteed house packer.

Although some of my clients did not warm to the idea - "I already have Arcade games in the lobby" - to my surprise and delight I may have been fully vindicated: A new commercial for Microsoft's 360 X-Box depicts several people watching a movie, at a cinema, when suddenly a video game begins to play on the screen. They rush up and burst into the cinema's projection booth to discover a gamer playing on an X-Box hooked up to a video projector. This, larger then life game, blows them away and they query the gamer as to when it will be their turn to play.
Great commercial and spot on!

Today, cinemas must constantly be creating new ways to use their venue. 90% of video gamers range in age from 8 to 38 (a huge demographic) which is split almost evenly between male and female, and across all cultural, ethnic, and income levels. The movie industry provides great entertainment for millions of people on a worldwide basis, but it is not a growth industry. Therefore, to be successful, a cinema must be seen as "the place" to go for a variety of entertainment choices and not just a place to see a movie.

Note: Parts of this blog were extracted from the April 25th Cinema Training Central email Flash. If you would like to receive the CTC Flash in the future please provide you email address.

PRODUCT INTEGRATION IN MOVIES & TELEVISION

Product or brand placement in movies or in television shows is not new but has taken on more significance in the last few years. Normally, story lines involving a specific product (say a car) are pitched to a company that will then pay for having their product appear in a scene. The auto manufacturer may be willing to pay several hundred thousand to show a quick look of their product or millions if its brand is an integral part of the scene.

Although no studies have proven that product integration works as a marketing tactic it has become more and more prevalent, as advertisers feel viewers, particularly younger viewers, mostly ignore traditional commercial messages. The danger is that there will be too many placements in too many shows and movies which would, in effect, then mimic the low impact straight commercial. This is important, as over 50% of the 8-to-28 age group, in a recent poll stated they would be more likely to buy a video iPod and watch a 30 second ad in return for a free download of a favorite TV show. Meaning: that the alternative would be to PAY for downloads which were commercial free.

JUST THE STATS / Video Chain Stores

Video Chain Stores:

• Struggling with lack-luster movies in 2005 and a move by customers to purchase rather than rent DVDs, rentals were down by 1.8% to $8.8 billion in '05.
• Blockbuster and Movie Gallery are the largest video rental chains while Netflix, their largest online rival, expects to grow from 4.2 million customers to 5.9 million by year end.
• Blockbuster still has over 4,100 U.S. outlets, so don't count them out as they expect rental income to increase due to '06 movies like Mission Impossible and The DaVinci Code.
• Additionally, as the new Hi-Definition DVD players and their more expensive discs come to market, there may be a resurgence in the rental side of the business.
  

CINEMA UTILIZATION RATE

One of the most important concepts in determining the profitability of a cinema is the utilization rate. This is the rate which measures the use of the cinema. In 2001, Entertainment Equipment developed a formula which could be used to measure a cinema's utilization rate and which is now used by many in the industry. That formula is as follows:


U = ____________A_________________
nSc x nSe x nSh x nD

Where: A = Admissions
nSc = # of Screens
nSe = # of Seats
nSh = # of Showings/Day
nD = # of Days
Calculated to derive a percentage figure, the result will show the use of the cinema. For example, if the figure derived is 18% then 82% of the time no one was occupying a seat in the cinema while a film was being played. This calculation can be used by a single screen cinema or for a circuit with 10,000 screens. Try it at your cinema, use a month's worth of data. Remember, an increase in your cinema's utilization rate, even by just a few percentage points, will greatly increase your cinema's profitability. So, do everything you can to get people into the cinema and remember: all cinemas are local community-centric.

CINEMA TRAINING CENTRAL COURSE DESCRIPTIONS

CINEMA TRAINING CENTRAL COURSE DESCRIPTIONS

Operating A Cinema (2 Day Training Program)
The goal of this program is to review the aspects of cinema management from an operational viewpoint. It is designed for theatre management and owner/operators, as well as, for those who are open to exploring new concepts on how to operate and manage a cinema as a unique business venture requiring a unique management approach.

The operational/management issues to be covered include: concession and boxoffice, advertising and promotions, safety and security, facility maintenance and upkeep, increasing off-hour theatre utilization, purchasing and vendor negotiations. Technical topics will include: projection room equipment overview and maintenance, projection room management and the important relationship in coordinating the content (pre feature - feature - post feature) with management functions, particularly concession operations. Other technical issues will include: acoustics and picture formats (film, as well as, video projection). Also discussed will be staff hiring, firing, retention and the roles and responsibilities of boxoffice and concession personnel, as well as, ushers and ticket-takers.

The course is taught by several instructors with diverse backgrounds in cinema management, operations, concessions and projection. Many aspects of this program are hands-on and class participation and questions are highly encouraged.


Maximizing Concession Operating Profits (1 Day Training Program)
This course provides a detailed look at concession operations from an analytical point of view. Normally set in a roundtable discussion format the goal is to provide each trainee the tools necessary to maximize concession profits.

A complete discussion of a cinema's concession sales profit analysis will be covered, including: the calculation of the major indicators which drive the three key concession sales tactics: Speed, Communication, and Value. Determining your patron's buying resistance and why it's best to push "middle pricing" will be discussed along with the good and bad of combo sales and how to use combos to target markets. What sells and what are the hot trends in concession and how these trends relate to buying behavior. Also covered will be the selling of non-food items and services at the cinema. The use of staff incentives, rebate programs, volume discounts, coupons, customer reward programs and other concepts to increase returns will also be considered. Attendees will have the opportunity to role-play in an actual concession stand and review and discuss several successful new employee incentive techniques that are proven income generators.

Taken separatly or in conjunction with the Operating A Cinema Program this is a must one-of-a-kind training program for anyone managing, or responsible for, cinema concession operations.


Marketing Your Cinema (1 Day Training Program)
Although only of a one day duration the purpose of this course is to open the trainee's mind and curiosity to operating a cinema as a "local" business. Topics covered are branding & business identity, the techniques of connecting your cinema to the local community, content selection as a marketing tool, defining your patrons and how to increase your cinema's market reach. This course piques the trainees's curiosity and defines the competition, and the benefits of going your own way. Further discussion will include how to use your staff as a marketing/promotion tool and how to train them for this purpose. The issue of why customers "leave" and how to prevent losing customers will be discussed. The benefit of exhibiting non-film content will be introduced and the how and why this is a win/win situation for your cinema and your patrons.

This is relevant training for those responsible for the long-term profitability of a cinema. No prior courses are requisite. The trainee simply brings an open mind and inquisitive attitude. Class participation is highly encouraged!

Cinema Owners/Investors Program (5 Day Training Program)
This 5 day training program is the most comprehensive offered at CTC. With one-on-one private instruction this training is for the serious current or potential cinema owner/operator or cinema project investor. It is a program for those looking to obtain a comprehensive study of the workings of the movie exhibition industry and how a cinema fits into this business landscape.

The subject matter covers all aspects of a cinema and can function as a test bed for participants wanting to validate their cinema project's potential, or as a means of obtaining a large amount of knowledge regarding a build-out, expansion, or turnkey operation. This is a jam-packed, intensive program with day, as well as, evening instruction. You are literally immersed in the subject matter with the goal of leaving the program with a complete understanding of the hows, whys, and whats of a cinema with emphasis on present and future technology impacts.

All aspects of a cinema business are covered, including: technical, operational, marketing, staffing, concessions, MIS, product mix and pricing, and the business's profit drivers. Many past participants have brought their business plans with them for review and analysis while attending this Program.

This Program is scheduled by appointment only.


Alternative Content & Digital Cinema (1 Day Training Program)
This Program is intended to answer all the questions surrounding digital cinema and the use of standard video projectors in cinemas with a detailed discussion about how D-Cinema works and what are its benefits and downsides to the disstributor and exhibitor.

The application of video projection for alternative non-film content and in-theatre promotions will be explored with emphasis on digital image optimization, and the opportunities and pitfalls this presents to the exhibitor. Various projector models, pricing, and the good and bad points of the LCD, DLP, and LCoS technologies will be explained. The application of flat panel and plasma screens at cinemas will also be covered.

A hands-on workshop emphasizing the selection of the right video projection equipment for various in cinema applications including projectors and source components will be fully reviewed.

This Program addresses the issue of two technologies (film and digital) co-existing at a cinema and each contributing to its profitability. This training is for anyone with an interest in knowing what the cinema of the future will look like and how it will operate. It presents the choices confronting the exhibitor and proposes a variety of ways to address the future.

Modern Cinema Design & Planning (1 Day Training Program)
Cinema design and planning essentially revolves around how to optimize the whole presentation environment - entrance/lobby/foyer, auditoriums, interior space, concession/service areas, projection room, and egress & exits - so as to make going to the movies a special 'experience' unavailable anywhere else.

Seating, sightlines, and screens, acoustical wall design, lighting, architectural plans and general construction, will all be covered in this course. The concept of the 468 viewing rule will be discussed and the ideal presentation environment will be explored. The pros and cons of various seating configurations, and the sizing of auditoriums will be discussed. Floor plans, interior elevations, HVAC, room reverberations, and many other topics in regard to the design of a modern cinema are considered. This is a very compressed but comprehensive study taught by individuals who have designed and been involved in the build-out of numerous cinema projects. This course should be attended by anyone with an interest in the overall environment of a venue used for public presentations, or for those seeking more general knowledge of the important physical attributes of a cinema space.

Primary Technical Training (2 Day Training Program)
For those starting a career in the cinema industry or those with a basic knowledge of cinema operation this course provides a solid foundation upon which to build your skill set. Participants learn the proper techniques and procedures of projection room operations: answering the questions of What & How It Works In The Projection Booth. All the components of a cinema's projection and sound equipment are covered and their function and interfacing explained.

Proper film handling and makeup, including: film inspection, splicing and film cues, presentation setup (features, trailers, promos), proper threading and use of leaders, moving film prints, handling film wraps and their prevention, basic projection room equipment troubleshooting and day-to-day equipment maintenance are all covered in this course. The concepts of picture formats and lens are also discussed. Additionally, participants are introduced to the PROP System, EEC's proprietary Projection Room Operating Procedures.

This two day training program is truly hands-on with participants performing film inspection and makeup, threading, and routine maintenance procedures and parts replacement on actual projectors and film platter systems. They perform proper xenon lamp replacement and alignment and how to troubleshoot a sound problem. Booth safety is stressed throughout.

This is a must course for those beginning or having a basic knowledge of film projection and it sets the foundation for all other CTC technical training programs.


Intermediate Cinema Technical Training (2 Day Training Program)
This course is geared toward the individual who already has a foundation in film handling and basic projection room procedures and wants to further enhance their technical skills. Areas covered include: film platter timing and adjustment, film shutter timing, proper procedure for checking Dolby sound levels and the running of test tone and buzz track. Film formats and the concept of image sizes and apertures in conjunction with RP40 picture alignment test film is demonstrated with each participant threading and running test film loops. Troubleshooting a xenon power supply (rectifier) and the replacement and tapping of diodes is covered.

Additionally, the basics of cinema video projection and D-Cinema is discussed and all the various digital technologies. Throughout the course emphasis is placed upon the proper equipment parts terminology and definitions with a review of the A & B Sound Chain components.


Advanced Cinema Technical Training - Audio (3 Day Training Program)
For the experienced cinema projectionist or technician or for audio specialists, this high impact 3 day Program covers advanced audio topics culminating with each participant performing an auditorium sound equalization.

Topics include: A & B chain alignment, installation of LED readers (analog and digital). The proper installation of sound racks detailing audio cabling, audio component wiring, tuning, and training staff on the proper use and maintenance of all components. Popular models of audio equipment will be demonstrated and highlighted, including: Dolby, DTS, Ultra Stereo, Smart, Panastereo, QSC, Yamaha, etc.

Participants are encouraged to bring technical issues or problems they are experiencing for discussion and resolution. This is a Program for those seeking to hone their skills or individuals with a desire to advance their already solid technical capabilities. Emphasis is placed upon improving each participants' technical diagnostic skills.

Test equipment, including oscilloscopes, real time analyzers, sound level meters, test films and discs, and PC generated test setups are provided or participants are welcomed to bring their own test gear. Those with a goal of working as a cinema technician or engineer or those who desire to enhance their technical skills should strongly consider this training. Dolby and THX testing procedures and guidelines are incorporated in the training.


Advanced Cinema Technical Training - Projection (3 Day Training Program)
For the experienced cinema projectionist or technician seeking to enhance the skills and knowledge regarding the on-screen image and exacting the best performance from modern projection equipment this is a must course.

Topics include: lens turrets and lens sizing, cutting and sizing of apertures, servicing film gates and intermittents. The proper hook-up of an audio system to the projection system wiring, cabling, testing and alignment. Xenon lamp sizing and light failure troubleshooting. Proper installation and checking of rectifier diodes and lamp igniters. The proper use of image test films and equipment will also be covered. The trend toward pre-feature promotions and alternative content will be explored as participants will operate and learn the good and bad of digital projectors as well (both LCD and DLP types).

A companion course to the Advanced Audio Program this jam-packed 3 day Progam focuses on techniques for troubleshooting projection problems and as with all CTC Technical Programs is hands-on and class size is limited.


CTC Technical Master Class (3 Day Training Program)
This is a very special training program for individuals who are currently working in a technical capacity within the cinema industry. This Master Class will revolve around the technical issues and problems which are currently facing the cinema industry and explore issues through a general interchange of ideas, concepts, and viewpoints coupled with the experimental use of either new or upgraded cinema projection and sound equipment.

Typical topics for discussion would for example be: film image perception vs. 35mm film presentations. Film & D-Cinema vs. HDTV. Best alternatives for a cinema's film and digital projection . The setting of industry standards regarding a more formal certification for cinema technicians and engineers.

Additionally, the purpose of the Technical Master Class is to provide the participant an opportunity to discuss these issues with experts in the industry. It is a forum for the interchange of knowledge, which has the effect of adancing the technology of the cinema. This training will be given at specific times throughout the year convenient to the participants and be by invitation only. Class size is limited to 5 or less individuals with instruction and interchange with at least 5 of our faculty and guest instructors making this 3 day Program truly immersive.

Pic n' Play Promotions - Marketing That Increases Cinema Concession Profits

Pic n' Play is a unique, high impact, Cinema concession marketing program which links concession sales to mass media products, such as music CDs, DVDs, and other consumer friendly entertainment themed products. This marketing strategy, which had a very successful launch in 2005, has proven to increase concession sales while improving patron goodwill.

Pic n' Play combines customer appreciation with a high margin concession revenue generator, by offering a special concession promotion coupled with a free and exciting appreciation "give away" of a well known consumer product. Pic n' Play is Simple, Effective, and Direct. Here's how it works:

Each Cinema Patron is given a coupon by the Boxoffice Attendant upon admission (the coupons are included in the Pic n' Play package).

Next, the Cinema Patron presents the Coupon at the concession stand which entitles the Patron to a FREE gift with the purchase of the Pic n' Play Concession Special (as decided upon by each Cinema). Examples of what Specials could be offered are:

• Combo: Large Popcorn and Two Medium Drinks
• Combo: Large Popcorn, Medium Drink, & Candy Bar
• Value Special: i.e. Spend $10 or more & receive free gift
• High-margin non-sellers: i.e. Free gift with purchase of Large Popcorn or Nachos
• High Volume Generator: Free gift with any Drink or Popcorn purchase

Pic n' Play is self-managing. There is no extra work or effort required on the part of theatre management or staff. Also, Pic n' Play is RISK FREE. Unused gifts are fully refundable and reordering is simple via 800# or e-mail. Additionally, Pic n' Play is designed for automatic expansion and a variety of media promotions, in 2006 music CDs, DVDs, and MP3 (iPOD) accessories will be offered.

Discover Pic n' Play - There is nothing like it in the Cinema Industry!

For full details or to enroll as a participating Pic n' Play Cinema contact: Entertainment Equipment Corp. at 800-448-1656 or entequip@aol.com.

The Cinema - In Search of An Audience

Is the cinema industry losing its mojo? Or is it sabotaging itself with its latest trends. Those trends, that are intended to push the cinema to higher levels, include: d-cinema convergence, day-and-date theatrical/DVD/pay-per-view release, and the current deluge of cinema content.

Let's take them in that order, but first, a quick analysis of the industry.

Worldwide boxoffice for 2005 was $22 billion give-or-take. The top 100 film generated $14.4 billion or 65% of the total. The top 25 - $8.3 billion or 38%. The top 10 (alone) a whopping $5.2 billion or 24% (the U.S. boxoffice was even more skewed with the top ten accounting for 27% of total boxoffice). Of the top 10 - 8 were escape/fantasy films and 2 were comedy/drama. Of the top 25 - 11 were escape/fantasy, 8 comedy/drama, 4 adventure/drama, 1 horror, and 1 documentary.

There were 527 major releases in 2005. Worldwide there were 7.8 billion admissions, down from 8.4 billion in 2004. North America accounted for 45%, Europe - 30%, Asia/Pacific - 18%, all others - 7%.

Clearly, something is amiss with the cinema industry's feng shui.

With theatre utilization rates well below 20% the emphasis should be on increasing attendance. Therefore, more marketing should be placed on a slimmer roster of films, ones specific to genre proven to attract the largest audiences.

D-CINEMA CONVERGENCE
Digital-cinema won't help the boxoffice. In fact, it may decrease boxoffice revenues. Moviegoers may expect and demand a lower admission price on digitally-presented features. And why not? All things digital decrease in price.

And, like all things digital, the underpinning technology keeps evolving, forcing the latest d-cinema connection and conveyance mechanisms to atrophy through ever advancing innovation which is the inherent trait of the digital domain. This poses one immediate problem: the substantial investment in the required d-cinema gear - projectors, processors, servers, etc. - quickly reaches zero.

Another side effect of d-cinema, is the dampening effect it has had on overall exhibitor investment. The trumpeting of d-cinema has instigated a very cautious atmosphere with regard to investments in cinema exhibition. Exhibitors (particularly independents) have taken on a siege mentality which has stymied investment not only in expansions and renovations but also in new projection, sound, security, seating and concession upgrades. This is significant because although the larger theatre chains get the attention over 50% of U.S. movie screens are still owned and operated by smaller circuits and independents. D-Cinema is the perfect solution to a problem which doesn't exist.

DAY-AND-DATE RELEASES - A STRATEGY?
The theatrical release of major motion pictures represents the upfront marketing of the after sales, higher margin products - DVDs, music CDs, merchandising, pay-per-view, etc. The day-and-date release notion negates this critical quotient from the revenue stream formula. It turns a synergistic business model into a non-generative one. Simply put - it makes the pie smaller.

THE BIG BANG THEORY OF CONTENT
With over 500 major releases the industry needs to reassess. In addition to the major releases there is an uncontrolled flood of indies, film fest entries, shorts, docus, foreign films, etc. Anyone, with the urge to make a movie, and the requisite $5,000 admission fee (for a digital camera and a video software package) is producing a "movie". There are even awards for the 30 second cell phone camera flix. It's more and more swag cluttering an already saturated art form with no evident value.

GETTING BACK THE MOJO
The movie industry is all about content and not conveyance. It's not about simultaneous release modes or digital presentation but presenting content people are motivated to spend their time and money on against the myriad of other recreational activities available to them. With the possible exception of community-centric, non-movie alternative content, like it or not, based upon industry numbers current preferences (on a worldwide basis) bend toward escapism and humor.

In searching for an audience the cinema industry needs to focus on what works at the boxoffice and backburner schemes, projects, or programs which detract from this. That is how the cinema will get its mojo back.

Digital Cinema - The Perfect Solution For A Problem That Doesn't Exist!

The reason for digital cinema has, and is still, the film print and distribution cost savings that would accure to the studios if movies where distributed and presented digitally vs. being film based ( I have heard estimates as high as $1 billion/year). But, is this reason as compelling as some would have us believe. Based upon screen count, as reported by The National Assoc. of Theatre Owners' 2005/06 Encyclopedia of Exhibition, total screens in the U.S. were 31,474 as detailed below:
National Mega Chains (over 1,000 screens) - 16,895
Large Chains (500-1,000) - 2,097
Regional Large Chains (225-500) - 4,455
Medium Circuits (75-225) - 3,557
Small Circuits (15-75) - 2,528
Independents (15 & under) - 1,942
This 6 tiered breakdown (which I arbitrarily decided upon) depicts accurate figures for the large chains and circuits, but ( I believe) are off by 10-15% at the medium circuits and below. As, for example, many of our independent exhibitor clients are not in the NATO listing. However, what the data shows is that screens are devided about equally between the mega chains (which are only 5 in number) and everyone else.

With approximately 33,000 screens in the U.S. even if all these screens were converted to digital presentation, as there are about 160,000 screens worldwide, that would leave about 125,000 to 130,000 screens still film based. The question then becomes, why the push to convert the U.S. at a current cost of $70,00 to $100,000 per auditorium.

Jim Lavorato, April 2006

Cinema Management and Technical "School" Emerges as the Go-To-Place to Cope With The Cinema Industry

Cooking school without a kitchen? Flight school without an airplane? Driving school without a car? Theatre training without a theatre? It doesn't make much sense. That's what occurred to Jim Lavorato, CEO of Entertainment Equipment Corporation (EEC) in 2000. He is responsible for the creation and operation of Cinema Training Central (CTC) - the first and only permanent, professional management and technical training facility devoted to the cinema exhibition industry. Operated as a not for profit entity, CTC has earned the support and respect of many companies in the cinema industry: LucasFilm/THX, Dolby Laboratories, Eastman Kodak, JBL Audio, Yamaha Corporation, and Sony Corporation, just to name several.

Part of what sets Cinema Training Central apart is that its primary "campus" is located in a specially equipped and tricked-out 8plex cinema that had previously been a Geneal Cinema Theatre in an urban location in downtown Buffalo, New York. Now cinema training is truly hands-on. Conducted in small groups of no more than 7 individuals, instructors address real-life problems, so the knowledge gained is directly transferable to each participant's everyday job responsibilites. "Since its inception, CTC has trained over 600 alumni and provided them the luxury of training at an operating cinema on a wide variety of equipment. We have over 75 different cinema equipment manufacturers represented at CTC - offering most participants instruction on the very same equipment resident in their cinemas", states Lavorato.

CTC is unique not only by its on-site training philosophy but also by its distinguished 13-member faculty, with collectively hundreds of years of experience in all areas of the cinema business, such as cinema operations and management, concession operations, promotion and marketing, architecture and design, project planning, and film and digital technology application.

Programs at CTC are offered at "training weeks" normally held in May and September (which are traditionally slow periods at the cinema boxoffice). In addition, programs are available by appointment, and special, customer-specific group programs are scheduled throughout the year. The training programs currently include: Operating A Cinema, Maximizing Concession Profits, Marketing Your Cinema, Cinema Owners/Investors Program, Alternative Content & Digital Cinema, and Modern Cinema Design & Planning. Also offered are 5 technical programs, from Beginners to Masters Programs.

For more information on Cinema Training Central contact Entertainment Equipment Corporation: 800-448-1656 or entequip@aol.com

D-Cinema Like It or Not

I'm not for or against Digital Cinema, but it is my duty to explain all of the good, bad, and ugly
aspects of D-Cinema to our clients. Because I'm critical doesn't mean I'm anti. Nothing could be farther from the truth. In fact, Entertainment Equipment has been at the forefront of
introducing digitally-based content to cinemas long before it was given any attention by the
industry. Please refer to the following articles I wrote on the subject:

"Theatres Become 'Viewing Venues'" September 1999 Issue Film Journal International

"Broadcasting Sporting Events @ Theatres, A Digital Beta Test" April 2000 Issue Film Journal International

"The Case For Pure Digital Cinema" November 2002 Issue Film Journal International

"Regaining The Cinema's Pirated Property" December 2002 Issue Theatre World

What I am against, is the adoption of technology where it's not required and where that adoption may in fact be detrimental to the cinema industry from which there will be no return.

What makes the cinema industry unique is that it is still film based. It has retained its content in analog form using a medium that's 100 years old. Yes, it's cumbersome, quirky, and totally out of sync with the way most information is transmitted today. But it's also standardized on a worldwide basis, is more difficult to copy, still produces an unequalled visual presentation, and(most importantly) prevents competition from entering the industry.

The Day & Date Scenario

My ears perked up the other day as I was watching CNBC and an analyst from some investment company was discussing movies being released day and date with their DVD counterpart. His scenario was that people will go to the cinema and view the movie and then if they like what they saw, run out and purchase the DVD (at full price).

Hmmm, I thought. That is one possible scenario but probably not likely, the likely scenarios would go something like this:

People will either go to the cinema or purchase the DVD, not both. The person that goes to the
cinema and likes the movie will not go out and purchase the DVD straight away, but will wait
until the DVD goes into the bargain bin at the video store or Wal-Mart.

The person that buys the DVD will not view it alone, but will invite friends, family, and acquaintances over to view and enjoy the "premiere" together and at night's end ask if anyone would like a copy of the movie "burned" for a take home gift.

Now, those are the likely scenarios.

Film's flaws preserve movie distribution

Question: Name an industry that fully controls its products from concept/research-to-
development-to-fabrication/production-to-distribution-to-enduser on a worldwide basis?
Stuck! There is only one-the cinema industry. The key to this phenomena, which no other
industry on the planet enjoys, is the control of the products' distribution. The introduction of
digital cinema may provide the tipping point which destroys that control and consequently
the movie industry.
By being film based, the cinema controls the distribution of its precious products ( yes, there is
piracy but nothing like it will be once movies are distributed digitally and add to that the problem
of viruses on hard drives and servers). It's film's inherent drawbacks and flaws which preserve
the movie industry's distribution control and nothing more.