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Friday, March 31, 2006

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.

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.

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.

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.

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.

Thursday, March 30, 2006

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

Monday, March 27, 2006

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.

Tuesday, March 21, 2006

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.