The Mouse Saved 2016's Box Office

Disney Saved 2016's Box Office

2016's box office ended with a huge surge as the year-end slate of movies couldn't have been of better quality or diversity.

'Rogue One' was the real box office bruiser, as the eighth segment in the 'Star Wars' saga, is currently inching toward $1b worldwide. 'Sing', the animated children's musical, although a distant second to 'Rogue', hit it big as well.

Disney dominated 2016 with six of the top 10 grossing films and literally saved this year's box office pushing it to a new record high of over $11.5b domestically, and still counting. The Mouse-house set the record in being the first studio to reach $7b in gross box office globally.

The holiday season came as a big relief for both the studios and exhibitors as this summer's grosses were anything but stellar.  But, even with a very crowded marquee most of the holiday movies did well. Besides 'Rogue' and 'Sing' there were a number of good performers: 'Passengers', 'Muana', 'Why Him', 'Assassin's Creed', and 'La La Land' all grossed very well, as did early holiday releases 'Fantastic Beasts', 'Office Christmas Party', 'Collateral Beauty, and 'Trolls' all of which grossed over $150m.  'Doctor Strange' broke the $230m mark and critics favorite  'Hacksaw Ridge' has grossed over $70m and still has legs.

In the end, 2016 finished big and salvaged what would have otherwise been a down and lack-luster year. Disney was 2016's box office hero, with: 'Finding Dory', 'Captain America', 'The Jungle Book', 'Rogue One', 'Zootopia', and 'Dr. Strange' all ending in the top 10 for the year, with all except 'Strange' grossing over the $340m mark.

We all look forward to another record breaking year in 2017!
 

Oscar Overload

This year there will be 336 movies eligible for the Best Picture Oscar Award.  That's a lot of films to judge and whittle-down to 10 finalists. In fact, it's too many. In an unattainable quest to be deemed a totally inclusive group, the Academy's selection process appears foolish.

The movies in contention span all genres and ratings-levels no matter their significance. The criteria for eligibility being that the films must have screened at a commercial cinema in Los Angeles between January 1st - December 31st for at least seven consecutive days. Additionally, the films, must have been exhibited theatrically and have a run-time of more than 40 minutes.  This eliminates a huge number of festival entrants but still leaves hundreds of bona fide qualifiers.

Nominees for the Best Picture Award will be announced on January 28th. The Award Show will be televised from the Hollywood Dolby Theater on February 28th.

Movie Attendance: Loyalty vs Frequency

Who is your audience?  The loyal moviegoer who only views films at your cinema however often, or the frequent moviegoer who visits your cinema on a consistent basis week in and week out.

What motivates the loyal or the frequent moviegoer?  It seems that most people are either/or. The loyal love your cinema. To them it is convenient, comfortable, meets their presentation standards, and consider it 'the venue' in which to see a movie. These are patrons to cherish. They come back over and over again and appreciate your efforts in making your cinema, 'their' cinema.

For the frequenter, it's all about the movies. These are the film buffs and people who really like going to the cinema to view the latest films on a weekly or biweekly basis and select films not specific to any genre but what is on the marquee.  Yes, they appreciate comfort, convenience, great presentation, and good concession but frequency is the key - it is a habit, an entertainment ritual, a recreational necessity.

The loyalist and the frequenter are motivated by very different criteria. Trying to get a loyalist to become a frequenter (the ultimate movie patron) is difficult, if not impossible. The loyalist normally views films they have an interest is seeing - if nothing strikes them of interest on the marquee they will opt for other entertainment. The frequenter, on the other hand, goes no matter what is on the marquee - opting for the movies vs other forms of entertainment. The frequenter is not loyal to the cinema but to films. The loyalist is committed to the cinema but not to films.

It is incumbent upon the cinema operator to understand each of their patrons and cater to their viewing needs. Film selections should be thoughtful and harnessing moviegoer data is crucial. What do 'my' cinema's customers want.  The key to the frequenter' is variety, for the loyalist, it's the whole experience - learn to serve both.

Will The Cinema Industry Be Trumped?

Trade Wars: Reciprocity is the new game in town

How will the cinema industry react to the newly elected Trump Administration? Certainly threats of tariffs would be bad news for the major studios.

For example, Hollywood has been counting on increasing access to Chinese moviegoers to fuel global box office growth. Currently, China allows 34 foreign films (virtually all U.S. produced) into the Chinese market each year.  That rule ends in February and the major studios were counting on the quota being increased or totally lifted. So, if Trump is looking for fairness in trade and quid pro quo in international dealings then China should lift the ban.

Chinese investors, particularly the Wanda Group,  has been allowed to make substantial investment in both cinema production and exhibition within the U.S. On the flip-side, China has been rapidly building new cinemas to placate its growing middle class and the theory is that China will need U.S. films to fill those seats. Yes, the Chinese film industry has entered into co-production deals with all of the major studios to produce locally made films but these projects will not be sufficient to fill their cinema entertainment needs.

For many decades, both Democratic and Republican administrations followed the same policy in the way the U.S. handled its relationship with the Chinese government.  The notion was that a stronger engagement would lead to the growth of a huge Chinese consuming middle class.  Indeed, a middle class has developed but the Chinese government has not moved toward a freer society - instead the U.S. policy has resulted in the development of a major rival that didn't previously exist.

With the Trump administration the opportunity for a more pragmatic approach to our dealings with the Chinese government is open. There will be lots of bluster and threats but in the end a mutually beneficial and cooperative deal will be struck for the entertainment industry. Reciprocity is the new game in town and I predict that in February the Chinese will increase their film quota limit on films.

Movie Consumption Grows At All Levels

In five years VR will play much larger role

Cinemas, streaming, rentals, video purchases, cellphones, tablets, broadcast, cable, pay-per-view - the choices for movie viewing are wide, varied, and growing.

Choice is good and distribution channels feed one-another - consumers will often go to the cinema and then purchase the video for re-viewing.  Cinemas still remain king in terms of 'quality viewing' but home entertainment has seen huge improvement in content presentation. To compare, for the first nine months of this year, home entertainment spending totaled $13.1b vs.$8.3b at the box office. Of the $13.1b home number 60% represented revenue from streaming services with only 7% from physical disc sales.

Advances in technology and a wide choice of viewing options have placed the consumer firmly in command. They expect quality, simplicity of use, and great value from their movie entertainment. Although the bulk of viewing is from well known streamers like Netflix, Amazon Prime, Hulu, many others are now entering the marketplace.  CMG recently posted on a new on-line movie service from the Turner Movie Classic channel called FilmStruck - which for $10.99/month serves up a menu of classic, foreign, and indie films. Another is Brown Sugar, a service from Bounce TV, that concentrates on '70s-era blaxploitation and cult films for $3.99/month - there will be many others to come.

CMG believes that within five years the sale of video discs will be extinct, as more and more consumers will become less interested in having any form of physical ownership of movies because they will be able to access titles on a streaming service. Virtual reality (VR) will also be playing a much larger role in five years.

Cinemas need to maintain their superior presentation qualities while broadening and enhancing their services. To maintain growth in the face of increased competition, cinemas will be required to improve their sound, expanded concession selections, and seriously consider the introduction of the 4k digital projection format that delivers four times the resolution of current 2k projectors. 4k will also find its way into the home.

The battle is on and it's going to be waging for some time to come. There will be winners and losers and the survivors will be those that recognize their shortcomings and address them.  The key being to always keep the consumer center-stage.

Atom Ticketing: Just Another Player

I've posted about Atom Ticketing and its goal of increasing the seat utilization rate at cinemas through an on-line app and automated system - a hefty and, in my opinion, unachievable mission.

The normal utilization rate at cinema's is 12-18%, meaning that, on average, 82-88% of the seats in a cinema are unused while a film is being presented.  This rate of seats-to-occupancy has been pretty much the norm for multiplexes since their inception.  For independent cinemas, the utilization is higher because they have fewer auditoriums and don't run as 'grind houses' as multiplexes do.  Many independent cinemas have utilization rates in the 20-30% range.

Originally, Atom's mission was to offer cinemas an automated system that would assist in increasing the utilization rate during low attendance times, such as weekday afternoons, by offering seats at lower admission prices during those times. Atom has now altered its mission. Now, it is pushing an app which makes it easy for groups of people to plan film outings. "Our hopes are that Atom Tickets triggers a social moviegoing revolution", said Steven Spielberg, a backer of Atom, "This is a big win for anyone who loves going to the movies with his or her friends." Spielberg and other backers of Atom believe they have a breakthrough technology. I'm unsure why they think this.

Atom does have a slick app which allows users to scan through movie posters of current or up-coming movie releases. Then, based upon 'predictive analytics' suggests movie tickets based on previous ticket purchases and/or your preferences gleaned through linking to your social media. For example, if you follow Brad Pitt on Facebook, Atom mines this information and  then suggests you purchase tickets for his latest film. You can also pre-order concession items when purchasing admission tickets.  Additionally, in the future, Atom intends to sell movie related merchandise such as toys, music, games, and clothing  through its website and app.

Free to download its app, Atom collects a surcharge on ticket sales from users. They claim use of their app will result in a 2-5% increase in admissions and concession orders. I don't think either claim can be achieved.

Atom's original system, which automatically reduced admission prices for film screenings that were under-attended, effectively increasing the utilization rate seems to have been scraped. It was not hard to assume that such a system would be unworkable and not subscribed to. People go to the movies when they have time and when there is a film they are interested in viewing - this is mostly on Friday evenings or Saturday/Sunday days or evenings.

CMG believes that no automated system or app, however slick and innovative will ever be able to increase a cinema's utilization rate.  Utilization increases can only be achieved by a cinema offering content that is based on local moviegoers' tastes, excellent overall service, better and varied concession, a spotless and comfortable venue, efficient staff, and an engaged and forward thinking management.

ADA Law: Final Ruling On Movie Captioning & Narrative

On November 21st, Attorney General, Loretta Lynch signed into law the Final ruling requiring ALL movie theaters in the U.S. to have and maintain equipment necessary to provide BOTH closed captioning and audio description (narrative) for all digitally presented movies.

The new law becomes effective once the Final Ruling is placed in the Federal Register, which will occur by the end of December.  Once the law is registered movie theaters will have a maximum of 18 months to comply with the law.

There are no exceptions to the law except for drive-in theaters and those theaters that run 35mm film exclusively. All cinemas screening any digital film must comply and have available both closed captioning equipment for the hearing impaired or deaf and audio narrative headsets for visually impaired or blind movie patrons.

The cost of systems to comply with the law are priced from $1100-1400 with the narrative eyewear from $575-625 and headset audio receivers from $75-90.  The number of eyewear and headset receivers is determined by the number of screens at any one cinema - this number is stipulated in the law.

To review the law, go to the ADA website (ADA.com) and search '2016 final rules for movie theaters'.