Coming Soon: Netflix Opens Movie Theaters

Think this is a far-fetched notion? Let's dig deeper.   

I've seen several reports in the media that have suggested the end of the movie theater and by extension the movie industry because of the virus. Wrong! The cinema is an art form. The production of a feature film is a grand endeavor, which in most cases, requires scores of  people to complete. Predicting the demise of movie-making is equivalent to predicting the demise of book publishing.

Netflix was on track to spend $17.3 billion on global content production this year. It would not be a stretch to think that Netflix take half-a-billion and purchase a multiplex chain and use the theaters to showcase its own content, as well as, other distributors.

Netflix currently has 167 million subscribers in 190 countries. With production halted it reduced its content budget to $15 billion so it has funds to 'play' with now that its content budget is $2.3 billion lower.

Netflix as exhibitor would be good for movies

Binge-watching makes for content that is long in production as multiple episodes are required. For 2020, Netflix is good-to-go with its current slate of content but for 2021 it has a big problem in delivering episodic-driven content given production has ceased. This production issue is across the board, be it for Amazon, Disney, Apple, and other streamers.

To offset this content shortfall coupled with the added problem Netflix faces of currency exchange (a very strong U.S. dollar vs. subscription fees that are collected in much weaker foreign currencies) will put pressure on earnings in the later part of 2020 and through 2021.

This problematic scenario could be solved by Netflix's purchase of a major cinema chain:
- It could showcase it own and others content
- Purchase a chain at a bargain price
- Enhance its relationship with film production people - from directors to actors.
- Get closer to its U.S. customer base which is currently static in terms of added subscription.
- Be a real boost to the cinema industry and other movie exhibitors as they would be screening Netflix productions as well as traditional HWD content.

The idea of Netflix becoming a theater operator isn't as far-flung as imagined, in fact it makes for a good strategic play.

Just saying,
Jim Lavorato

Exhibs & Production Post Virus: Observations

Masks, plexiglass, gloves, Purell, sanitation extraordinaire - reopening a cinema: what is enough and when does it end, if ever.

Depiction of reopened cinema

Government leaders cannot continue to order businesses (and the populace) to make extreme personal and financial sacrifices in the name of something as nebulus and now known to be as limited as the Wuhan virus - the fatality rate now known to be less than 1% of those infected.

Movie theaters are perhaps the ultimate venue for personal interaction, yet they will open (in some case next week) and when they do what will be the best way to operate for both patrons and staff.

Seating capacity: will probably be limited to 50% so exhibs should plan on running more shows throughout the day - screening movies from 9am thru the wee hours. Children are off of school for the remainder of the school year in most jurisdictions making for a pool of everyday moviegoers. Additionally, most adults' bio-clocks have gone haywire so late night movie attendance could be just the out-of-home activity they crave.

Staggered seating will be expected by moviegoers as will sanitation of the seats. Have staff spray disinfect seats between shows. It is imperative to demonstrate to patrons that everyone of the cinema's staff is on-board with their safety and security.

Masks: iffy. How can people wear masks and eat concession? Perhaps have masks available but not required. Many patrons may bring their own masks.

Gloves: at the discretion of the patrons. Have available if they want them.

Plexiglass screens: optional, if not already existing, for the box office and concession stand.

Be realistic, most people will be very skittish about attending large crowd gatherings - at least initially. It will be the job of each exhibitor to lessen that fear. I know polls have shown that people will take their time in returning to public entertainment venues but people don't always do as they say particularly if they know actions are being taken to minimize their risk.  Also, there are compelling reasons to attend a movie or other social event, for one people are desperate to get OUT of their voluntary (or otherwise) house arrest.

Note: If you think the rules for cinemas are stringent the 'new normals' for movie production are truly draconian. What is it going to be like in the coming months after the virus imposed shutdowns at film production facilities across the globe? What is developing are drastic rules to minimize the Spread.

Here's a few on the agenda:
- a two-week quarantine for the entire cast and crew before production begins.
- daily testing of all via temperature check
- breaking the production into work Pods
     - Pod 1 - the on-set cast and crew (director, VFX folks, cinematographer, etc.)
     - Pod 2 - base-camp staff (makeup, hair, catering, etc.)
     - Pod 3 - set design, props, etc.
      Each Pod would have a quarantine supervisor who would enforce the protocols.
- locations and sets would be dressed (cleansed) and sealed for three days, including costumes.
   props, etc.

Whether or not you are going to get an A-lister to self-quarantine for two-weeks is iffy. But, it is certain that production changes would be profound and how long they would have to be imposed is not know.  The other, huge issue is financing of a production if that project cannot get insurance. The big studios could self-insure but many smaller projects may not be able to.

There are going to be mega-changes in the day-to-day operation of making a feature film and for the exhibition of that content.

My thoughts,
Jim Lavorato

What To Call The 'Virus'

There's been lots of criticism regarding the naming of the virus. Coronavirus, COVID 19, pandemic, Chinese virus, Wuhan virus etc. The U.S. media was down on Pres. Trump because he was calling it the Chinese virus and according to them this was racist and degrading to the Chinese.

Sign throughout Asia

Well, guess what. The folks in Asian countries such as Singapore, Thailand, Vietnam, Laos, S. Korea, Japan, Indonesia, Taiwan, etc. etc. are not only calling it the Wuhan virus but have signs that use Wuhan as an acronym, which is widely disseminated throughout these countries (see inset).

To verify this, I contacted several friends that are currently in Thailand and Japan and they agreed that the virus is referred to as the Wuhan virus in these countries.

We all need to be leery regarding the U.S. media and their skew of how they want news and events to be 'viewed' and 'consumed' by us.
The virus started and spread throughout the world due to China's inefficient and misguided handling and management of the virus - everyone knows that. You can call it what you want but the Asian countries, for the most part, are calling it the Wuhan virus from where it originated.

Just saying,
Jim

U.S. Cinemas Nearer to Reopening

American stalwart gets shot-in-the-arm from virus

The Trump Admin. announced Thursday, the three 'Gates' that businesses will have to go through to becoming fully reopened and included a phased plan for movie theaters.

The Plan, "Opening Up America Again" is based upon "gating criteria" that States or municipalities would have to satisfy before opening.

Gate One

- There must be a downward trajectory in the reported cases of COVID.
- There must be a downward trajectory in documented COVID cases.
- Hospitals must be able to treat all patients without crisis care and have a
   robust testing program for at-risk health care workers
- These criteria must be satisfied over a 14 day period


The reopening under Gate One applies to large venues such as movie theaters but they must adhere to strict physical distancing protocols, ie maintaining a 6 foot distance between non-related patrons.

Gate Two

When a State or municipality reaches the Gating criteria a second time without a rebound of COVID cases, large venues would be allowed to have patrons gather in groups of up to 50 without social distancing.

Gate Three

Relaxes restrictions further to 'limited distancing protocols'.

Obviously, some States/regions will be opened sooner than others but there is no timeline on any of the Gates.  Some States have already met the Gating criteria and will reopen shortly.

29 States are in the pre-open stage, including Montana and Utah which will probably be the first two to open cinemas. It should be noted, that each State must also have preparedness responsibilities including testing, contact tracing, healthcare facility capacity, and protection for essential workers.

Movie theaters should start implementing Plan B (as outline in EEC Alert #7) and get ready for reopening - it can't come too soon. Cinemas will be allowed to reopen after Gate One criteria is met. However, although there is a glut of content to be released, the studios may not green-light the distribution of tentpoles as yet. But being able to sell tickets, Coke, and corn is financial manna.

Before closing I wanted to address Drive-in Theaters. The American originated but oft-forgotten venue, Drive-ins are experiencing a major spike in attendance as people are seeking respite from the cooped-up monotony brought on by the virus. You are safe at the drive-in and those that are opened or those going to open are providing food menus upon arrival at the boxoffice with a phone number to call to order food for pick-up at the concession stand door(s).


Best and stay safe,

Jim Lavorato

After The Virus: Cinemas' PLAN B

Cinemas in China have already reopened

It appears we still are a week or so away from a projected peak of infections and widespread testing of the U.S. populace. Entertainment businesses - movie theaters, concerts, sporting events, theme parks, etc. - are facing uncertain questions about what comes next? That question boils-down to how long will it take for people to feel safe enough to return to communal venues once reopened. This will take time and full proactivity on the part of these impacted businesses.

According to a recent poll by Performance Research, 49% of respondents said it will take "a few months" for them to return to group entertainment venues post-crisis. There is psychological tension at play for these businesses: the desire of people to share space after weeks of virtual isolation versus the trauma of sickness or death by an unseen and little understood pathogen.

                  Your return to business will be a 'staged process'

PLAN B

Call it embracing cautious optimism but I believe cinemas should prepare for when audiences will return - NOW. Marketing and communication is key. The way-back by the public to movie theaters could be as early as May in some localities. The studios have modified their release schedules and there is plenty of product for pent-up patrons to view.

Signs & posters are a good idea

Instituting safety measures at your theater is your start point. In waiting for universal testing, each cinema, as an added security step, could take the temperature of each patron as they enter the theater. Sanitation, is paramount, Prell dispensers throughout the cinema, full soap dispensers in very clean restrooms are no brainers. Performance Research found that 66% of respondents stated they were more concerned with the cleanliness and sanitation of public venues than with crowding and close contact (59%). Staggered seating will be required upon reopening and expected by partons.

Cinemas will have to create new standards and seals-of-approval that demonstrate steps are being taken to sanitize: seats, lobbies, restrooms, concession stands, and that screening of employees is actively taking place. People need to see and be able to tap into your efforts via phone, social media, website, local press, radio spots, local TV show news, word-of-mouth, running specials/discounts, partnering with other local merchants (especially any involved with commercial sanitation). Your return to business as usual will be a 'staged process'.

The pandemic, like all others, will fade into history but there will be lasting effects. Start NOW in implementing your Plan B for reopening. This will take effort and some investment, but the sooner you address your Plan B the sooner you'll be screening films again.

Best,
James Lavorato

Is The Internet Up to the Task?

One of the overlooked benefits to cinemas is that the internet does have capacity limits and it may be reaching those limits now!

Data use is up 27% amid social distancing and there is growing concern from the ISPs that the 'broadband pipe' and infrastructure is reaching full capacity. U.S. homes usage of the internet rose to 6.3 gigabytes or 41.4% in January alone.

Is this going to be the 'new' normal as more and more people stay at home for remote office work and virtual schooling instead of going to coffee houses, bars, restaurants, and other social events, opting for streaming hi-def and 4k video instead.

Netflix, the premier user of the web-pipe, expects streaming usage to be up 61% during February. While Facebook doubled its server capacity over the last two months to power its messaging applications as users placed more voice and video calls on its platform.

There is now widespread concern by Regulators in the U.S. and Europe that social distancing will "break" the internet. The European Commission on Internal Market and Services has already requested that Netflix stream its content in standard vs. 4k HD format. Netflix did agree to reduce its streaming bitrate (for the time being) lowering its usage by 25%.

"This is going to be an enormous stress test for our communications networks," stated Blair Levin of the U.S. Federal Communications Commission. The FCC gave Verizon, T-Mobile, and U.S. Cellular access to the 600 Megahertz spectrum through April, providing extra wireless capacity for data connections.

There is heavy reliance that the ISPs will be up to the task in providing for the huge increase in usage?  CMG doesn't think it is.

I'm sure you've already experienced slower logins, longer data retrieval times, reduced availability of 4K/Ultra HD video streams, and more frequent 'come back later' notifications - all to the benefit of movie theaters. It is becoming very apparent that going to the cinema is really the only way to view a film in high def with great sound.

This unexpected problem of internet capability and capacity is only going to get worse and as it does it provides opportunity for movie theaters.

Note: I had several infographics for this post but Google couldn't connect blogspot to my PC - requested I 'come back later' - it's already started.

Just saying,
Jim Lavorato