As moviegoers make their long-awaited return to cinemas, premium large-format (PLF) auditoriums have emerged as a preferred destination. The trend began to emerge as early as last summer, when Chinese cinemas first reopened following the closures that presaged the pandemic’s global disruption. The August release of The Eight Hundred, the first Chinese film to be shot in Imax, brought blockbuster earnings from Imax screenings despite the format being available in just 1 percent of the country’s screens. Imax continued to see similarly strong performances from its locations as more cinemas opened around the globe. The box office hot streak carried over during the lull in new releases experienced by much of the market during the first half of 2021. A rerelease of James Cameron’s Avatar in China, for instance, brought in nearly a third of its opening weekend haul from Imax screens. Domestically, Imax began to hit similar benchmarks as audiences returned. By July, Imax claimed nearly 10 percent of the $80 million domestic opening weekend from Disney’s Black Widow—at the time, the biggest pandemic-era debut in North America.
The over-indexing of PLF auditoriums in the global return to cinemas hasn’t been exclusive to Imax. Immersive seating provider D-Box experienced that same bump with the release of Godzilla vs. Kong earlier this year. The film opened overseas in late March to $123.1 million from 53,256 screens, 5 percent below the $130 million international bow of 2019’s Godzilla King of the Monsters from 53,515 screens. Despite the slight drop in overall box office, D-Box sold more tickets in its motion-seating format for Godzilla vs. Kong than it did for the film’s 2019 predecessor—even with cinemas operating under capacity restrictions.
The number of PLF auditoriums has more than doubled over the past six years, according to the latest report from research firm Omdia. The sector grew by 17 percent from 2018 to 2019, slowing down to a 7 percent growth the following year because of the pandemic. By the end of 2020, there were close to 6,400 PLF screens globally, “a very small number in terms of the 203,000 cinema screens worldwide,” says Charlotte Jones, associate director of cinema at Omdia. Jones expects that global footprint to increase in the coming years, sharing her insights in a presentation at a recent edition of Boxoffice Pro’s latest “Live Sessions” webinar series focusing on the topic.
Jones defines PLF as auditoriums where best-in-class image and sound technology feature prominently and sometimes include newer formats, like immersive seating and panoramic screens. “By definition, premium formats elevate the cinema experience. They are multifaceted, often consisting of more than one element, and, in fact, exhibitors are known to cherry-pick and combine a number of concepts in their approach,” she says.
If her definition is broad, it is by design. The rise of premium-format screens over the years has expanded from what Omdia defines as “global-branded PLFs,” auditoriums under a third-party vendor’s brand like Dolby, RealD, and Imax, involved in the end-to-end life cycle of a film—from production to exhibition—to what has come to be known as “exhibitor-branded PLFs.” The exhibitor-led efforts are private-label offerings independently assembled by circuits themselves and oftentimes incorporate branded formats like Dolby Atmos immersive audio with non-branded fixtures like luxury seating or laser projection.
“Different exhibitors have different strategies, investing in a number of formats,” says Jones. “While [the top five circuits in North America] have investments in exhibitor PLF, it doesn’t preclude them from any investment across a number of other formats, so multiple brands can coexist, and we’ve actually seen this trend increasing.”
In North America, for example, more than 80 percent of AMC Theatres’ PLF auditoriums are globally branded through Imax and Dolby Cinema, the latter available exclusively in the United States through AMC. Regal and Cineplex each have 40 percent of their PLF fleet under their in-house brands—Regal RPX and Cineplex UltraAVX, respectively—with over half of their premium auditoriums branded under a variety of global partners.
On the other hand, the two remaining top five cinema chains in North America, Cinemark and Marcus Theatres, both have a majority of their PLF rooms under their respective private labels. Cinemark XD auditoriums represent over half of the circuit’s premium-format screens, with the bulk of its global-branded PLFs represented by D-Box and Imax auditoriums. D-Box expanded its relationship with Cinemark in the United States earlier this year, increasing its footprint by eight locations and reaching a total of 99 screens across the circuit. In the case of Marcus Theatres, over 90 percent of the circuit’s PLF screens operate under its in-house brand, UltraScreen DLX.
“When we break out that split between the global and exhibitor PLF brands, we can see a very different picture emerging by region,” says Jones. “North, Central, and South America are the only regions with more exhibitor-branded PLF screens than global PLF screens. Exhibitor PLF screens are less developed in Europe, particularly among some of the exhibitors in Eastern Europe, whereas in Asia Pacific there is a very high proportion of global PLF—mostly coming from China.”
The share of PLF screens relative to a territory’s total screen count remains low despite this growth. Emerging markets like Croatia, Saudi Arabia, the United Arab Emirates, and Morocco are the only countries where PLF represents more than 5 percent of total screens, in accordance with markets tracked by Omdia.
“There is definite potential to expand in a lot of these markets. Looking towards the end of the scale, we do have some European markets, particularly those in Eastern Europe, as well as some others such as Germany and France that we can consider to be under-penetrated when it comes to PLF,” says Jones.
Recognizing the opportunity of investing in PLF while their territory was still underserved, French circuit CGR Cinemas hit the market in the late 2010s looking for a solution they could introduce to their audience. Unable to settle on any one concept, CGR devised its own PLF, Ice Theaters, in 2018. “We looked at all the premium large formats; those we found impressive were financially challenging for us, and those that were financially easy to recoup were not that impressive,” recalls Ice Theaters SVP of Global Sales Guillaume Thomine Desmazures. “So we tried to build our own premium large format, which initially was only for our own theaters, but all of a sudden it started to generate interest outside of our own theaters in France, and we realized that maybe this model, invented by an exhibitor, might interest other exhibitors.”
CGR spun off its Ice Theaters concept as a global-branded PLF, making it available to other cinema chains around the world. Ice incorporates a series of LED panels into the sides of the screen, creating an immersive experience by adding background peripheral elements to a viewer’s line of sight throughout a film, without distracting from the film image on the screen itself. The auditoriums are equipped with laser projectors, luxury recliner seating, and Dolby Atmos. “These are elements that not everyone will be able to recognize at first glance,” says Desmazures. “For instance, my niece and her friends won’t have a clue if they are in a theater with Dolby Atmos or laser projection—but they’ll be able to recognize the LED panels from the moment they walk into the room.”
CGR’s approach to developing Ice Theaters reflects Jones’s comments about how the latest generation of PLFs have incorporated a variety of elements into their design. Desmazures admits Ice Theaters had to walk a tightrope in its messaging to consumers in order to sell the premium nature of the format. “The main risk we identified is that if we treat this as a gimmick, we may attract some audiences—but they won’t come back later,” he says. “We needed to start with something flashy enough to be new, but complement it with a spectacular presentation so it convinced both studios and moviegoers on returning to the format.”
CGR now operates 40 Ice locations in France. Ice Theaters has since expanded to global sites like Regal’s L.A. Live location in the U.S. and a six-screen deal with Middle Eastern circuit Vox. Omdia’s research identifies emerging markets in general, and the Middle East in particular, as the hottest hubs for PLF expansion in the coming years. The Middle East boasts 129 PLF auditoriums spanning 16 territories, showing above-average investment in the sector. “We think it’s driven by the innovative nature of these exhibitors. We’ve got new screen construction there; new screens are more likely to invest in premium formats because they’re built from scratch,” says Jones. “It also has to do with the propensity of local audiences and a very high prevalence of multiplex theaters, as opposed to the sort of boutique or art house cinemas more common in some European territories.”
Programming also plays a big role in the prevalence of PLF, as major studios dedicate additional effort to incorporating premium formats into the production and post-production stages of their biggest titles. A film’s availability in premium format is often mentioned in marketing materials for the biggest tentpoles on the studio calendar. Those campaigns help eventize theatrical releases over other distribution models—including day-and-date SVOD and PVOD releases—enticing viewers to leave their homes and pay a higher ticket price at the cinema.
“Even the smallest screen in any of our theaters is better than what you have at home, but the premium experience—whether it’s sight and sound or seating—is something that you just can’t get in your living room,” says Ryan Wood, SVP and head film buyer at AMC Theatres. “We’ve seen it from our loyal guests and average consumers alike: they seek out our premium formats, especially on the big event titles.”
If PLF was once the domain of action-driven capers and sci-fi adventures, more genres have come to find success in premium format in recent years. Family films, horror movies, and musicals have all reached PLF screens in 2021. “We work across all genres,” says Jean-François Gagnon, global sales director, theatrical, at D-Box. “We’ve seen the haptic experience deliver a value that consumers recognize and are willing to pay extra for because it’s so different from anything they have at home.”
D-Box has leveraged the unique quality of its motion seating system as a main selling point for moviegoers. The company works with studios during a movie’s post-production to ensure its haptic seating technology works in harmony with the sound and visuals on-screen. That process is perfected by a team of designers, most of whom have a background in music or sound design, to design each film’s unique haptic track in a way that can accentuate and highlight specific details of a scene. The end result is a synchronization between the film and the patron’s seat, offering a level of immersion unavailable to home viewers.
A focus on the out-of-home experience, positioning cinemas as entertainment destinations for a night out, has received increased attention as movie theaters contend with a shorter (in some cases, nonexistent) theatrical exclusivity window emerging from the pandemic. “I think we’ve already seen how audiences are seeking out enhanced experiences on their return to movie theaters,” says Jones. “I think this presents further opportunities for cinemas to invest in their flagship screens. The rollout of these new concepts is not coming at a particularly opportune time [during the pandemic], but nonetheless, exhibitors need to continue to innovate and invest to remain relevant, particularly in the case of audiences having a higher number of subscriptions at home. What we’ve seen is that premium format creates more value for the whole content chain, not just in movie theaters, by eventizing the movie.”
The saturation of streaming content available at home has made it more difficult for new releases to stand out in the market. It has also led to a collaboration between studios and exhibitors that prioritizes event-driven campaigns ahead of a film’s release, often attached to advance ticketing opportunities. AMC’s Wood emphasizes the importance of promoting a circuit’s PLF showtimes during these advance-ticketing campaigns, “We make sure whenever an advanced sale campaign is launched by a studio, that our premium formats go along with it,” he says. “Normally, the first consumers to come to the movies want to see a title in the best format. If you are buying your ticket early, it means you want the best seat and you want the best format.”
The titles usually released in PLF auditoriums tend to be front-loaded studio tentpoles, earning the bulk of their gross during the first 10 days of release. Success or failure for a PLF release often comes down to a film’s opening-weekend performance in these auditoriums. “For us, we need to be there on opening weekend,” says Gagnon. “That’s the important part, reaching the people who are ready to pay for a ticket to see a movie the day it comes out.”
Coordinating the release schedule around the availability of premium screens is another important factor Wood believes exhibitors should consider in their PLF strategy. “You want to make sure you maximize your starts on premium format because, as we know, those runs typically only last for a week,” he says. “It’s a churn business, especially with this year’s slate. As a norm, if that consumer doesn’t get a chance to see it during the opening week, they may not get the chance to see it in Dolby or Imax.”
While the rise of PLF pre-dates the pandemic by several years, its role in drawing audiences during the reopening period has been significant enough to make analysts question the pace of its future growth. The slowdown in growth that occurred in 2020 can likely be attributed to the pandemic’s devastating effect on cinema circuits, which were forced to either temporarily suspend or permanently shutter operations. Those that did reopen now face the challenge of negotiating back-rent agreements with landlords. These factors could cause further disruption for the expansion of PLF screens in the coming years, as circuit’s capex investments are paused or curtailed because of the pandemic.
“Obviously this will have an impact going forward in terms of operators and their target investments. I think the first port of call was in reducing operating costs and driving down expenses. But operators need to innovate to survive, and I think, going forward, these premium formats will become a clear target for investment,” says Jones. “But of course, this is all based on their return on investment.”