HOLLYWOOD vs.SILICON VALLEY

Former U.S. Senator Chris Dodd - you remember ....... Dodd-Frank, the legislation enacted by Congress which was intended to right the wrongs and abuses of the banking industry which caused the financial melt-down of 2008.  Yes, that Chris Dodd, now the Chairman of the Motion Picture Assoc. of America,  who was offering a high-five to  tech industry honchos at a Commonwealth  Club of California dinner last week.

The conciliatory gesture came on the heels of the movie industry's humiliating defeat in their efforts to control content piracy on the Internet. The MPAA and the studios were shocked by the huge defeat of legislation they lobbied hard for, and now it was all about face-saving and passing the peace pipe.  In his speech, Dodd noted that Google, which was the lead opponent against the studios, by contrast has the most content deals with Hollywood.

The anti-piracy legislation that was voted down in both the U.S. Senate and the House of Represenatives were the Stop Online Protection Act (SOPA) and the Protect Intellectual Property Act (PIPA).

"We call them audiences, you call them users, but giving them the best possible experience is a shared goal" Dodd told the dinner attendees. "In the end, we all report to the same people. I want you to know that our community is listening, continuously innovating, and hungry for more. And we know we can't do this without the work of the brilliant and creative minds behind the new devices, internet platforms, and other digital outlets."

Dodd also suggested it was important for both Hollywood and Silicon Valley to bury the hatchet and work together to enable seamless content sharing, saying, "We have to break through the notion that this is a zero-sum game, we need to benefit from each others success."

Good intentions aside, both groups have been preparing for further conflict.  The MPAA and studios have bolstered their social media strengths while its Silicon foes recently formed the Internet Defense League, whose purpose is to immediately respond to any threat to the Internet from Hollywood.

CMG believes the war has just begun!


Best
Jim Lavorato
Comments Welcomed

LIONSGATE CEO ROARS

Jon Feltheimer, Lionsgate CEO

CMG caught up with Jon Feltheimer, Lionsgate Studio's CEO during a webinar held at  the CTAM (Communications & Theatre Association) conference last week.

CMG: What is the most pressing issue you are dealing with right now?

JF: Our biggest issue, and what I am discussing at this conference , is the falling revenue from DVD sales but how they are being offset by VOD revenue, which is where we must be moving.

CMG: Explain.

JF: Let's take one our our latest films, Arbitrage staring Richard Gere. It brought in about $6 million in VOD revenue compared with $7 million at the boxoffice. That level of on-demand revenue would have been unimaginable for a specialty film just a few years ago.

CMG: Why is this?

JF: The audience for on-demand movies is different than that of moviegoers. 90% of Arbitrage's theatrical audience didn't know the movie was available on-demand and the majority that purchased the movie on VOD didn't know it was playing in theatres. They are totally different audiences.

CMG: I understand that digital rights also play a huge role in the TV sector, could you comment on this?

JF: Yes. For example digital rights were an important factor in renegotiating the final three seasons of  Mad Men (a Lionsgate production with AMC).  At nearly $5 million per episode, we needed to find ways to make Mad Men profitable, so syndication deals were struck with Netflix and other web-based streamers. 

CMG: You spoke at the conference on the need for the industry to work together and not compete in ways that make it harder for others, can you comment on this?

JF: Narrow agendas can make it hard to work together and look at the big picture. For example, the battle between the satellite networks (Dish Network and DirectTV) and content producers over Dish's AutoHop system (AutoHop allows users to skip over commercials and ads) is bad for the industry. We also need better user interface.  You can have premium content, but it's no good if the viewer can't find it.

CMG: What do you mean by - can't find it?

JF: For example, the on-demand release of "What To Expect When You're Expecting" underperformed our expectations simply because the movie starts with a "W".  As such it appears near the end of the A-to-Z lineup and viewers don't scroll down all the way.

CMG: Can you quickly speak about EPIX (Lionsgate's video service) ?

JF: EPIX continues to be a focus for us and our partners, Viacom and MGM. We believe that digital distribution deals will drive the content providers in certain directions.  EPIX recently struck a deal with Amazon Prime and ended it exclusive distribution arrangement with Netflix. We felt we needed more outlets for our content and this trend will continue.

CMG: Thanks, Jon



Best & Happy Movie Going!
Jim Lavorato
Comments Welcome

WEEKLY CineBUZZ REPORT - 10 October 2012

ULTRA HI-DEF TVs

One of the issues I stress when discussing Digital Cinema conversion with movie exhibitors is that D-Cinema presents an opportunity to improve the image and sound quality of the movie presentation, which is paramount in remaining competitive with their biggest threat - the living room!.

Consumers' living rooms are getting more and more 'entertainment immersive'. For example, at last week's CEATEC show (Japan's annual electronics love fest) the major TV manufacturers were all highlighting future Hi-Def TVs.  Touting 4 times the resolution and boasting larger screens (84" or 7ft. is becoming the new normal for size) these 'new' TVs will further enhance the in-home 'movie experience'.

The shift to D-Cinema for exhibitors is not only necessitated by film's demise but by the requirement that the movie theatre 'experience' keeps pace with other advancing technologies.  This means that a cinema's digital conversion be accomplished 'right', with proper sized digital projectors and enhanced sound.  This is the only way a local cinema will survive the relentless competition.  Choosing the smallest projector, not enhancing the existing sound system, and just trying to squeak by to save a few dollars on conversion won't get the average cinema the wow factor needed to compete against a 7ft. TV screen with surround sound.

The writing is on the wall and cinema owners need to read it.


LOOK MA - NO COMMERCIALS ......... NOT !

For years now, consumers have been by-passing TV ads by using their DVRs (digital video recorders) - but those days are numbered.  The DVR is destined for the techo scrap heap of history as viewers exchange their ability to skip ads for the convenience of streaming their favorite content on any device at any time.  The DVR is essentially being replaced by VOC (video on demand). And this is really good news for media companies and advertisers alike. 

Consumer behavior is shifting as cable and satellite providers have broadened their VOD offerings.  Viewers no longer need a DVR to watch most of their favorite sitcoms, dramas, or reality shows.
This behavior shift is further promoted by on-demand video subscription services, such as Netflix, Amazon, and Hulu.  Younger viewers are quickly moving to a scenario where they never knew you had to 'set' a TV to record a show.

What will happen is that VOD programming will disable one's ability to fast-forward, ie viewers can't escape the ads when they watch via VOD content.  In addition to controlling commercial skipping, VOD allows media companies the ability to control how long a program stays available and when it goes down - with DVRs they had no such control.

Right now, it appears that the scale is tilting back in favor of media companies and advertisers as commercials will once again be unavoidable for viewers.

ULTRA VIOLET - STILL INVISIBLE

UltraViolet, the movie studios initiative to push consumers to stream content from the cloud and store it in their personal media 'lockers' hasn't caught on.

Like its name, UltraViolet (UV) has thus far been invisible to consumers.  What UV's sponsors (which consist of the major studios, software & hardware manufacturers, and web retailers) wanted was for consumers to store (stash in their lockers) all manner of content and be able to access it at their convenience using any type of UV compatible web-connected device.

The problem is, consumers haven't shown much interest in the UV concept.  Why?  A big factor, I believe, is that marketing and promotion of UV by its sponsors have been dismal.  There should have been a global marketing campaign.  Another factor, was that early on UV was riddled with technical problems regarding the proper functioning of the locker system (these issues have now been solved).

The studios, led by Paramount and Fox, are now back on the UV band wagon, so you'll be hearing more about it and its value in the future.


3D - IT's ALL ABOUT THE LIGHT

I can not emphasize enough the importance of presenting 3D  movies with the proper amount of light, as not doing so puts 3D exhibition at risk of losing patronage and tarnishing a cinema's reputation.

Some 3D systems, such as RealD require an enormous amount of light as they rest in front of the lens outside of the projector.  So, running RealD 3D with a 2000 or 3000 watt xenon lamp is woefully inadequate even with the required silver screen.  Dolby 3D requires the least amount of light as its 3D system rests inside the projector and even then a minimum 4000 watt xenon should be used, no matter what size the screen.

The biggest complaint from audiences and filmmakers alike is that 3D films are too dark.  In 3D, you can only get the perception of depth when there is enough light otherwise the image looks flat.

I'm aware that the cost to exhibitors for the 3D add-on is substantial; however, if an exhibitor opts for 3D they must do it right, and there is no substitute for the proper amount of light to obtain the full 3D effect as the filmmaker intended.  When moviegoers have a bad experience with 3D it makes them less likely to attend (and spend on the 3D up-charge) going forward.

In 3D exhibition it's all about the light, so if installing a 3D system exhibitors and there equipment providers/installers must insist on using the proper light level.


Best
Jim Lavorato

CHIEF EXECUTIVE CUSTOMER

Over the last 4 months I have logged in over 12,000 travel miles visiting scores of theatres to discuss their conversion to Digital Cinema.  One question that almost always arises, goes something like this, "should I raise my admission prices upon conversion".  At first blush the answer seems easy. Will the current customers (and possibly new ones) continue to attend and support the cinema, if prices are raised?  But the answer is more complex.

Lets face it, every business has to raise its prices at some point.  And if you provide genuine value, and the price boosts aren't too onerous then your customers may accept them in stride.  But by the same token, raising prices can be tricky, particularly in the very competitive entertainment business.

So the question becomes whats the best way to raise prices, without losing customers?

First, start by taking into account all the factors that influence how you price for admissions and concessions.  Such as, market forces, the economic conditions in your area, competition, and cost-of-doing business (just opening your doors).  This is your start point and provides you a base or break even price point.

Second, if you don't think your customers can handle a direct price increase, than consider how you package your current pricing structure.  Most cinemas already use tiered pricing for popcorn and drinks but make sure your pricing is structured to that it pushes the patron to at least the middle priced item (never have more than three sizes or options from which to choose). 

Third, since you are investing a considerable amount of money into digital cinema conversion, make sure you explain this to your community.  There has been plenty of press (national and local) regarding 'the cinemas' move into the digital domain but it must be emphasized by you.  That YOU are making a commitment to THEM in providing the latest and best way to view the latest movies and other entertaining content.  Contact your local press, TV and radio stations, spread the word on your website, and use all of the social networks you can - this is free and great promotion and sets the way toward increasing prices.

Fourth, be prepared for blow-back!  While you may have every reason to raise prices you should be prepared to explain them, just don't blame the cost of doing business. If necessary show off (yes, offer the moviegoers the opportunity to view the projection room) your new digital projection equipment (your investment) and explain how you and your staff are working hard to ensure they continue to receive the best movie entertainment unavailable in their living room.

Should cinemas raise their prices upon digital conversion.  Well, to my mind, it's worth it, but you must put in the effort to explain the increase and its value. Place yourself in the moviegoers shoes -what they want is very good/excellent movie entertainment with few distractions and courteous and efficient service. If executed properly, the customer will understand and accept the price increase, but it's your job to make 'the sale'.

Good Luck

Best
Jim Lavorato