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Saturday, January 28, 2012


It's Saturday night (1/21).  Three visiting relatives and I decide to attend a 7pm IMAX showing of Underworld Awakening - 3D.  The IMAX is located at the Regal Cinema Transit 18, Williamsville, NY.

Admission for four adults - $64, our concession 
brings the total to $112.
Showtime - we're excited. The trailers began and end. Then, a blank screen (no picture/no sound).  After 10 minutes moviegoers are on their cells calling the Theatre to inform them that they are sitting in the IMAX auditorium with nothing happening.  5 minutes later the movie starts.
In the upper left section of the screen are huge swirl marks and the image is slightly blurry.  The 3D glasses are chintzy throw-aways (bright yellow of flimsy plastic with stiff non-folding arms and very thin lenses). There are collection bins at the exits so Regal (I assume) is re-using the glasses to save money.

My companions notice the swirl marks and ask what I think.  I believe it is a lens problem, and not screen or movie related.  The image is dark and unless you keep your head looking straight ahead the image blurs.  This is really a very poor 3D presentation.
Great movie - I really like the Underworld franchise - but the presentation was horrendous, especially in view of the $100+ cost.  My three compatriots echoed my sentiments and all agreed that the overall presentation was awful and certainly did not merit its cost.  We were all expecting a premium presentation and were extremely disappointed and, as you can guess, not too keen on another visit to the IMAX anytime soon.
Big and Bad
To make matters worse, this particular IMAX is showing its age (my guess - 12-15 years old). The seats are small as compared to new theatres with back-to-back seat spacing short making for cramped leg room.  The seats do not recline and have fixed cup holder (not retractable) armrests.
My IMAX "experience" is the reason cinema attendance continues to drop. Movie exhibition, at many cinemas, is not customer-centric or friendly but hostile, uncaring, and money driven - and moviegoers are acutely aware of this.
Consumers like going to the cinema, but more and more it is becoming a non-value based activity as compared against other ways of viewing and enjoying a film.  Regal and IMAX  need to take note and quickly.

Jim Lavorato

Wednesday, January 25, 2012

WEEKLY CineBUZZ REPORT - 25 January 2012

2011 Oscars : Horses, Dogs, and Cats

For me it wasn't a strong year for movies - a sentiment shared apparently by the Academy as only 9 instead of 10 films got the Best Pic nomination.  They must have felt that out of the 598 commercial releases not one more was deserving of the "Best" accolade. I can say that the 2011 nominees are varied.  From 3D-to-black&white, baseball-to-9/11, race relations-to-Paris love.

My pick for Best Picture is "The Artist"  Not seen by many moviegoers (it only grossed $12 million) but it is a tribute film to old Hollywood which the Academy members (who are old) always love.  The movies that make the real money are never nominated. The Harry Potters, Twilights, and super heroes, for all of their box office draw, can never expect to see a nomination let alone Oscar.  The Academy is, well, above those kinds of movies. This is, after all, about advancing the art form.  Hmmm, but without the mega-action flix there would be no Hollywood, no Academy.  So, aren't the Oscars just a put-on. Aren't the Oscars a vehicle for Hollywood to advertise its contribution to the betterment of mankind, and of course a way for the public to view "the stars" all made up for their red carpet ride.  The Oscars are what Hollywood is - make-believe and hype.  Which is fine but at least change the faces. Scorsese, Allen, and Spielberg. Clooney, Streep. Their tiresome.  No wonder the Awards lose viewership very year.

Speaking of tiresome, there will be 24 Award categories for the TV presentations.  This should be streamlined down to 12, which would make the show much more entertaining and viewer friendly.  The folks (I for one) aren't interested nor care about film editing, mixing, makeup.  The 12 Oscars Awards for TV airing should be:
Best Pic, Actor, Actress, Supporting Actor, Supporting Actress, Director, Original Song, Documentary, Foreign Film, Cinematography, Visual Effects, and Animated Film.

Nuff said. Oh, one other thing, it was a good year for horses, dogs, and cats.

What is The Academy and How Do They Vote

Membership to the Academy of Motion Picture Arts & Sciences is by invitation from its Board of Governors. Each candidate must be sponsored by at least two members of the branch for which the person may qualify.  They must than receive the endorsement of that branch's executive committee before submission to the Board.  There are 15 branches to the Academy.

The race to nomination consists of attempts by film makers to ensure that each of the 6,000 Academy voting members views their film.  This means special screenings, free admission to commercial runs, mailing DVDs, etc.

Nomination ballots are mailed to active members in December and are due back in January.  Members of each branch vote to determine the final nominees in their respective category - actors nominate actors, directors nominate directors, and so on.  The exception is Best Picture, where all Members are eligible to cast a ballot.

Final ballots are then mailed to all voting members in late January and are due back, no later then the Tuesday prior to the Oscar Sunday presentation.
All members vote for winners in all categories. Final votes are tabulated by only two partners of PriceWaterhouseCoopers (an accounting firm) and the results announced when the famous envelopes are opened on stage during the Oscar presentations.

Cheers and Happy Movie Going!
Jim Lavorato

Sunday, January 22, 2012


What can I say about Kodak. Was it yet another victim to digital domain disruption?  A casualty of mismanagement?  Was it a failed entity or one just suffering from the ravages of old age and near the end of its life-cycle.  What was it that morphed an iconic American company into a bankruptcy court flier and likely absorption candidate by another entity.

One of Kodak's early '70s digital cameras
I have worked with Kodak for the last 20+ years on a variety of cinema related sound and projection projects.  It always occurred to me that I was working with very smart and motivated people.  But, like many large and very successful organizations, over time, they become departmentalized and layered.  This has the effect of making the status quo the goal - as this is where prior success was spawned.  Kodak was too successful. Given Kodak's utter dominance of the analog film industry (on a global basis) their emphasis and single mindedness was to keep the game going even when faced with certain inevitable outcomes from the digital domain.

New Packaging Imager
Kodak executives were fully aware of the impact the transition to digital photography would have on their business model.  In fact, Kodak still owns many of the patents on digital photography (see CMG post " Kodak's Hidden Treasure" - August 20,2011). Additionally, Kodak built one of the first digital cameras, way back in 1975!  At its heart, Kodak is a chemical and engineering company.  It weakness was its marketing, promotion, and business development.  Kodak could develop products but never effectively market them. So, like most companies it fell back on its core strengths to keep profitable - which was continuing to make advances in film technology and manufacturing.

The Kodak story is one of evolution and corporate fatigue not failure. Capturing the digitial photographic market, the way it had (so successfully accomplished) with film, was not in their grasp. And even if they had gotten control of it there were no profits to be made. Digital photography was and is a financial non-starter.  Kodak did the only thing it could - ride the wave until it reached shore.

Best and Happy Movie Going!
Jim Lavorato
Cinema Consultant & Advisor

Tuesday, January 17, 2012

WEEKLY CineBUZZ REPORT - 17 January 2012

Gov't Flexes Muscles

Last week the China Daily reported that the Chinese Government was placing a prohibition on the playing of pre-feature advertisements after the posted start time (which must be printed on admission tickets) for all movies. Cinemas violating this restriction would be fined 200,000 yuan ($31,520) and/or face operating license revocation. 

Additionally, the new law makes mandatory the exhibition of at least one free movie per month to the public and two free movies during each school semester for students. It further stipulates that cinemas would be punished by fine and imprisonment for concealing box office receipts and that," any film that fails to obtain a government issued distribution permit shall not be exhibited at a cinema, over the Internet, or at film festivals."

The Chinese Government wants full control of the cinema and what its citizens view.


Apple's scheduled launch of the iTV will be in the 3rd quarter of this year. I expect the iTV will feature the Siri speech recognition technology (used in the latest iPhone), customizable apps, over-the-top TV service (in other works, no set-top box) all coupled with on-line service for movies, TV shows, social networking, etc., etc. Apple's goal is to bring simplicity to TV viewing, which is currently cluttered with set-top boxes, cables, and remotes.  The iTV will have bright color and excellent image (ala the iPad and Mac), low power consumption, and super thin design.

My understanding is that the technology for the iTV (hardware and software) is not the holdback to market intro, but inking partnerships and negotiating licensing deals from content providers is the stumbling block.
iTunes has a huge library of movies and TV shows but these are for download - Apple wants  new and live broadcasts and content.  Right now, the only way to view this "premium" content is by going to the cinema (in the case of movies) or by subscribing to cable or satellite (in the case of TV programing).  What Apple, Google, Amazon, and other tech Kings want is for consumers to have the ability to choose their own customized programming - movies, shows, sports, etc. - for a monthly fee and in the process use the Internet and cloud services for content distribution and storage. This change, however, would  bring major disruption and re-script the traditional entertainment content distribution model for the movie studios and cable/satellite operators.

Google, is going a step further. It  is in the process of developing over 20 web-based networks of their own which would produce for webcast original shows, movies, live sports and other events - essentially becoming a studio.

The tech Kings are relentless in their pursuit to poach TV viewers and moviegoers away from cinemas and cable/satellite.  Can they be stopped?  No. Simply because of two overwhelming factors.  First, the Darwinistic and unstoppable nature of the technology driving the digital domain; and second, because they have the financial strength to fund their efforts. For example, it is estimated that by the end of the second quarter of this year, Apple will have over $100 billion in cash and other tech Kings are also flush with cash. Microsoft $57 billion, Cisco $44b, Google $43b, Oracle $32b, Amazon $30b.  The Kings can negotiate good deals with the media giants as they know they have the upper hand and if they can't strike a deal they will simply buy them out or create their own "premium" content.


Several Wall Street stock analysts believe the cinema box office gross will grow in 2012 - but solely based on higher admission pricing.  Ticket sales are anticipated to continue their downward spiral, due to , you guessed it, higher admission pricing.  Movie exhibitors must get into their noggins that ever higher admission pricing beget less moviegoers.

Barclays Capital media analysts are predicting a 1.5% increase in U.S. box office grosses which will reach $10.31 billion.  However, they anticipate attendance to drop by 1%. The average ticket price will be $8.12.  MKM Partners and B. Riley analysts foresee a 3-4% box office gross increase based upon a 3-5% admission price increase.

The 2012 movie slate looks promising with The Hunger Games, The Avengers, Men in Black 3, Madagascar 3, Brave, The Amazing Spider Man, The Dark Knight Rises, Twilight, The Hobbit, and James Bond 27 likely blockbusters.

Year-over-year, the 2011 box office was down 4% but admissions took a shellacking dropping close to 5%.  This is unsustainable for the cinema. Do exhibitors really believe rising ticket prices will ever provide a balanced offset to attendance losses?  If so, this is a major strategic miscalculation on their part!

Cheers and Happy Movie Going!
Jim Lavorato
Cinema Consultant & Advisor

Sunday, January 15, 2012


Circuits need to downsize
I don't want to become too snarky, but feel compelled to  reiterate the point regarding the nature of the Internet and its eminent disruption to the cinema. I have also stated the the large cinema chains will be impacted and that their defensive strategy must include downsizing - both in terms of sites and theatre sizing.

Fortunately for the large cinema circuits, the Internet is also the nemesis of large retailers, to wit, the Regals, Cinemarks, and AMCs  should look to the big retailers for survival cues - and the retailers current battle against what marketing gurus term the "Amazon disease". 

WalMart, Costco, and Target's revenues make up roughly one-fifth of U.S. retail sales, but they are acutely aware that competition is intensifying.  On one flank are the dollar stores, on the other, e-commerce  - where on-site price comparisons from Amazon are killing big-box electronic outlets like Best Buy while negatively impacting the large retailers. To put size into perspective, WalMart operates 3,759 U.S. stores, Target 1,750, and Costco 425. Although operating much smaller stores, nonetheless Family Dollar operates 6,800 locations and Dollar General 9,500.

"Amazon is WalMart's biggest threat, hands-down", Natalie Berg, retail consultant at Planet Retail tells me. "If you look at retail stocks, companies that are viewed as at risk to "Amazon disease" have had their multiplier cut in half".
WalMart fights "Amazon disease" with smaller sites
To combat this, the large retailers have embraced selling more products under their own in-house brand, which stymies consumer efforts to make  web-based price comparisons. Also, private label products carry a higher margin and breed consumer loyalty.  Additionally, WalMart (leading the way) has turned to smaller format stores.  In July, it launched WalMart Express (smaller stores that are easier to site and offer a product mix that is 70% groceries).  Even smaller are the new on-Campus stores which launched last year.  Bill Simon, WalMart CEO commented that, "WalMart plans to open hundreds of the smaller format stores over the next three years".
Amazon price sets by Region
Price matching guarantees are another tactic in the retailers arsenal in fighting the Internet.  "It's all about obscuring price transparency and product exclusivity.  The more you go down that path, the more immune you are to Amazon", says Berg.  Amazon's strategy (and they are not alone) is to change buying habits, not only for hard goods but for entertainment, and movies are on their menu. 

Social networks and wireless services are becoming a big part of marketing and all cinema exhibitors should take note of this.  The Internet tech Kings' intentions  are to poach moviegoers.  The battle will be fought on razor-thin margins so flexibility and timing are key.

The large cinema chains should study how the big retailers are addressing the Internet threat and begin forming a defensive strategy of their own - and downsizing must be a big part of that strategy.

Best and Happy Movie Going!
Jim Lavorato
Cinema Consultant & Advisor

Friday, January 13, 2012


Hopefully, the Cinema will find 2012 a stellar year; however, it will be bucking some headwinds from the Presidential election and Summer Olympics.  Nonetheless, consumer trends promise high demand for quality entertainment content.  Much of that demand is driven by the proliferation of smartphones, tablets, other mobile devices and smartTVs that allow consumers to view both movies and TV shows most anywhere, at any time they desire.  Luckily, they still do not have the impact of a cinema presentation - image and sound.  However cinemas must be cognizant of what is happening around them and consumer trends taking shape.
Over 57% of People View On-line Videos
According to Google, U.S. consumers own over 105 million smartphones, 61 million gaming consoles, and 20 million tablets.  Given that video consumption is in a hockey-stick growth pattern and users want to access video (including movies) - to say the trend for streaming content is strong has become a cliche'.
So, what are people watching?  Research I've read from a variety of sources, including: PriceWaterhouse, Nielsen, Fox Cable Networks, Turner Broadcasting, and Multichannel News, suggest that viewing premium content on mobile devices is unstoppable and has moved streaming video out of the "new media or early-adopter" category and placed it firmly into the "mainstream mass-market" sector.  Studies have found that the availability of content on multiple platforms helps build audiences because viewers can watch content they have missed - be it movies or TV shows.
These mega-trends in consumer behavior do not bode well for the Cinema overall but they will take time to fully manifest themselves allowing exhibitors time to  prepare for them and defend against them.

Best and Happy Movie Going!
Jim Lavorato

Wednesday, January 11, 2012


Jobs, as he unveiled Apple TV last year
DISRUPTION  is the name of the game in the digital domain.  Did the studios and movie exhibs really think they could control film distribution once it went digital?  That is why over the past decade I have been against the digitization of movie theatre projection (which I might add was a losing battle).
Take for example, the latest maneuvers by AppleApple's desire is to become the go-to source for movie streaming/viewing in the future.  At $99, the Apple TV set-top box sold over 4 million units in 2011 and with only 8% of U.S. households (7% in Europe) owning smartTVs the growth in connected-TV sales will be huge over the next 5 years.
For its part, Apple plans on being in your living room, as it interfaces its existing base of mobile devices (which number in the tens of millions) with the Apple TV.  Both the iPhone and iPad will serve as remote TV controllers and AirPlay (a feature on Apple's iOS operating system) will allow mobile devices to move media to the TV from the devices and, in reverse, allow the iPhone and iPad to serve as complementary screens.
AirPlay will also feature a mirroring function which displays a mobile device's screen onto the TV and will also allow the device to functions as a game controller. Moreover, Apple is planning to launch its own TV in 2012 which will be able to tap into iTunes for seamless rentals and purchases of movies and TV shows, as well as music.
At present, Smart and connected TV sales are outpacing set-top boxes. Gaming consoles are currently the number one platform for streaming content directly to TVs but this trend will change as well.  Microsoft is also planning a link-up mobile devices and TVs using its Kinect system.
Going Digital-Is It A Waste?
Movie exhibitors be prepared.  It will not be enough to tell moviegoers, as Regal Cinemas postulates in its pre-feature trailer - " Go Big or Go Home". People are at home and they are staying there to view movies more and more and going to the cinema less and less. Cinemas exhibitors, prepare to defend yourselves.

Jim Lavorato

Tuesday, January 10, 2012



If you take a look at the top 20 highest grossing films of all time, you quickly realize that only one had an A-lister in the lead role.  The real stars of these films were the high-impact visual effects and/or computer-generated animation.
  Top 20 Grossers
  • Avatar
  • Titanic
  • Harry Potter - Deathly Hallows Part 2
  • Transformers - Dark of the Moon
  • The Lord of the Rings - Return of the King
  • Pirates of the Caribbean - Dead Man's Chest
  • Toy Story 3
  • Pirates of the Caribbean - On Stranger Tides
  • Alice in Wonderland (2010)
  • The Dark Knight
  • Harry Potter and the Sorcerer's Stone
  • Pirates of the Caribbean - At World's End
  • Harry Potter - Deathly Hallows Part 1
  • The Lion King
  • Harry Potter and the Order of the Phoenix
  • Harry Potter and the Half-Blood Prince
  • The Lord of the Rings - The Two Towers
  • Star Wars - Episode 1- The Phantom Menace
  • Shrek 2
  • Jurassic Park
A-lister, Johnny Depp, in the Pirate franchise was the only recognizable star in any of these films.  The rest were cast with unknowns or limited (at the time) star power actors.
It appears that this long-term trend will continue, as upcoming movie franchises are copy-catting the former winners.  The super-spectacular effects movies are what consumers demand and it makes little difference to them who is cast in the acting roles (which for moviegoers are ancillary to the movie's appeal). Additionally, customers expect each new film to top the previous one's visual effects.  That places the "star" power in the hands of the superstar special effects artists which now earn over $1 million per film.

Cheers and Happy Movie Going!
Jim Lavorato

Monday, January 09, 2012

WEEKLY CineBUZZ - 8 January 2012

 Movie Ticket Prices Hit A High in '11 
Rehashing the cinema's 2011 performance is futile. Scouring cinema grosses and admissions data and comparing it to prior years is not a fruitful exercise. It is enough to say that there are few bright spots on the cinema industry landscape. Need I say it one more time, "the cinema industry needs to re-script its business model".

To that point, a colleague brought to my attention an historical fact that was unknown to me regarding the pricing of movie admissions (as most of you are aware I have been beating the drum for some time now regarding the tiering of admission pricing, as I believe not all movies have equal box office draw) and that at one time movies were "rated" and priced accordingly.  See next bullet item in this report.

But, tiering admission pricing is but one of a cadre of changes that need to be embraced and implemented by the cinema industry - with exhibitors being the spearhead for most of the changes that need to be made.

Unfortunately, the timing couldn't be worse.  As we witness the challenges facing the industry, manifested by the decade long decline in cinema ticket sales, and currently in the grips of a conversion to digital projection which saps the, ever dwindling,  financial resources of exhibitors. Resources which should be going into revamping and modernizing their business operations - to address declining ticket sales.

Let's all hope 2012 is a turning point for the cinema industry and both distributors and exhibitors began to embrace the operational changes needed to return the industry to solid financial footings.


Let us step back in time, oh say about 40 or so years, and look at the way cinema tickets were priced.  Back then, films were given an A, B, or C rating depending upon how much star power and cost went into a movie. An A listed film carried a higher admission price than a C rated one. In the 1970s that pricing strategy (which made extremely good sense) was abandoned and movies were given to the same pricing no matter the content or cost. Cinemas need to go back to the old pricing regime.  The lowering of the admission for second tier movies would increase volume at the cinemas, as moviegoers might not mind paying $5 to see a B rated film.

Now the studios figure that if the folks think that cinema admission is too high they will wait and do a buy/rent of the DVD or pay-per-view.  Too bad because DVD sales/rentals are on the slide. In fact, Bloomberg Business, just last month ranked the DVD sales/rental business as one of the "dead businesses" of the future as more and more consumers are accessing the Internet for their entertainment.

Now, don't get me wrong, their will be cinemas in our future, but they will (must) be different then they are today and tiering admission prices is a step in the right direction.


Last week Warners Bros. announced that it was going to extend the holdback period (the period of time when a movie is made available to various content providers) for Netflix and other content streamers.  The new deal between Warners and Netflix, Redbox, and Blockbuster among others, will double the window for new releases.  This means that the streamers/renters will now have to wait 56 days after the DVD first goes on sale, instead of the current 28 days. 

This move by Warner Bros. helps cinemas slightly, but their motivation is to bolster sagging DVD sales.  To be announced this week at the Consumer Electronics Show, the streamers are stating that they haven't agreed to a new deal, but execs at Warners have been talking up the deal.

The move for longer holdover periods is also tied to Warner's push for UltraViolet  (refer to prior posts on UltraViolet)  the electronics/media industries' consortium that allows individuals to have a "lockers" where they can store content of all sorts for retreival whenever they like on whichever device they like.

For their part the streamers/renters, like Netflix, aren't making too many comments.  Coinstar's (parent of Netflix)  CEO Paul Davis, only commented that "Netflix would be persuing 'workarounds' if the studios tried to extend the holdback period". 

Extending holdback periods for whatever reason is good news for cinemas, so long as the period is not tied to Internet streaming or very short periods for DVD or VOD options.

Best & Happy Movie Going!
Jim Lavorato