Movies on the Cheap?

Gift cards have become very popular - available at most all retailers for products and services.  But, a gift card recipient may (for a variety of reasons) not want or be able to redeem the card.   Not to worry, in that case, they can go to one of several websites that act as gift card clearing houses and buy and sell gift cards. The charge for this service typically averages about 15% of the value of the card - Giftcardgranny.com, giftcardrescue.com, plasticJungle.com, and Swapagift.com are several.

Well, you could have knocked me over with an anvil, when I saw AMC Theatres gift cards at a 58% discount from face value !  Hmmm, is this a good proxy for the value of cinema admissions?  Well I guess it is what the market will bear so lots of folks must feel that going to the movies is only worth half of what a major circuit is charging.

Cheers and Happy Movie Going!
Jim Lavorato

Virtual Print Fee - It's All One Sided



Its all about Money

I receive queries almost daily from movie exhibitors regarding the Virtual Print Fee scheme. My response: Like many contracts, at first blush it sounds great, but in the details it's all one sided - and make no mistake, the film Studios know how to make up a "good" contract.

The Studios' scheme to get  movie exhibitors to convert to digital cinema by paying a virtual print fee (a fee given to the exhibitor because a film print did not need to be distributed)  which defrays the cost for the D-Cinema conversion, comes with lots of stipulations and, in fact, is advantageous to - you guessed it - the Studios

For example, to qualify for the VPF, movie exhibitors must, among other requirements:
- Open digital movies on the first day of their release.  That is why you will
   see first run movies opening in smaller auditoriums with small screens.
   The movie must open but there are other films already in the large auds.
   which can not, under contract, be moved to the smaller auds.

- Any renovation made to a cinema from 1/1/10-to-present that did not
  include a digital cinema platform can not qualify for the VPF. Code:
  those cinemas that are thinking of upgrading, for whatever reason, must
  include a D-Cinema conversion into their plans.

- Once a d-cinema platform is installed the exhibitor has 6 months to
   upgrade all other auditoriums at that location, and one year to upgrade 
   all auditoriums within the circuit.  I'm not sure if this covenant is being
   enforced but it makes conversion very costly and is totally unnecessary.

- Exhibitor must pay a royalty fee on all alternative content exhibited to
  the Studios while the VPF contract is in force. Theory: since we are
  paying the VPF we get our take on all content using the D-Cinema
  equipment.

- Movies released in 3D format must be exhibited in 3D if the exhibitor is
  3D equipped.  This makes for conflicts, as a 3D feature already playing,
  and contracted say for 3 weeks makes compliance with this stipulation
  impossible and may result is a forfeiture of that movie.   

These are but a few of the stipulations under the Studios' VPF scheme. But the giant loophole - that gets the Studios out of the deal (does anyone really think the Studios will be paying the VPF for 10 years as is stipulated in the VPF contract) is the one that states: the Studios reserve the right to demand that the exhibitor upgrade to the latest technical standards as stipulated by the Studios and non-compliance will void the VPF contract.

So there you have it.  Enjoy!

Best and Happy Movie Going.
Jim Lavorato

CineBUZZ REPORT - 25 October 2011

3D Glasses Proliferate

Focux 3D Glasses

Over the last six months or so I have been beleagered by companies selling 3D glasses, some good some not so good.  The Focux Active (see insert) look pretty good.  Stating that the glasses provide, " the best feeling of brightness, color, and stereoscopic impression, but are also  compact, comfortable, earth-friendly, and cool-looking".

The promo sheet states that the Focux glasses, although active shutter type, require a battery change only once very 5 years, are light-weight, and easy to store as the arms fold automatically.  Storage trays are available and the glasses can be recharged 600 at a time.  Also note worthly, the promo sheet states that a silver screen is not required given the brightness of the image through the glasses.  Additionally,  they are compatible with all DLP D-Cinema Systems, and have a built-in auto test mode for moviegoers.

Check out the Focux 3D glasses at www.sales@focux.

BOX TOPS

Paranormal Activities 3 (Paramount) took top honors this weekend with a domestic gross of $54 million, a very good opener for the horror franchise and exhibs are hoping it will have legs over the coming weeks.

Coming in at #2 was Real Steel (Disney) which pulled in over $11.3 million and has now grossed over $112.7 worldwide (it has performed very well in the overseas markets as well) so it has now covered its production/marketing cost which means Disney will reap significant profits as this product moves through its life cycle.

Footloose (Paramount) came in #3 with $10.9 million and has been a steady performer. The 3 Musketeers 3D (Summit) the other new release besides PA3 that made it into the top 5 took 4th place with $8.8 million. A so-so showing but demonstrating again that being in 3D doesn't guarantee B.O. success. Rounding out the top 5 was Ides of March (Sony) at $4.9 million, look for this one at the Oscars.  The other new release was Johnny English Reborn (Universal) which wasn't reborn but was dead on arrival at the B.O. with an opening of only $3.8 million.

The domestic gross for the top ten movies totalled, a respectable, $109 million for the weekend and finally pushed the cinema out of its early autumn slump and hopefully on an upward trajectory for the remainder of the year. 

Early predictions have the domestic 2011 box office gross and ticket sales below 2010. Admissions are projected to reach 1.27 billion or about 60 million below last year, while dollar gross is expected to reach $10.2 billion or $300 million less.

Best and Happy Moviegoing!
Jim Lavorato

MILDLY HOSTILE BUSINESS PRACTICES

When conducting Cinema Training Central's (www.cinema-training.com) management workshop I discuss what are termed "mildly hostile" business practices - 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.

This is what Sony Pictures recently did when it informed movie exhibitors that come May 2012 it would cease paying for 3D glasses and referenced the fact that exhibitors adopt a "guest ownership model"  - which is code for have moviegoers buy their glasses and re-use them on future visits to the cinema.

The Sony LCoS based 4k D-Cinema projection system is more costly than the DLP based system used by it competitors, so it has many less installed D-Cinema platforms (and from what I hear the majority of these are loaner systems).  Sony's policy change on 3D glasses will come just before its release next summer of  Spider Man and Men In Black III, both to be released in 3D format.  Stating that "there are ways to deal with the cost of 3D glasses that will not adversely impact the (moviegoer) and also help the environment" , Steve Elzen, Sony Pictures spokesperson, called on exhibitors to work on the situation. 

In response, NATO (National Assoc. of Theatre Owners) noted that Sony's policy change was "insensitive" to consumers. While Regal Entertainment, the U.S.'s largest cinema circuit, in a statement issued by its CEO, Amy Miles, stated "if  Sony shifts costs to exhibitors we would be forced to evaluate this new economic model and program our screens accordingly".  Code for, Regal may not exhibit Sony pics in 3D format.

MY TAKE
First, charging moviegoers for the glasses would fall under my definition of "mildly hostile" business practices - and would over time decrease patronage at cinemas.  Second, do you really believe Sony when they say they want to shift cost to exhibs and moviegoers to save the environment.  Third, the more the distribs and exhibs battle the more eyeballs they loose to the in-home movie experience.

Best and Happy Movie Going!
Jim Lavorato

Interesting Tid-Bits

CONNECTED TVs SURGE

The latest stage in the evolution of the TV is the arrival of internet
connectivity, which has surged as improved bandwith and usability allow people access to the vast world of content on the internet.

Strategy Analytics, a media research company, recently conducted a survey of over 5000 respondents in the U.S. and Europe which found that "connected TVs are being purchased at a very fast pace, with over 42 million homes now connected for the purpose of watching TV shows and movies".    We are in day one of the connected TV revolution as UltraViolet (see prior post of UltraViolet) launches its individualized video "locker" concept and Apple considers its own streaming movie service. Connected TVs are going to proliferate, and will be the cinema exhibition industry's greatest threat and competition in the not to distant future.

KODAK & IMAX MAKE DEAL ON PATENTS

In a deal between Eastman Kodak and IMAX, Kodak will license a portion of its patents for an upfront fee of approx. $50 million from IMAX. Reported in a prior Cinema Mucho Gusto post, (see Kodak's Hidden Treasure - 20 September 2011) Kodak has over 10,000 patents which are essentially more valuable than the company itself.
Under the deal IMAX will also pay recurring royalties as it uses Kodak's patents in its  products. IMAX is exclusively licensing 100 patents related to laser projection technology and will get the cinema rights to the bulk of Kodak's remaining patents.  These patents will allow IMAX to deliver digital content to its largest screens, which it previously hadn't been able to convert from film.  For Kodak, the infusion of cash will be welcomed as it transitions into a company that sells digital consumer and commercial printers.

NETFLIX BREAKS PROMISE.......and it costs them

When giving the Cinema Training Central (www.cinema-training.com) seminar on Cinema Management, one of the topics discussed is Branding and Corporate Identity.  A company's brand is essentially a promise.  A promise that it will provide a product or service that it has "promised to deliver".  But once that promise is broken it is very difficult to get it back.  Case in point: Netflix, which last month decided to raise pricing on mail order videos in an effort to force customers to use streaming as the cheaper alternative.  Big mistake.  The Netflix brand (promise) was broken and customers - to the tune of  3 million - stopped using Netflix.  To recover, Netflix had to regroup and publicly renounce its new policy. In the meantime its share price dropped over $100.
Branding and corporate identity are crucial elements in marketing and developing brand equity.  If your company isn't or doesn't brand itself call us for information on our Management Training Workshop on Marketing.

IMPULSE OR SURGICAL ?

According to ShopperTrak, impulse buying by consumers is waning in favor of surgical shopping.  Impulse purchases require people to browse, and that is happening less and less because tech-savvy consumers use the web to get info on the product they want and simply go and buy it and leave the store.
Termed "mission shoppers" , these consumers are visiting stores less which lessens the chance of the impulse purchase.  The research points to the fact that Americans are turning into "surgical shoppers" vs. impulse shoppers.   And while mission shoppers were almost always men women are now adopting this practice.

Cinemas should pay close attention to the so-called conversion rate (the percentage of people that actually buy concession after walking into the cinema). As Americans make fewer trips to the cinema, each moviegoer becomes more valuable and coaxing them to buy more concession becomes more crucial. 

12 foot WebTV

Currently, because of the d-cinema conversion and the recession many cinema operators stopped refurbishing, hired less staff, and posponed needed repairs and upgrades.  Now, because of the coming proliferation of content streaming and inevitable shrinking of the theatrical release window, cinemas are going to have to move quickly to improve the movie-going experience - with upgraded technology, and improved service and superior merchandising - to better engage their customers.

Cinemas have let the consumer get too far ahead of them and now they are going to have to scramble to fix that situation.  We have many prior posts to this blog recommending just that: installing pay-by-phone, adding wireless Internet networks, using smart phone technology to check inventories, having staff spend more time with moviegoers, going back to the use of  customer greeters, and on and on.  Its a return to old-world service but using high tech tools to do it.

My fear is that the cinema experience gets no better or becomes gimmicky while the in-home entertainment experience gets better and more immersive- accelerating the migration away from the cinema.

Best and Happy Movie Going
Jim Lavorato

WEEKLY CineBUZZ REPORT - 18 October 2011

Exhibitors Have No Juice

Last week Cinemark, the third largest movie exhibition chain in the U.S., announced that it was not going to exhibit, Tower Heist (Universal), because Universal (Comcast) had stated that it was going to offer the movie via its video-on-demand service just three weeks after the theatrical release.
Well, imagine that.  Like this threat from Cinemark really matters to Comcast!  It's like I've been saying for 5 years now - not that I like saying "I told you so" - but movie exhibitors have no juice, because they bought into the digital game.  Eventually movies will be available day-and-date across the world to everyone as content is streamed on a variety of devices and outlets with cinemas being just one outlet.  Cinema exhibitors just don't have the juice in terms of numbers to back up their threats.
The millions  movie exhibitors spent (and are still spending) on D-Cinema conversions should have been spent on changing their business models - refocusing their branding and marketing, connecting to their local communities, upgrading their facilities to more sustainable operations, and on and on.

It's all about eyeballs
Cinemark is fighting the wrong battle, and one they can not win. In the digital age, movie exhibitors will be marginalized and will become just one of many outlets where films will be viewed. Therefore they must concentrate on basic strategies of improving the movie going experience  as it will become harder and harder to compel consumers (who will have a vast array of entertainment alternatives via their connected TVs and other mobile devices) to get off their sofas and pay a visit to the the local cinema.  Exhibitors need not only good content but must offer an exceptional out-of-home entertainment experience to survive.

Not to be left out, the studios are also in a precarious position.  As the Comcast buyout of Universal, so vividly, demonstrates - the studios are takeover targets for the digital Kings.  Apple, Google, Amazon, Microsoft, Netflix, Facebook, and many others, will need content for streaming and it is the premium content, ie. major motion pictures, they will demand. And the best and most efficient way to get premium content is a buyout of a major media company. 
The scenario, I've just laid out is inevitable. Movie exhibitors should prepare for it as the survivors will reap huge benefits.  But at this stage in the game, not exhibiting films because of collapsing release windows (as Cinemark is doing) will gain nothing except lost revenue and less movie patrons in the future.

F/U to story: As of today, Universal has backed off of its position for the early VOD release of Tower Heist, but it is an omen of things to come. It's a shot across the bow - take heed exhibitors.

Cinema Needs A Comeback

Flat and crowded - that is what the world is becoming.  By 2050 the United Nations estimates the world's population will exceed 9.8 billion from today's 6.8 billion headcount.  The world is also becoming increasingly flat, as it emulates and pursues an "American lifestyle" becoming smaller as both the information and energy technology age develops.

The U.S. cinema is already flat in terms of box office grosses and decreasing in terms of admissions - but these trends can be reversed if distributors and exhibitors adopt a modern pragmatic and accommodating business relationship as both Hollywood and the exhibitors will need each other's support in the future.  A much more streamlined movie entertainment community is in the works so that necessities change.

Cinedigm's Bragging Rights........Not Too Good.

According to the Motion Picture Association of America, and who am I to doubt the MPAA, there are approximately 150,000 cinema screens in the world. Of which 40,000 or so are in North America.  Cinedigm, the digital cinema conversion folks, say that they have converted 8,000 screens with another 1400 or so in the works.  That's about 25% of the total screen count in the U.S. and Canada.  Hmmm, after ten years you think it would be more, but then again the exhibitor really gets nothing for converting, except higher operating expense.

Listed as a penny stock on the NASDAQ, Cinedigm (CIDM) current share price is $1.15 down 55% for its 52 week high of $2.60.  After the Virtual Print Fee scheme, Cinedigm will have no value - in fact it has no value now.  It lost 18 cents per share last quarter and is, in reality a puppet company for the studios which will dissolve next year.

Hollywood Suffers from "Uchimuki"

Japanese companies suffer from - "always looking inward" - in other words they are not innovative and their managers lack creativity because their mindset is inbred.  The Japanese are acutely aware of this inward thinking trait, called "uchimuki", and have tried to overcome what is rooted in very old and traditional social norms without much success.

I'm afraid the Hollywood studios are suffering from uchimuki as well.  They are inward thinking and following a movie exhibition business model that is at least seven decades old and in dire need of a revamp.

The studios had a choice of going digital with cinema exhibition or staying with film and they, unfortunately, chose the former.  The savings derived from the demise of film prints had the studios' bean counters drooling but in the long run will cost them movie distribution control and make them the puppets of the digital domain kings, such as Amazon, Google, and Apple.  The studios are under the delusion that they are "safe" and control premium content but don't realize that they are future takeover targets of the tech kings.  The studios' venerability is apparent - at least to some of us outside Hollywood - but continue to rush headlong with d-cinema conversion.

Comcast, the country's largest cable provider, paved the way with its purchase of Universal from G.E. and other buyouts will follow.  The studios have maneuvered their way into a very bad position because  of their "uchimuki" tendencies.

Best and Happy Movie Going !
Jim Lavorato

Who's Watching What ?

When it comes to viewing premium content, consumers have more options than ever - web TVs, PCs, tablets, game consoles, cellphones, etc. and they are using them.  A new study by PriceWaterhouse Coopers (PwC) finds that traditional TV is still king with web-enabled TVs and tablets coming on strong, while Smartphones, due to their small screens and slower network connections, have limited appeal.

PwC found that 58% of consumers said they spend more time viewing movies and TV shows online than they did a year ago, with the preferred device being the tablet.  In a concurrent study, the Nielsen Company, reported that only 10% of mobile users watch video streams on their phones; however, mobile "views" of TV shows increased 200% in second quarter of this year.

UltraViolet Locker System   

The PwC study also noted a significant increase in cloud-based media storage offerings.  The idea of digital lockers - a la the UltraViolet locker system - for storing music, shows, movies, photos, and other content in individualized "lockers" appears to be very appealing to consumers, although they expressed concern regarding costs to maintain a locker.

The study is good news for content streamers: Netflix, Hulu, Roku, Google, Apple, Amazon, and Microsoft  (to name several), but bad for the social media platforms like Facebook and YouTube, as over 65% of survey respondents said they wouldn't pay anything to watch movies or TV shows via social networks.  However, because we are just in the beginning stages of premium content streaming there is still opportunity for the Hollywood studios to leverage social media sites.

Overall, the PwC study indicated that consumers would rather rent than buy video-on demand because it is viewed as less expensive, and does not occupy space on their PC's hard drive.  Consumers also like getting faster access to movies (now commonly available within four weeks of the theatrical release) as this rated as the most appealing feature of VOD offerings - with most consumers willing to pay an up-charge of $5 for the quicker release.

Best and Happy Movie Going !
Jim Lavorato

WEEKLY CineBUZZ REPORT - 4 September 2011

Box office Malaise Continues

The box office slump is now in its sixth week, as the top grosser last weekend - Dolphin Tale (WB) - took in only slightly over $14 million. It was followed by Moneyball (Sony) and Lion King 3D (Disney) which were prior week holdovers. The other new comers, 50/50 (Summit) and Courageous (Sony) ranked fourth and fifth, but with dismal performances.

Other new releases: Dream House (Universal) and What's Your Number (Fox) made it into the top 10 but with minuscule numbers. In fact, the top 10 movies for the week only grossed an aggregate $88 million.

Year-to-date the U.S. box office totals $7.8 billion, which represents a decrease of $265+ million as compared to 2010.  We are all hoping for a break in the box office slump as there are some very good films being released over the next several weeks, lets keep our fingers crossed.

Streaming Content

Roku, launched in 2008, has quietly become the first streaming platform which has been really embraced by consumers and has become the partner of choice for content providers.

Roku is simple to use and its platform allows for quick deployment of content using a variety of monetization options.  Roku provides subscribers access to over 300 entertainment channels that deliver content which includes: TV shows and movies from both Netflix and Hulu, videos from Amazon Instant Videos, live and on-demand sports, music, photos and videos from Facebook and Flicker, plus regular news channels. Look for Roku to be a major player in the streaming content game going forward.

In other news, Amazon continued to build out its streaming service by inking a deal with Fox for access to over 2000 movies and TV shows. No first run films or current shows but it ups the amount of video available through its streaming service by 20%.

Unlike Netfilx and Hulu which stream across platforms and devices, Amazon's subscription is limited to PCs and web TVs but mobile devices can't be far behind as Amazon will be introducing a new tablet shortly and it still has the Kindle as a device which could be enhanced to receive content.

Exhibitors Need To Use Cashless Payment Options

I've written before on the need of cinema exhibitors to embrace the use of SmartPhone payment systems at their theatres. This technology, although not widely used at present, will become more and more popular.

Google Wallet

Last week, Google officially launch The Wallet, which allows consumers to tap or swipe their phones to pay for purchases.  While other companies, including Visa and American Express, as well as AT&T and Verizon have stated they will be offering digital wallets, Google is the first to take the wallet to market.

Citibank, MasterCard, and Sprint are the initial launch partners for The Wallet and it will be the first such device to use "near field communications" technology for digital payments. NFC allows for secure communication between devices at very short distances. Google stated that their "near field"  system will be licensed to AMEX, Visa, and Discover which means that upcoming versions of Google Wallet will support these credit cards as well.

Google wants its digital wallet to offer consumers and retailers more then just payments. It wants to incorporate and deliver Google Offers, a service which allows people to enter loyalty cards into their Wallets and also allow retailers to send promotional deals to customers based on where they have shopped in the past and where they are located.
Exhibitors get on The Wallet bandwagon!

Best and Happy Movie Going!
Jim Lavorato

WEEKLY CineBUZZ REPORT - 29 September 2011

Box Office Update

There is no point to recapping last weekend's box office as it was a mirror image of the prior week with Lion King 3D topping the chart.

The U.S. box office continues to stumble through September at stall speed so it is a good bet that the folks are waiting for the big holiday grossers before returning and as we move into award season.  So, I'll concentrate on the future instead of the past.

This upcoming weekend (9/30) will see the release of 50/50 - a comedy which should do a respectable amount of business, Courageous - a feel-good, faith-based flix which will not click, Dream House - a good horror/ murder drama (with for real newly weds Daniel Craig and Rachel  Weisz) will also do respectable business, and finally, What's Your Number - a comedy cum chick flix ala Bridesmaids which may be the big winner this weekend, as the folks need a good laugh.

Moving forward, October and November offer up more comedies and a few , yes, we know they are going to gross big, films.

10/7 weekend

Ides of March - Clooney in a political drama with a great supporting cast has real box office potential.  Restless - a romantic tear-jerker offers little hope, Wonderlust - comedy about urban couple that goes counter-culture may have a little steam, and The Way - drama directed by Estevez that stars father Sheen, I don't think it will work at the b.o.

10/14 weekend

The Big Year - this comedy about bird watching w/ Black, Martin, and Wilson will be a big grosser in fact the TV marketing has already started.
Footloose, a redo of 80's hit with a twist could be a sleeper, The Thing, a prequel to the '82 thriller may also have appeal. So this weekend will be the best in quite awhile.

10/21 weekend

Dirty Girl - a coming of age drama set in '87 could have potential and if good will have word-of-mouth push, Paranormal Activity 3 - a Halloween scary and 3rd installment for the horror mini franchise will pull them in, and The Three Musketeers - old story, new faces, for me a no-go. 

10/28 weekend

The Skin I Live In - drama about plastic surgeon and use of synthetic skin, will be ok earner, Anonymous - who was William Shakespeare (he/she) who knows, a great cast, could do ok for a few weeks, In-Time - sci-fi about aging and immortality for sale, not much potential here, Johnny English Reborn - Mr. Bean as secret agent, no real draw here, Martha Marey May Marlene - drama with good cast and Academy considerations, may do very well even with long ambiguous title, and finally Safe - high-impacter with Jason Statram (who seems to be in every other film) which will do very well.

11/4 weekend

A Very Harold & Kumar 3D Christmas - a sequel to the very popular film picks up where the last H & K left off only six years later, it will do business, Puss in Boots, Shrek character gets top billing in this animated comedy that will be great b.o., Tower Heist, thriller/comedy with big cast that will also pull them in.  This will be a big b.o. weekend.

11/11 weekend

The prior weekend flixs will still be doing very well and adding to those will be J.Edgar - bio on FBI's first chief cook and bottle washer, really not much interest but you never know, Jack and Jill - Thanksgiving comedy with very good cast, this will do well.

11/18 weekend

Happy Feet Two - penguins always do well and this should not disappoint. The Twilight Saga - Breaking Dawn Part 1 - a big one and next to last installment in this very successful franchise.  This will be another great b.o. weekend.

Lets stop here and save the last half of November and the December releases to later. Comedies will rule over the next 6 weeks and from the looks of things will be much better than the last 6.

Best and Happy Movie Going !
Jim Lavorato

THE CINEMA of 2015 - Part # 1

 - What will the cinema of 2015 look like? 
 - Will cinemas still enjoy an exclusive release window for movies?
 - How will cinemas compete in the post PC era ?
 - What business model will ensure a cinema's success?

In my capacity as a media consultant I have been asking myself these and other questions regarding the cinema, and have come to believe that they not only need answers but that they are time critical.

In this first of a four part series on the Cinema 2015 I'm going to provide perspective on the current landscape of the industry, and insight into what moviegoers will demand in the future.

THE LANDSCAPE

Currently the cinema is split into two very distinct areas: the U.S. vs. rest of world.

THE U.S. CINEMA

The plunge in movie ticket sales over the last eight years in the U.S. is a very disturbing trend given an increasing populace coupled with Hollywood's re-introduction and intense marketing of 3D.  This decline in admissions evidences a real dissatisfaction by the public who no longer consider a visit to the local cinema a value-based entertainment activity.

From its 2002 peak at 1.56 billion admissions, U.S. ticket sales have steadily trended down to where 2010's 1.34 billion admissions were 220 million below the '02 peak.  In contrast, over the same period the average ticket price rose from $5.81 to $7.89 or 36% as box office grosses increased from $9.10 billion to $10.57 billion.   Therefore the upward glide in box office gate. over the last decade, is solely attributable to higher base admission prices coupled with the recent 30-40% admission up-charge for 3D movies.

THE INTERNATIONAL CINEMA

In sharp contrast to the domestic market, the international cinema has increased by a breath taking 30% in just the last 4 years and totalled over $21.2 billion in 2010. This represented 67% of the global total and it is anticipated to exceed over 70% this year.

I estimate that the international box office, will grow at a compound rate of 5% through 2015 and by then represent over 73% of worldwide box office, as the U.S. remains static. However, the reasons for the international growth are fueled by economic and not structural dynamics, such as the: 

 - On-going globalization of the world economies
 - Economic strength in emerging markets
 - Only 5% of  world population is in U.S.
 - Earnings are growing 5x faster in overseas markets

So,  even though there will be growth internationally the public's perception of  "going to the movies" is changing.

PUBLIC'S PERCEPTION
There have been numerous studies and extensive research conducted on the public's perception of the movie going experience.  Polling conducted by groups as diverse as the Motion Picture Association of America to Coca Cola have evidenced the public's sentiments which are endemic to all markets.  For example, the Mitel Company, Ltd., a London-based consumer research group, published a study in May 2011 on the views of British consumers regarding the cinema. The study found that:

- 87%  of consumers believe movie concession is overpriced.
- 76% believe admission pricing is too high.
- 59% indicated they would go to the cinema more if prices were lower.
- 51% wait for the DVD or pay-for-view releases for home viewing.
- 43% prefer watching movies at home.

These sentiments are stunning and reflect a universal belief that the current movie going experience is under-whelming and over-priced and highlight a growing tendency by consumers to view movies in more convenient and less expensive ways.  The in-home movie viewing experience is getting better and more immersive and when coupled with the virtual explosion in content streaming the future of cinema exhibition does not support a steady state business model.

WHAT MOVIEGOERS WATCH AT CINEMAS
Moviegoers are very specific in their cinema attendance, which is highly skewed toward specific genres: action/fantasy, animation, and comedic films. For example, over the last 5 years the top 10 films averaged over 30% of the annual U.S. box office -   but these films represented only 2% of the total released. This skewing is also seen in the international market where, over the last 5 years, the top ten films accounted for 26% of total box office.

Even more pronounced, the top 25 films averaged a whopping 42% of the U.S. and 40% of the overseas box office over the last 5 years!  Film releases over the same period averaged 580 per year.

YES WE CANNES !
To win you have to be on the right side of change.  You must start projects the second you see disruptive potential - and you should be seeing this now in the cinema industry. 

Cinemas require a new business model that, for example, embraces modern sales and marketing techniques.  Currently, cinemas charge the same price for all movies.  Well, movies are products and like all other products are not created equal and their admission pricing should reflect this. Avatar and the 45th version of Harry meets Sally should not have the same price tag.

In short, the Cinema of 2015 will need to offer consumers a unique out-of-home entertainment experience, which must be centered around 5 must haves: quality, convenience, participation, value, and sensory stimulus.

In the next installment of Cinema 2015, I will discuss what current and future technologies are going to impact the cinema and if there is going to be a cinema - as we now know it - in the future.

Best and Happy Movie Going!
Jim Lavorato

WEEKLY CineBUZZ REPORT - 21 September 2011

Does the Lion really Roar ?

Given accolades and big back slaps by movie industry websites, bloggers, and critics - with statements like "completely shatters box office" - the Lion King 3D (Disney), a 1994 re-release up scaled to 3D, motored to the number  one box office spot with a $30 million weekend take.

 I took a different view. To me the Lion's kitty like triumph demonstrated what a pathetic state the U.S. mainstream box office is in.  The new releases were all dismal earners. Drive (Film District) grossed $11 million (cost $38 million), Straw Dogs pulled in a measly $5 million (cost $47 million), and I Don't Know How She Does It (Weinstein) - which should have been titled I Don't Know Why They Made This - grossed $4.7 million (cost not reported).

In fact the weekend was so bad the top ten movies could only muster a frigid $80 million total gross, and the top 25 less than $125 million !  September has been a month of movie no-shows.
The folks are just not interested in viewing the "re's" - re-runs, re-releases, re-makes.  One movie website stated, "new releases take hit" from Lion King 3D.  Come on. The Lion King demo is not even remotely related to the demo that Drive, Straw Dogs, or the chick flix with the long title would draw.
Year-to-date the U.S. cinema's gross is down a tad over 4% or about $330 million, but this performance is built upon an average admission price that has increased over 5% since 2010.
We say once again, to get volume the movie exhibition industry must adopt a tiered pricing regime. Not all movies should carry the same price tag - it's a 70+ year old marketing policy that needs to be upgraded not re-released.

International Box Office the Real Roarer !

The Smurfs continued to rule most overseas markets and was the box office topper again.  The Smurfs has now earned over $321 million overseas and $457 worldwide.
It is interesting to watch the polarization between the U.S. vs. rest of world box office.  The international box office could very will top 70% of the total, with the U.S., for the first time, garnering less than 30%.

Other News
Look for the September 25th premier of  "The Cinema 2015" - a special Cinema Mucho Gusto series on the future of the cinema industry.

Best and Happy Movie Going !
Jim Lavorato

LIFE AFTER DEATH - DIGITALLY

Where do you leave your digital footprint on a daily basis?

Answer:  All over the planet if you're using any of the following: SmartPhone, Social Network (ie.Twitter, Facebook, YouTube, Sina), Search Engine (ie. Google, Bing, Baidu), 
Music Forum  (iTunes etc.), Media Streaming, Video Download (Pay-per-view), Photo Sharing Sites, On-line Gaming, eReader and On-line Purchases.

Not only do you leave your footprint but you leave information about your needs, desires, and motivators, in addition to your age, gender,  facial characteristics, income level, race, and other very valuable information and data about yourself.  This info is shared, mined, and stored (indefinitely) and used to market, sell, and promote products and services which are personalized and customized to your particular set of  characteristics.  You know, it's the "since you bought this book, you might also be interested in this stool and rope" or something like that. 

So, if you think you are "under the wire", think again.. And the more you use the internet the more data is available on you, your environment, social circles, etc. etc.  It's not Big Brother it's Big Marketing.  You see  promotions and ads  in emails to you, your favorite sites, on your searches, etc. and they are all saying one thing to you - GIVE ME YOUR MONEY !

Your Footprints Aren't Yours

Yes, all of those pics, tweets, posts, and emails you so fastidiously spent time on are not yours in death.  That's right,  unless they are copyrighted, your heirs have no right to your (in the cloud) "property".  Hmmmm, so all of those great pics you had on Shutter Fly are resident on  a lifeless server in the digital domain for eternity - but no one has access to them.  The Cloud is good, but like all clouds,  eventually vanishes into thin air and you are left with nothing.

There are on-going legal battles to determine what an individual's cyber rights to their musings, pics, and other information (personal or otherwise) might be after death, but as it stands right now there are no legal rights to that property.

Moral of the story.  If you have something you want to keep for value or personal reasons don't put it in cyber space.   Now, where is my old Kodak 35mm camera and film?

Best and Happy Movie Going!
Jim Lavorato

WEEKLY CineBUZZ REPORT - 12 September 2011

Getting It Right

I'm in Singapore this week and the local cineplexes are exhibiting a buffet of films which reflect the cultural diversity of this city/state. 

U.S. distributed first runners Contagion and The City of Final Destination share the marquee with The Smurfs, Cars 2, Spy Kids, Crazy Stupid Love, Final Destination 5, Glee 3D, Bad Teacher, and Horrible Bosses.   Also showing are Hong Kong distributed first runners: Love in Space and My Kingdom.  Bollywood is also represented with: Mankatha, Meet Brother Ki Dulhan, and Bodyguard.

The cinema in Singapore is vibrant and like the cuisine, influenced by its multi-cultural populace which makes it the best in the world.

U.S. in Box Office Doldrums

Commemorating the 10th anniversary of 9/11 and coming after the Labor Day holiday the folks were not in the mood for movie going and the marquee didn't offer much enticement anyway.

Contagion (Warners)  put the plague on The Help (Disney) - which by holding the number one B.O. spot for 3 week running clearly indicated how very weak the end-of-summer release schedule is.
So, as it now stands, exhibitors nervously pace for even one box office producer, and that wait could still be several weeks away given this month's release calendar.  My predicts:

 Producers: Killer Elite, Drive, Lion King 3D, Dolphin Tale, Dream House, Moneyball
                                  
Potential Earners: Section 7, I Don't Know How She Does It, Restless, Straw Dogs
Possible Sleeper: Puncture
No Showers: Margaret, Stay Cool,  Pearl Jam 20, 50/50, Courageous

Best and Happy Movie Going !
Jim Lavorato

CINEMA in SINGAPORE



Merlion - Symbol of Singapore

The Merlion is the symbol of Singapore and one that is very apropos for this country of can-dos. Emerging from the sea  and developed with next to no natural resources - except its people -Singapore has the heart of a lion.

With 5 million citizens, Singapore sits at the tip of the Malay peninsula in Southeast Asia and is one of the most modern and dynamic cities in the world and, I'm glad to report, has a very vibrant cinema.

Cathay Cineplexes is the foremost cinema group in Singapore and is managed and operated better then most cinemas in the U.S.  They boast a very competent, young, and vibrant staff  utilizing the latest technologies and marketing techniques -  which makes my job as cinema consultant much harder but also much more rewarding.



Platinum Lounge and Auditorium Seating                              



For example, their prime location, The Cathay Cinema, in collaboration with American Express, recently debuted the Platinum Movie Suites concept in movie viewing. The venue offers a separate box office, access to a private lounge where a variety of food and beverages (above and beyond the normal cinema's concession offerings) are available, use of Web-enabled WiFi iPads, butler service, and even blankets for use during the show, if desired.

 When the movie program is about to start you are ushered to your reserved seat (there are no bad seats is the auditorium) where your concession items are served to you.  The seats are  powered and can go to a full recline position. During the presentation you can order off a menu provided simply by pressing the attendant button (who discretely and silently will take and then serve your order)  The seating is arranged such that this service does not bother the other patrons.

The auditorium boasts top-of-the line projection and sound systems. This is premier movie viewing and certainly not for every one's taste, but it may be the wave of the future as cinema's will need to complete for that out of home movie viewing experience as content streaming gains in popularity. 

The up-charge for the Platinum service ranges from $14-24/person but after experiencing it I can tell you it is worth every cent of the extra charge as it takes the movie viewing experience to another level of enjoyment.

Cathay Cineplexes of Singapore could be showing us the future of cinema. My guess is that we are going to see more of these luxury movie going concepts in addition to main stream cinemas but without question, the business model for movie exhibitors to be successful is changing and we are going to see a vastly different cinema in the future.


Best and Happy Movie Going !
Jim Lavorato

Weekly CineBUZZ Report - 29 August 2011

Good Night Irene 

In addition to power lines and beach shacks, Irene also blew the box office down, as the weekend gross was the second lowest for the year (only Super Bowl weekend was worse).  But leaving Irene's temper aside there wasn't much to entice the folks to flock to the local cinema.
The Help (Disney/DreamWorks) won highest honors for the third week running with a $14.3 million gross and a total - not too shabby - take of  $97 million over its run.  Now, no matter how much you like a good, old American drama, The Help isn't the kind of film that distribs or exhibs want to see as #1 three weeks in a row and it has no international appeal.
Colombiana (Sony/TriStar) at a weak $10.3 million was the best any of the week's new comers could muster, as Don't Be Afraid of the Dark (FilmDistrict) was a distant 3rd placer with a "horrible" $8.7 million take.  The friendly chimps of Rise of the Planet of the Apes (which have been around so long  they are almost pets) took 4th spot with $8.6 million and has racked up over $140 million domestically. In 5th place, was another newbie,
Our Idiot Brother (Weinstein Co.), which you had to be to see this movie, grossed a dumb struck $6.6 million. Oh well, at a $23 million cost maybe there are enough idiots around to make up the difference via pay-per view and rentals. The top 10 films could only gin up a weekend gross just shy of $70 million - pretty lousy for a summer weekend, Irene or not.

Don't Be Afraid of the Dark

Internationally, The Smurfs came in 1st again with over $35 million and has now grossed over $200 million internationally and $329 million worldwide. With a price tag of $160 million The Smurfs was a gamble for Sony/Columbia but came through big time in the overseas markets.
YTD the U.S. box office now stands at $7.1 billion or approx. $450 million or 6% behind 2010. With weekends like this last one the odds of catching, never mind surpassing, last years results appear rather slim.

On the Road With CTC
Starting this week Cinema Mucho Gusto will be coming to you from Singapore.  Cinema Training Central (CTC) is on the road and will be conducting training seminars and workshops for Cathay Cinemas Group during the next several weeks.  I will continue to blog with the emphasis on the question as to why the U.S. cinema is declining in both admissions and box office while the international cinema is flying high and will account for over 70% of the  global box office this year.
Created 12 years ago, CTC has trained over 1000 individuals and remains the one and only place to obtain hands-on and industry certified management and technical training for the cinema exhibition industry.
The next several years will be tumultuous ones for the cinema exhibitor as the Cinema of 2015 will operate and look much differently than it does today. CTC and the other consultancy services Entertainment Equipment Corp. (www.gotoeec.com) offers can and will assist cinemas in this transition.
                                                                                                                         
                                            Cinema Training Central
                            The one and only training center devoted to
                                                cinema exhibition
                                          www.cinema-training.com
                                                                                                                          

Best and Happy Movie Going !
Jim Lavorato