Each year in the lead-up to CinemaCon, journalists and exhibitors attempt to predict the topics and questions that will dominate the convention. This year, in addition to the regular wedge issues and hype concerning evolving distribution business models, an inopportune quote from Netflix CEO Reed Hastings was getting outsize attention. Talking to reporters, Hastings said that the movie business hasn’t innovated in the last 30 years, quipping, “Well, the popcorn tastes better, but that’s about it.”
It was a surprising, and factually incorrect, statement to make. Innovation has always been at the heart of cinema, which was first birthed as a technology before growing into an entertainment platform and maturing into an industry. CinemaCon has been the host of these innovations since its inception, and in the last decade alone exhibition has demonstrated an invigorated effort in enhancing the moviegoing experience. The continuous advancement of digital projection, expanded concessions offerings, recliner seating, and proprietary premium large-format auditoriums are only a few examples.
“Cinema has always been, and continues to be, a place for innovation,” said Ted Schilowitz, chief creative officer at Barco, at CinemaCon. “Exhibitors have always been about finding new and interesting ways to entertain their audience through technology.”
“The past 10 years have produced more format innovations in cinema than the past 100 years,” said David Hancock, director of cinema at IHS Screen Digest, during his presentation at CinemaCon. “I know there was innovation before that—sound especially and in image as well—but the past 10 years have unleashed so much more.”
How have audiences responded? The industry has achieved record heights in box office revenue in four of the last five years, even as admissions have remained more or less flat over the same period. What we’re seeing are the results of exhibition’s aggressive investment in maintaining a competitive advantage while surrounded by entertainment alternatives coming from every direction.
A counter argument would point to a slide in overseas box office in 2016, with double-digit decreases in key markets. That dip, however, only exists by judging the data by a single metric: U.S. dollars. That very metric overshadowed growth in admissions and screen counts at numerous overseas markets; the strength of the U.S. dollar is a factor that affected countless other industries in 2016. “Out of the top 15 markets in the world last year, if measured in local currency, only one—Germany—did not grow,” stated NATO president and CEO John Fithian in his annual CinemaCon press conference. “That’s a much better reflection of people coming to the cinemas than the devaluation of currencies might suggest.”
Is the pace of growth sustainable? Every year can’t be a record year, but these benchmarks help redefine the baseline for measuring future results. Admissions in North America might not hit the record highs of exhibition’s heyday again. The question then is how to maximize consumer spending in the midst of such a competitive and fragmented marketplace.
The numbers speak for themselves: exhibition’s investment is paying off. The admissions figures tell us that there is a core base that is responding and embracing the premiums in the cinemagoing experience.
It is no longer about what you want to see at the movies; it’s about how you want to see it.
An ongoing concern for exhibition at large, however, is if audiences are taking note of these changes. Laser projection and immersive sound have set new standards in cinema technology, but can consumers tell the difference? Do they factor into their decision-making when going to the movies?
In a BoxofficeProfile study conducted in February and March of 2017 (sponsored by Boxoffice parent company Webedia Movies Pro), 20,000 people who had visited a movie theater in the past week were asked why they had done so. Over 52 percent of them cited a specific movie they wanted to see as the main factor—meaning that nearly half of the participants went to the cinema for reasons unrelated to programming. Another 16.8 percent of the participants said they simply wanted to go out to the movies—the venue and title were secondary. And 15.5 percent of them mentioned they wanted to visit a particular theater, the specific cinema itself being the main driver. These results underscore the importance of what the moviegoing experience means to consumers today, and the role that each cinema plays in that relationship.
Another topic the study addressed were the reasons that consumers decided to visit a particular cinema. The BoxofficeProfile study concluded that while the proximity of a theater and show times combine to represent the biggest factors in deciding on a theater, other factors played a bigger role than one might expect. Presenting these findings on a Thursday morning panel at CinemaCon, Webedia Movies Pro CEO Julien Marcel remarked, “Comfort comes almost at the same level as show times—33 versus 35 percent—and ticket price was only 22 percent. When we look at what moves the needle in terms of moviegoing, bearing that in mind is essential.”
Consumer outreach and marketing is a crucial part of that process, itself a hot topic at numerous panels in the four-day conference. Communicating with audiences on digital media is quickly becoming a vital part of exhibition’s viability in today’s oversaturated media market. Going beyond a company website and complementary Twitter and Facebook presence is crucial. What was once called “showmanship” in this industry overlaps with the more corporate-friendly term: “digital strategy.”
Jake Katz, VP of audience insights and brand strategy at Revolt Media, addressed the topic in a pair of presentations at CinemaCon, suggesting an approach that goes beyond a strictly transactional relationship with the consumer. “How can your employees be brand ambassadors for your theater on social media?” he asked, suggesting that every theater has the power to advance its brand through its employees in addition to its official social media accounts.
Similarly, Webedia’s Marcel stressed a comprehensive approach to developing a winning digital strategy. “It’s important to think of your digital presence as a complete ecosystem,” he said in his panel. “It’s not just your cinema’s website.”
Amber Ayer Stepper, VP of strategic planning and accounts at Charles River Interactive, a digital media agency, and a former exhibition industry executive, echoed Marcel’s sentiment at the same session. “In many places, [audiences] may not even be going directly to your cinema’s website,” she said. “Certainly not in the U.S.” Stepper’s exhibition background taught her an important lesson concerning digital strategy: “The conversion rate of social [media] to buying tickets is not nearly as strong as it is from search.”
While Jake Katz’s advice resonates in terms of brand presence, especially among younger audiences, exhibitors are still tasked with converting web traffic into transactions. That’s something that fellow participants at the Webedia seminar stressed as well. “Search accounts for 80 percent of all the traffic that leads to our website, and Google is obviously a massive part of that,” said Steve Knibbs, chief operating officer of UK circuit Vue Entertainment.
Bobbie Bagby Ford, VP of marketing at B&B Theatres, agrees. “Our stats are very similar—the conversion rate of Google search to our website is very high,” she said. “Even as a consumer myself, I go to Google right away. The challenge is to make sure we continue working together to make sure that information is up-to-date as much as possible.”
Google is up to the challenge. Alicia Sabuncuoglu, a strategic partnerships executive at Google, joined the panel to share her insights into how the tech search giant can optimize its relationship with the exhibition community. Citing trailers as one of the most effective tools that help consumers make moviegoing decisions on Google, Sabuncuoglu used the occasion to showcase Google’s new interface for show times and movie titles, released to the public the day before the panel. “Part of what we’ve tried to do is use a lot more imagery and video, let reviews and strong content from various sources speak, and let users pick their own path through our open platform.”
Ensuring that a theater’s data on Google is accurate and up-to-date is less daunting than it might seem, according to Bobbie Bagby. “If you have one or two locations, even if you have a lot of locations, starting with Google Plus pages and getting your information on there is the stepping-stone to making that happen. That’s an easy and completely free way to get your information out there.”
In this age of premiums and amenities, however, simply providing consumers with accurate show times isn’t enough. “The current enhancement of the cinema experience poses a specific challenge in terms of marketing,” explained Julien Marcel. “Fifteen or 20 years ago, when you opened a newspaper to find a show time, you knew what to expect in terms of the experience, of the price. Now you have so many different experiences, even within a single movie theater.”
“Being able to convey a show time and price point, it’s not copy and paste,” admitted Bobbie Bagby. “All of our auditoriums are growing and changing,” she said, referring to trends such as dine-in, recliner seating, and private-label PLF—all offerings currently available at B&B Theatres locations.
Julien Marcel believes this is an area in which exhibition can improve. At the moment there is no standardization of movie theater amenities that is either accessible or easy to understand for consumers. Marcel compares this effort to the airline industry’s creation of the business class category; standards and features vary from airline to airline, often creating a significantly different experience between companies, but the category provides a clear distinction at a higher price point that consumers recognize.
Patrick von Sychowski, editor of the exhibition trade website Celluloid Junkie, was quick to note that regardless of new amenities or different price points, it is crucial for exhibitors to keep their focus on customer service first and foremost. Even the most basic tasks in theater operations can have the most profound impact. “I don’t think it’s about price,” he said. “It’s about value for money. If a cinema’s toilet is dirty, it doesn’t matter how much the ticket costs—it’s always going to be a bad experience.”
If exhibition can meet the challenge of informing audiences about their latest offerings, it’ll have to do so quickly, as new technology continues to be developed by the world’s leading manufacturers. One of the biggest stories to come out of CinemaCon this year concerns new 8K LED systems from Sony, Samsung, and GDC Technology that don’t require a cinema screen or projector. One exhibitor at the event was visibly impressed, calling it “the death of laser projection,” while another industry insider failed to muster similar enthusiasm: “You mean the big TV?” he replied, wincing at the question. This technology has the power to signal a truly revolutionary shift in the industry, but the economic viability and ROI for exhibitors remain to be seen at this early stage.
Dolby Laboratories, for their part, arrived at CinemaCon with an expanded footprint for their cinema technology portfolio, including Dolby Atmos, their immersive audio format, which hit 1,000 screens in Asia Pacific. “It’s a great testament to the technology that we’ve been able to change and develop the technology since we brought it to market to the point where it’s maybe more attainable for exhibition,” said Stuart Bowling, the company’s director of content and creative relations. We’re seeing multiple deployments of all-Atmos complexes around the world.”
Dolby Cinema, the company’s PLF offering, continues to grow as well, with commitments from Wanda Cinema Line, AMC Theatres, and Jackie Chan Theatres. There are currently more than 60 Dolby Cinema auditoriums at AMC locations in the U.S., with overseas exhibitors beginning to take note. “The deployments are happening significantly sooner than we anticipated,” said Bowling. “That’s a testament to the feedback we’ve received from consumers and exhibitors. It’s why companies like AMC accelerated their deployments ahead of schedule.”
Likewise, Barco’s immersive screen format, Barco Escape, continues to pick up steam from content creators—a crucial factor for the format’s success. Following the release of Star Trek Beyond in Barco Escape, announced at CinemaCon last year, the company will welcome the release of Six Below in 2017—the first film to be shot entirely in the format. Barco Escape currently has a footprint of 36 auditoriums installed or committed.
We shouldn’t mistake these advancements as creating a “new normal” in the industry, instigating a cinema technology arms race where only the richest circuits survive. As John Fithian has noted, the power of exhibition comes from the diversity of its offerings—providing consumers a range of different ways of going to the movies, with a price point for everyone.
“We value the diversity of our membership from big to small because they provide different customer services,” Fithian said at his annual CinemaCon press conference. “If you’re a big national chain and you have the CapEx to go to these high-end [options], and can add enhancements to Premium Large Format screens, and have a big metropolitan population support it—great. But those type of really expensive amenities don’t work everywhere, there are population bases that don’t want to pay the ticket price for a much higher-end experience. We like to offer consumer choices, and those choices depend on where you are. If you’re in small town America, having come through 10 difficult economic years where your wages are only now coming back to the level they were at 15 years ago, having an affordable ticket price option at a small-town theater is really important.”