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Sunday, December 13, 2020

The CINEMA is Dead...Long Live the CINEMA

 AT&T should not be in the movie business! Nor should Comcast. The streamers have their place but Netflix and Amazon should become cinema owners via the purchase of one of the top seven circuits exclusive of any Chinese properties. 

36 Years For A Remake

AT&T has no compassion for the cinema as an art form or, for that matter, entertainment medium. With a $150+billion debt load their only concern is making money - as much and as fast as they can. So, one of their solutions is to have the entire Warner Bros. legacy of films and all new content streamed through HBO day-and-date with cinemas. 

As Denis Villeneuve, Director of the upcoming 'Dune' stated, "AT&T is using prominent images from our movie to promote their streaming service. They have hijacked one of the most respectable and important studios in film history. They have absolutely no love for cinema, nor for the audience." 

Villeneuve couldn't be more right! Filmmaking is a collaboration, relying on a team of artists and skilled trades people coupled with visionary producers, writers, and distributors. Streamers are funding providers and producers for the cinema industry but they cannot sustain the cinema industry.  Viewing a film at home is not and will never be the equivalent of viewing a film at a cinema. Many films require the scope and scale of a cinema to impart their emotional impact.

Original cast photo

AT&T's decision means 'Dune" won't have the opportunity to perform financially in order to be viable and piracy will ultimately win out. In a recent interview, AT&T's head, John Stankey stated, "the streaming horse left the barn." Yes, John and it went right to the meathouse.

With the pandemic now in its 2nd wave it was thought that 'Dune's' release would be postponed for a year. The plan was that 'Dune' would open at cinemas in October 2021, after the vaccinations were well advanced - but that scenario was tanked with the AT&T/Warners decision to have 'Dune's' tandem release: cinemas and streaming. 

According to Villeneuve, "Dune is by far the best movie I've ever made. My team and I devoted more than three years to make it a unique big screen experience. Our movie's image and sound were meticulously designed to be seen in theaters." 

Cinema, on the silver screen is more than a business, it is an art form and one of a few left that can be enjoyed as a collective experience we share with others. The artistic community should be up-in-arms regarding what is happening to 'their' industry.

Director & Cast

It is my strong belief that the cinema will return and not because the movie industry needs it, but because people need the cinema. Companies in the film business, be they film-makers, streamers, or large telecom entities must take on the responsibility, respect, and regard to protect this vital cultural medium. The revenue and profits generated by movies for these mega-companies, be it AT&T, Comcast, Sony, Disney, etc. is a negligible piece of their overall financial profile. But it is a legacy of our culture and history. 

Saturday, October 24, 2020

Mega-transformation: Disney Moves Boldly Into Digital-first Business

The aftershocks of COVID 19 may prove to be worse than the initial attack. Understanding the pandemic is not only a question of science but of business as well. 

The impact of the virus on 97 year-old media and entertainment giant Disney Co. was divestating and their transition to a digital-first strategy just as transformative.

Last week, Disney announced a major restructuring, as it drastically reduced its focus from theme parks, cruises, movies, and cable TV to Disney +, its streaming service. In a statement, Bob Chapek, Disney's new CEO, said "Given the incredible success of Disney+ and our plans to accelerate our direct-to-consumer business, we are strategically re-positioning our company."

Disney+, launched last year, has been a huge success with over 60 million subscribers. On the flip-side, COVID 19 destroyed Disney's cruise, theme park, cable TV, live-sports, cinema, and retail businesses - losing  $4.7billion in second quarter.

A Very Bold & Quick Pivot

For a company of its size and culture, Disney's pivot to digital was astounding. Pre-pandemic, Disney held the top-spot in global entertainment so deciding to reinvent itself around a digital strategy is very telling and points to management's belief that the virus's impact will be longer and deeper than once thought. Making the 'wait-it-out' option a non-starter. 

The shifting to digital is not specific to companies like Disney. Re-positioning your business model and brand to accommodate access to customers in a more economical and direct way is vital. 

Monday, October 12, 2020

Trying To Outrun The Virus

 Studios Run To Push Tentpoles Into 2021 and Beyond

As the months have rolled-by we have seen one after another blockbuster kicked down the road - as again and again the studios re-scheduled release dates. Setting of a domino effect the rescheduling has caused havoc. 

When the Bond sequel was moved to 2021 that triggered 'Wonder Woman' to move to Christmas and caused 'Batman' to be bumped into 2022! After the poor gate for 'Tenet' the studios really became gun-shy. There is also the looming problem with production - there isn't any going on!  To play it safe and have some marquee headliners for 2011/22 the studios are playing it safe and holding tentpoles in reserve. 

At the moment there seems to be reluctance on the part of moviegoers to 'go to the movies'. One because of the virus and two, there are no great movies to watch. Both the U.S. and Europe, as well as, Asia face the same dilemma. When these movies will appear on screen is anybody's guess. 

When the cinema returns to normal is anybody's guess. However, finding the perfect release date for a $150m film is not in the cards at the moment, as the pandemic isn't going to just disappear on Jan. 1st.

For movie theaters the release delays has literally killed their enthusiasm as the welcome mat for patrons have been removed time-after-time.  Without tentpoles to screen and without the NYC, LA, and San Fran markets closed it is unlikely the studios will premier a blockbuster before Christmas.

There is only so much cinemas (particularly independents)  can take before they cave under financial strain with no product to screen, and those are the ones that can open.


Friday, October 02, 2020

Europeans Step-up With $$$ For Cinema, Where is U.S.?

 The British government has authorized "lifeline funding" for independent cinema of $1.9b. "This is the first wave of emergency funding to help dozens of independent cinemas across the country, preserving their unique character and history for future generations," stated Oliver Dowden, U.K. Culture Secretary. 

Independents Across England to Receive Emergency Funding

The same assistance is occurring throughout Europe, via the European Union's Culture Recovery Fund. The same should be happening in the U.S. and it's NOT!  Funding for independent cinemas should be specific as these represent lifelines not only for the cinemas but for the hundreds of small communities across the country.

The National Assoc. of Theater Owners (NATO), the Directors Guild of America, the Motion Picture Assoc. of America, and over 70 film directors and producers signed a letter that was sent to Congressional leaders in the House and Senate to redirect unallocated funds from the CARES Act to assist independent movie exhibitors.

The virus visited a devastating blow to cinemas. 93% of U.S. movie theaters reported operating losses in the first half of 2020. It is estimated that if the status quo continues 70% of small and mid-sized movie theaters will go bankrupt or close permanently. This represents thousands of lost jobs for primarily young workers.

Many cinemas are still 'dark' because of the virus

We need to take a page out of the British cultural playbook. "The U.K.'s cinemas are a key part of our culture - they provide many jobs and entertain the nation", says British Chancellor of the Exchequer, Rishi Sunak.

The movie industry is a child of America and we must preserve this art form at all costs. It is a huge part of our culture and it must remain so. We all need to step-up and support the independent cinema.

Tuesday, September 15, 2020

Putting A Quota on Art!

The Academy herd has done it again. Put restraints on the art of movie making. One would think that anyone really interested in this medium would be up-in-arms over the conditions being placed on movies to be considered 'award contenders'. Directors, actors, screenwriters, novelists, producers, the cadre of 'artists' that make a movie a movie should be outraged. 

For 20+ years I have been foretelling the demise of the Academy Awards. It was easy to see that the Academy  was becoming more and more irrelevant to moviegoers and moviemakers alike. Each year the awards ceremony had become worse in terms of entertainment quality and viewership. In the past several years the show wasn't MC'd as the Academy couldn't muster a 'name' to host the event. 

Now, the coup de gras, The Academy has voted to place quotas on race, gender, and sexual preference for those films to be selected for an award. This runs counter to some in the movie industry that are pushing for gender neutrality, ie, there would be no more Best Actress award just Best Actors - this makes sense.

To set quotas makes little sense and further erodes the relevance of the Oscar. If the Academy pushes through with their social divisions there will be no need for an Oscar night because no one with any sense would be in attendance. 

Oliver Stone, in a recent interview, stated that the Academy's move for quotas in moviemaking would "never work and be detrimental to the industry. No director would work under these conditions."

Judging artists by the color of their skin, their sexual preference, gender, etc. is degrading and racist. No one can put a quota on art. This is equivalent to telling a painter what type of person to put in her painting. One thing is sure. That my decades old prediction regarding the Academy is coming true.


Friday, August 28, 2020

U.S. Exhibs Look To Europe After Six Month Lockdown

U.S. movie exhibs are set to open and ready to accept moviegoers.  If the fans return, as they have in Europe, the re-openings will prove to be very rewarding.

I believe that once again the anti-cinema pundits got it wrong regarding the demise of the cinema. In Europe, most of the cinemas have reopened. Many took the pandemic and turned it into opportunity to rethink their operations and internals for their patrons' enjoyment. So far this has paid off. European audiences have been under house-lockup were desperate to return to the big-screen having exhausted the streamers roster of content.

In Germany, this pent-up demand has fostered an admissions return of 50% of normal for films that have already been aired on pay-per-view, subscription, and broadcast/cable TV! Where new content has been screened admissions have been running at 80% of normal.

Looking ahead, as U.S. cinemas should have a very good 4th quarter box office. The large number of tentpoles the studios have in the ready-for-release stage and others that were pushed into 2021 makes the outlook very promising.

Covid 19 impacted everyone, but it did not quell the movie fans' desire to enjoy and share great, affordable entertainment at great cinema venues.  The movies live on!

Entertainment Equipment Corp.

Saturday, August 22, 2020

Nudity in Films: Art or Exploitation

 'Skin: A History of Nudity in the Movies', a documentary by Danny Wolf, delves into how the cinema has used nudity to admire, exploitate, and compensate itself via the naked body.

'Skin' pits the use of nudity by Hollywood vs. European films. It analyses many films, old and new, and considers how much audiences appreciate or are put-off by viewing the human body. The end result is that we all love to view nudity in all of its different forms.

Nudity in films evokes a combination of curiosity, awe, and voyeurism. 'Skin' presents a historic journey of nudity in movies from 'silents' to modern productions. It also touches upon the politics of nudity in movies with the infamous casting couch up to the #MeToo movement.

In retrospect, the early films of the 1900s up to the 1930s had more nudity. 1934 ushered in the Film Production Code and all movies got 'cleaned up'. It wasn't until 1968 that the Code was revoked, due principally to the cultural revolution of the 1960s. By then the naked genie was out of the bottle and it was off to the races. It should be noted that the ice breaker was a movie called 'Something's Got To Give' starring Marilyn Monroe. Monroe died during the filming of the movie and it was never completed. It was dubbed a "comeback comedy" for Monroe and included a nude scene.

Monroe in nude scene "Something's Got To Give"

Nudity is now commonplace in films for both women and men on both sides of the 'pond'. There are still restrictions in other parts of the world including India and China.

If you get the chance 'Skin' is a must view - it tells us something about ourselves. 

Wednesday, July 29, 2020

Theatrical Release Window Dismantled

We have been predicting, for some years, that the time would come when first-run movies would screen day-and-date across all media outlets - effectively dis-mantling the exclusive theatrical window. That prediction took a step closer to reality yesterday when AMC Theaters inked a deal with Universal Pictures.

Under the deal all of Universal's movies will move to an on-demand video status just 17 days after their theatrical release at AMC Theaters.

Big-budget blockbusters will still enjoy long theatrical runs given they continue making bank at the box office. But the question remains: Did cinemas just escape extinction or hasten their own extinction?

We knew (all of us) that the exclusive theatrical release window was going to be a relic of the cinema industry the day Netflix began to stream movies.

The AMC/Universal deal provides a road-map for the other studios and exhibitors to follow. However, it all comes down to what consumers do. Movie-going may go back to the pre-virus level, but on the other hand, it may not. Regardless, the theatrical window is closing. It is up to cinemas to make going to the movies an experience unmatched at home or anywhere else.

Sunday, July 05, 2020

Production Comes To A Dead Stop!

HWD isn't going back to work anytime soon.

Movies, shows and episodic series for theatrical, broadcast, or streaming has come to a halt - as safety from contagion has over-ruled all other considerations and needs.  So far all of the efforts from various entertainment industry commissions and groups have been disregarded.

Virus testing has quickly become the central barrier to overcome in getting content productions back on-stream. If a production adheres to all of the necessary protocols a location that is safe enough for hundreds of people is very difficult. No U.S. city wants production shooting on their streets so all scenes must be achieved indoors.

Producers and directors are searching for safe-havens so some productions have moved to places as Prague, Budapest, or Bucharest where the virus is much less prevalent and therefore much less controlled then in U.S. or Western European hot spots.

It appears that only a vaccine will bring an end to the production dilemma, and right now that isn't likely until 2021.

Jim Lavorato

Saturday, July 04, 2020

Uncertainty Is The Only Certainty

Here is the scenario:
- Studio announces plans to release a new movie
- Virus contagion forces scuttling of release date
- Studio delays and reschedules release date

"Tenet" was postponed twice in June, "Mulan" has been rescheduled three times. It is only logical that this scenario continues as State governments order cinemas to stay shuttered.

Some tentpoles have been shifted to the latter part of the year. Others pushed into 2021 and more than a few beyond that. The problem for the studios is that all of this scheduling and rescheduling cost unforeseen and unbudgeted marketing dollars. It's a chicken n' egg situation - studios want to release but need a critical mass of screens to do it, especially for tentpoles.

"Tenet" and "Mulan" are currently scheduled for release August 12th and August 21st respectively, Marketing budgets for these two movies, according to the studios, are still within budget but another postponement and the marketing of these movies will cease completely until a "very hard" release is scheduled.

It is estimated that pushing the release date for a blockbuster a few weeks ups the marketing costs by $500k but that number could easily mushroom to $5m+ if delays continue. The bulk of any movie's promotion and advertising expense occurs during the two weeks prior to release (promotion normally begins six weeks before release and peaks a week before).

NOW What?

Since cinemas are closed studios have had to reimagine their marketing strategy.  Playing trailers in cinemas, having press tours with casts, or other live events are not an option. To counter this, the studios are relying more on social media, apps, and video games. On the reverse side, cinemas can't successfully reopen until there is new content to screen. 

The major glitch in this whole mess is that even when reopened and there is great new content screened who is to say moviegoers will show up.

Jim Lavorato

Monday, June 22, 2020

Cinema's New Box Office

Bottom-line thinking has always been essential to HWD, because movies are too expensive to think any other way. Blockbuster mentality may have reached its peak and it took a pandemic to do it. The desire to make movies that only made money was the one desire and the week-end box office tally was the ultimate arbiter. 
Lining-up for the cinema

For the last 3+ months; however, the 'kill it at the B.O. syndrome' has been negated. For avid moviegoers it was going cold turkey from the 'fix' of the B.O. race. Yet, with all of its scars, the B.O., as an unbiased tabulation, performs a service in informing what folks are paying to view.

Movies are still being released on streaming platforms but we have no idea of how they would have 'performed' at the cinema - this scenario is alien to everyone and one could even say, an evil happenstance.

Netflix, and the other streamers, have mostly made it a policy to never reveal the performance of their content. Now, that we are in what some (mostly uninformed nitwits) are calling the post-theatrical era due to the virus some producers are touting their "streaming numbers". For example, Universal boasted that its VOD revenue for 'Trolls World Tour' bettered $100 million. But had it garnered say only $20 million Universal would have been mute. In contrast, a theatrical tally would have been revealed. In the streaming world when a movie or other content bombs there is no sound.

One would never see the B.O. numbers on any of these films if they were streamed

As cinemas begin their slow move to reopen, the weekend B.O. will return and so much the better for the industry. And, as the cinema rebounds (it will and be even stronger) the B.O. will return as the conscience of both moviegoers and non-goers alike. To know how many people are viewing a film has value. To be in a world without knowing a movie's tally is to live in a world of controlled (yes, fake) information.

Jim Lavorato
Movie Analyst & Goer

Tuesday, June 09, 2020

Easing Your Work-at-home Experience

If you are working at home (as I am) it has its benefits but also numerous downsides. So, to help you make your stay-at-home work environment more efficient and comfortable here are several suggestions:

Memory Foam Seat Cushion - $56.99

SimiCore 4port Charge Station

Mr. Coffee Mug Warmer - $9.89

Bluetooth 5.0 Wireless Earbuds

8 Position Laptop Desk - $16

Make your stay-at-home work experience comfortable and productive by adding several (low cost) time saving and efficient products. All of these can be purchased through Amazon.

Jim Lavorato

Monday, June 01, 2020

Box Office for 2020

The U.S. box office will most likely be 50% lower than 2019's - only reaching roughly $5.5b. Obviously, the longer movie theaters stay closed the harder it is for the studios to release their 2020 tentpoles.

However, unlike some industry analysts, CMG believes that people will return to visiting their local cinemas quickly and not be deterred by the virus.

CMG also predicts that there will be a significant bounce-back to moviegoing in 2021 - back to the $10-12b gate. Reason: there will be very strong slate of movies in 2021 bolstered by 2020 holdovers plus new releases. The problem for the movie industry is 2022 and beyond if production doesn't ramp-up soon.

It comes as no surprise that the theatrical 'windowing' issue has now shifted in favor of the studios who want a shorter than 90 day theatrical exclusive. The shortening of the 'window' will come to pass.

Jim Lavorato

Monday, May 18, 2020

Europeans Want U.S. Streamers to Pay for Local Content

European film and TV producers/distributors say they are being forced out of the entertainment marketplace due to the Wuhan virus and replaced by content originated by the U.S. streaming giants (principally Netflix, Amazon, Apple, and Disney). 

There is great concern that European based production companies will not be able to compete given the high cost they will incur complying with protocols and insurance coverage in the post-virus world. This concern has prompted the European Commissioner for Internal Markets to create a taskforce comprised of "local" film and TV industry participants to define the threats to the local entertainment "ecosystem" and implement measures to alleviate the negative impact.

Key issues for the Europeans are: financing, insurance, and enforcing a level playing-field by having the global streamers "participate" in the recovery of the local entertainment industry. The EU is leaning toward the "participation" to be  direct monetary infusion and not just pumping money into European productions that play on the giant streamers' platforms. If not forthcoming, than there has been talk of enacting a "digital tax" on the streamers.

I believe that the international streamers will pony-up and provide funding for local European productions and/or provide investment or grants to offset the higher production costs due to the virus. For example, the giants can self-insure their productions whereas a local producer can not.

A healthy film and TV industry, including cinema, local/regional TV productions, and indie produced content for streaming is in the best interests of the streamers. So, I predict that Netflix will provide funding to see that the local European content producers/distributors survive in a post-virus environment.

Jim Lavorato

Sunday, May 17, 2020

Neo and Trinity Are Back

Cast of 'Martix 4'
The 'Matrix 4' is scheduled to start production in July. The fourth, in the very successful Matrix saga, will feature both of the original stars - Keanu Reeves and Carrie-Anne Moss as Neo and Trinity.

The '4' is scheduled for release in 2021. The film is being produced, directed, and co-written by Lana  Wachowski (who with her sister, Lilly, wrote and directed the original trio of films).

Arch custom bike
Keanu Reeves (56) has always been a reclusive A-lister but has had a very successful career. The 'John Wick' franchise, in which he stars, was to release the fourth film this summer/fall but has been now rescheduled for release in 2023. CMG would be surprised if this release date holds. Reeves also owns a motorcycle company, Arch Motorcycles, which builds and sells custom bikes - there's a long wait list if you'd like to buy one. Reeves is one of my favorite stars for his unconventional role selection and his non-limelight lifestyle.

'Matrix 4' will be a huge box office earner and we look forward to seeing Neo and Trinity on the screen once again. They will be joined by Yahya Abdul-Mateen, Neil Patrick Harris, Brian Smith, Toby Onwumere, and Johathan Groff.

Jim Lavorato

Saturday, May 16, 2020

MoviePass, Going, Going, Gone

MoviePass, the ill-fated cinema subscription service, is going to be auctioned off and it could be all yours for as low as $250,000. 

It's A Wrap!

CMG predicted MoviePass's demise way back in 2018 and in posts that followed re-enforced our premise that the company had no future (see 8/1/18 'MoviePass: Near Death', 2/29/19 'The Predictable Death of MoviePass', and 9/17/19 'MoviePass: The Resurrection').

Once valued in the tens of millions, the bankruptcy filings valued the company at $1 million - lock, stock and barrel.

It is unclear to me as to who would want to buy the MoviePass carcass. According to the court filings, the assets include all of the proprietary software and code used by MoviePass for the operation of its mobile app, its website, five domain names, trademarks, and three patents. What is not included is the personal information of its members, such as email addresses, which one could argue is the most valuable asset the company retains.

To bid on MoviePass your submission must be received by Cassel Salpeter & Co., the bankruptcy court's trustee, by 5pm ET on June 18th. The auction is scheduled to take place telephonically on June 25th.


Jim Lavorato

Tuesday, May 05, 2020

Exhibs vs. Universal: What's The End Game?

The feud between Universal Pictures and the major cinema chains goes well beyond the movie experience.

Universal, owned by NBC (which, in turn, is owned by Comcast Communications) last week proclaimed that they would be offering more and more first-run films on a video-on-demand (VOD) basis. This edict brought out a tit-for-tat from AMC Theaters (the largest cinema chain in the U.S.) which stated it would no longer be exhibiting Universal movies at any of its theaters. Then, in unison, Regal Theaters' parent Cineworld jumped-in announcing that they would join AMC in boycotting Universal pics. Later in the week, AT&T, parent of Warner Bros., came out in support for Universal stating, "there was a need for a reworking of the theatrical model."

It's no secret that the studios and theaters are both in very poor financial condition, but the theaters are worse as they have no other revenue drivers sans the box office. The studios have VOD, and add-ons: merchandising, cable and airline fees, and streaming.

The rift started when Universal offered 'Trolls:World Tour' on VOD. Well, no big deal thought the circuits, as all movie theaters were shut-down due to the virus. However, in three weeks, the 'Trolls' had racked-up $100 million in rentals - and the exhibs knew they had made a huge mistake in not battling Universal's release scheme for that film - for if VOD became the norm it would be a kill-shot to the exhibs. Meanwhile, the studios are sitting on billions in unreleased movies and productions that are at a standstill.

CMG has been predicting the eventual day-and-date release of movies via VOD, streaming, and cinemas; however, skipping-over theaters and going directly to release via online formats is not in the best interests of the movie industry. Of course, the outcome of all this depends entirely upon the public. CMG believes the public cares about theaters, and they want to be able to "go to the movies."

Jim Lavorato

Monday, May 04, 2020

Cinemas Begin to Reopen

As movie theaters across the U.S. began to open, experimentation is taking place. Using airport security-style check-in seems to be the norm for cinemas. Moviegoers line-up at the front door where their temperatures are taken via infrared thermometers (about $50 each from Amazon). Anyone with a temp above 100.4F (38C) is turned away.

I believe it is very important that early attending patrons feel safe and protected. Most early openers are restricting capacity to 25% per screening.

Another issue to be dealt with is a lack of product. Some cinemas are opening with "Trolls World Tour" and films, such as "The Hunt" and others that were released just before the shutdown such as "1917" and "Parasite".

Think of your cinema's reopening as psychological vs. profitable.  You're providing the first "big escape" for your patrons and your employees (who are very eager to return to work). Follow all of the protocols and even expand on these. You may want to offer discount admission to entice attendance.

Keep these issues in mind:
EVO Theaters located in Texas reopened the week

- Reduce touch-points on food service
- Curtail cash transactions, as much as possible
- Distance spacing is requisite
- Masks for patrons, your call
- Masks for employees, a must
- Act quickly with protocol offenders

Early reports are that theaters announcing there reopening have pre-sold between 25-30% of available seating for upcoming shows.

Interesting Noteables:

- All cinemas in Norway are scheduled to reopen on May 7th. Although, like Sweden, cinemas were never obligated to close during the virus shutdown.  It was left completely to the theater owners as to whether or not to close - and most did.

- Imax was slammed by the virus as it had to close all of its movie exhibition worldwide. Imax, which licenses its technology to theater chains are at the mercy of the theater owners regarding reopening policy.

Jim Lavorato

Thursday, April 30, 2020

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

Saturday, April 25, 2020

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

Monday, April 20, 2020

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,

Sunday, April 19, 2020

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

Sunday, April 12, 2020

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'


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.

James Lavorato

Monday, April 06, 2020

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

Wednesday, March 11, 2020

Bernie? "I hardly knew Him"

"Bernie WHO? I hardly knew the guy." This is what's being said throughout t Hollywood, Belair, and Beverly Hills today.
Weinstein as he left court upon sentencing of 23 years.

From the top of the Hollywood heap to the rank dampness of Rikers Island that's how far Bernie Weinstein has fallen. And Bernie will be rising damp for the next 23 years.

Sentenced in New York State Superior Court today by Judge James Burke, a jury had previously convicted Weinstein of one count of sexual criminal assault and one count of 3rd degree rape.

Although his defense pointed out to Judge Burke all of Bernie's charitable works, his age (67) and poor health it all fell on deaf-ears. as the Court imposed the 23 year (basically, life) sentence. Weinstein's legal woes; however, are not over. He still has to appear in Los Angeles where he is facing 5 more counts of criminal sexual charges.

CMG believes that this may be the end of the 'casting couch' by moguls in the film industry - as the price to be paid is too great and the #metoomovement is not over.

Jim Lavorato


Thursday, February 27, 2020

Finally The Verdict: Weinstein 'Busted'

Is the casting couch dead?
CMG has been following the Harvey Weinstein sexual assault lawsuit for several years. We watched as Harvey finagled and postponed the process every way he could - changing his law team three times, promoting health issues and a heart condition to gain more time and jury sympathy, and contending that all charges against him were false as all of the sexual acts were consensual.

Finally, all of the legal maneuvers and court manipulations ended on Monday when Harvey was convicted on two of four indictments in a NYC court. The first count carries 5 years while the second (3rd degree rape) up to 24 years, his sentencing will be next month. As one would have expected, right after his conviction, Harvey complained of chest pains and was sent directly to the Rikers Island Prison hospital.

After his sentencing in New York, Harvey will be extradited to Los Angeles where he faces five more counts of sexual harassment and assault.  Old Harv could wind-up with over 175 years, if convicted. After Monday's sentencing Weinstein's attorneys made a statement that their client "took it like a man" and "was completely shocked by the verdict".

The #metoomovement was the force behind Weinstein's conviction and we may well be witnessing the end of the Hollywood 'casting couch'.

Jim Lavorato

Tuesday, February 11, 2020

What Do Viewers Want

Bold and binge-friendly 'cinematic-look' content that is edgy and gripping - these are the new criteria consumers are looking for and producers striving for in content delivery. Content must be smart, well-written, and perfectly executed. The content game is upping the ante every day for writers and directors.

While broadcast and basic cable must still answer to advertisers who may be unhappy about risque' content, it's clear provocative content is becoming the norm throughout the entire spectrum from cinema to regular broadcast.

 X Football League : Getting the viewer involved.
The entertainment landscape is changing. It is getting wider, deeper, and much more competitive. Players in the arena range from Verizon to Twitch and everything in-between. From movies to eSports it's all about getting consumers to watch, and (now) participate in (ie. the new XFL U.S. football league) and become engaged with.

Tiered admission pricing must be given great consideration!

Cinema has been entertaining the 'masses' for over 100 years and I see no end in sight for this 'viewing' venue. With the tsunami of content being produced there is no shortage of product for 'cinematic' viewing. The trick is that cinema exhibitors must embrace a wider variety of content sources and choose which best 'fits' their local audience. Screening movies from a handful of Hollywood studios will spell doom for movie exhibitors. They must partner-up with ALL of the content providers in the expanding entertainment landscape.

Additionally, the issue of tiered admission pricing based upon the movie must be given great consideration. Charging different admissions for different movies is a sound one with lots of retail marketplace precedent, and which fits in perfectly with the offering of a wide variety of content from various sources.

For cinema exhibition to remain viable and profitable operational change is required. 

Jim Lavorato, President, Entertainment Equipment Corp.

Monday, February 10, 2020

Academy Museum: Sort of Opened

It is only fitting that I write a follow-up on the Academy Museum of Motion Pictures on the day of the 2020 Oscar presentations.

Museum as it now stands.

Located at the junction of Wilshire and Fairfax Boulevards in L.A., I've been following the progress of the Museum for several years, highlighting one issue after another that postponed its opening - not the least of which was a funding shortfall of several hundred million dollars. Finally, on Friday, it was opened for a press tour - no official opening has been announced.

Just six months ago, construction was halted and plans redrawn to make the facility smaller due to a lack of funding. A campaign to raise the "new" budget requirement of $388m to complete the 'downsized' project was met as $368m was received in pledges and cash.

Construction on the Museum began in October of 2015 and was originally  scheduled to open by the end of 2016. Fast forward to 2020 and five years later it is scheduled to open by year's end.

 The Museum will feature a 1600 seat auditorium where 35mm, 70mm, and digital films will be screened. A smaller 288 seat aud will also screen content and run exhibit features on the history of the cinema. The Museum's main feature is a large, death-star shaped atrium/lobby, ample exhibition spaces, a restaurant, and retail space are also included.. Admission pricing has not been announced.

Jim Lavorato, Founder 4M Performance

Tuesday, February 04, 2020

#OscarsSoWhite : How'd That Work Out

Oh, how soon they forget. Remember the big movement by the Academy of Motion Picture Arts & Sciences to 'diversify the Oscars' because they were too white, too straight, and too white-man dominated.

The Academy confronted its lack of diversity by adding thousands of new members of color, female,  and bringing in hundreds of filmmakers hailing from outside the U.S. - that was 2019.

Enter 2020. Diversity is hard to find at the Oscars. Of the 20 acting nominations, only one is a person of color. So even with thousands of new 'diverse' voting members  we're back to square one as these new members didn't vote based on diversity but on merit - as is should be.

There are two disruptive trends going in the movie business:

First, that there is a tremendous amount of production going on with both the studios and the streamers pumping out content like there is no tomorrow.

Second, it is getting less and less costly to produce a feature film. All that is required is a decent script, a bit of grit, and an iPhone.

2019 was the hallmark of the low-budget indie film. Whether this is sustainable is anyone's guess. It appears that the digital effects-packed films garner the majority of  cinema admissions. This all forces the award-givers, like the Academy, into a quandary: embrace inclusion or go for engaging entertainment?

One man's disruption is another's breakthrough. The tide is turning back to the relevant vs. the must-dos. The social cause makes for poorly viewed content. Most thinking folks are aware of the social and environmental issues and they don't need constant reminding. What they seek is high-quality, engaging entertainment.

Just saying,
Jim Lavorato 

Monday, January 13, 2020

Movie Theaters Will Survive

Movie theaters have fought and survived the introduction of the TV and the DVD.  It is now under siege by online content streaming. This current battle may well be its toughest but in the end will come out the victor - here's why. 

The End of Cable TV

Cable TV operators know their future lies in providing the internet pipe and all the benefits it will gain as 5G becomes the norm. Consumers have been cable-cutting for some time as they move to the internet for all of their in-house and mobile entertainment viewing (some 6.2 million are expected to cable-cut in 2020).

This year is pivotal, as subscription service providers (Netflix, Disney, Hulu,  CBS, Amazon, and all the others) will need to outlay billions on new content, placing a great strain profits. This will necessitate that advertising be introduced to streaming content to support static subscription fees.

Additionally, cable TV operators have begun to embrace streaming on their own by aggregating content. Comcast, for example, added Netflix and Hulu, to its 'XI' pay TV platform and recently launched FLEX, a free service for broadband only subscribers. that bundles free streaming apps with high-speed internet access.

Pressure to control costs is driving two significant trends: globalization of content and advertising becoming a permanent part of the streaming content viewing experience.

Adding Ads to Streamed Content
The subscription service universe is becoming very crowded.

TV remains the most efficient and best way to get a message out quickly to large audiences.  However, TV ad load is declining as advertising moves to social media and streamers - which is expected to reach $25 billion by 2024 with $17 billion of that going to subscription based platforms.

Consumers clearly like the choices offered by the streaming world but surveys have shown that 42% of those 18-49 are finding that managing the complexity of all their online subscriptions presents a problem and they are not willing to spend huge sums on these services. Therefore, streamers are experiencing consumer resistance to higher monthly fees and the continued addition of more channels by users.

Content streamers came to market with very aggressive pricing and now are coming to terms with the economic realities of producing content and turning a profit. Pressure to control costs is driving two  significant trends: globalization of content and advertising becoming a permanent part of the streaming content viewing experience.

4M Performance - Coming Soon

Movie Theaters: The Winners

Let's recap.

- The content streaming industry is getting very crowded.
- There will be a lot of inferior content produced as the cost of quality content rises.       
- Streaming subscription fees cannot be raised to cover increasing costs of production
- Consumers are saying they are limiting their subscriptions to $44 per month at 3.6 services.
- Subscription based channels will need to raise revenue through advertising and product placement.
- The broadband service providers have already begun to offer aggregated content packages to offset
    the impact of cable-cutting.

Given all of the above, it is not a stretch to infer that movie theaters will continue to be the venue in which to view the very best, highest quality content in the very best way. And, it is not unwise to believe that the studios see movies as their best way to distinguish themselves as the providers of top quality content.

The cinema will survive the current battle against the streamers and may, quite likely, come out on top as the best place to experience top quality, ad-free content (sans pre-feature ads).

Jim Lavorato, Founder
Entertainment Equipment and 4M Performance

Tuesday, January 07, 2020

Cinemas as Wedding Destinations

Saying 'I DOs' at the Alamo Cinema - 'Star Wars' style
Whatever gets butts into seats. Your cinema as wedding chapel.

At least that is what the Alamo Drafthouse movie chain recently did with two 'Star Wars' themed wedding ceremonies at their cinema in Austin, TX.

It seems both couples have viewed 'Star Wars' films over the years at the Alamo - so the thought was to celebrate their fandom and love with an exchange of vows at the cinema.

Certainly not in the cards for most CMG readers, but it did get people into the cinema (which also catered the events). The weddings featured mini Oscar place cards, macaroons instead of cake, and a special screening of  'Spaceballs'.

It appears that Alamo has discovered a new, be it off-beat, revenue stream by being offering wedding planning and related services - including receptions, rehearsal dinners, and post-wedding to-dos.

Whatever it takes,

Jim Lavorato
Founder, Entertainment Equipment Corp.