There was an electric energy throughout Caesars Palace in Las Vegas this April, when over 3,500 registered delegates and more than 5,000 attendees congregated for the most important event of the year on the exhibition calendar. While it’s always good to reconnect with colleagues at CinemaCon, doing so following a record year of box office—both in North America ($11.1 billion) and globally ($38.3 billion)—is even better. Strong first quarter figures for 2016 helped brighten the mood even further: a 12.7 percent bump in Q1 box office thanks to the staying power of Star Wars: The Force Awakens and big outings from titles like Deadpool, Zootopia, and Batman v Superman: Dawn of Justice.
With momentum reinforcing exhibition’s relevance in today’s hyper-evolving mediascape, it would have been understandable if conversation had dwelled entirely on last year’s accomplishments. Instead, the overarching dialogue at CinemaCon 2016 focused on the future, with attendees providing intriguing insight into how the theatrical experience will continue to evolve in the coming years.
Coming on the heels of a record year, the months ahead represent a compelling opportunity for cinemas to further distinguish themselves as premier entertainment destinations. The industry- wide investment on in-theater improvements is a sign that exhibition is already addressing this challenge. Premium large format, luxury seating, and enhanced concessions offerings are all trends Boxoffice has covered with increasing frequency—spurred by their adoption by multinational circuits and family-owned single-screens alike. NATO President John Fithian focused on consumers’ positive reactions to these features during his State of the Industry address, noting that 2015 was a chance to entice audiences who hadn’t visited a movie theater in a while and therefore “a great time to show off the new amenities our members can offer.”
Corrine Thibaut, Coca-Cola’s international customer director for cinema and sisure, echoed this sentiment during one of the panels, stressing that an uptick in admissions creates an incentive to recruit new audiences by showcasing exhibitors’ focus on the theatrical experience. For Thibaut, exhibition can only benefit from reminding audiences that individual cinemas are part of a unique and memorable experience, just as important as the movie itself. “We need to create spaces that sit at the heart of the community,” agreed Jon Barrenechea, project development manager of Picturehouse Cinemas, citing Starbucks’ success in developing a brand concept that consists of people spending time inside their doors. “We need to create that for our cinemas: a space that feels like a part of peoples’ lives.”
This adds up to a more intimate cinema-going experience, one that is seeing the rise of what David Hancock, IHS Technology’s director of film & cinema, calls “premium small format”— boutique locations with a focus on the latest technology and amenities but without the screen count of a multiplex. Hancock considers the future of exhibition closely tied to the “experience economy,” offering consumers value-added premiums to differentiate and customize their night out at the movies.
That doesn’t necessarily mean we’ll be seeing smaller screens any time soon. IHS Technology reported nearly 2,000 premium large format screens worldwide by the end of 2015, a number that is set to increase in the coming years. Cinema technology companies Barco and Dolby have been catalysts of that growth, offering exhibitors a suite of their premium offerings— CinemaBarco and Dolby Cinema—in order to bring the latest in sight and sound to a theater near you. Dolby Cinema, for example, has already racked up more than 200 sites worldwide (including commitments) with 38 released or announced titles since its launch in 2015. Dolby Atmos, the company’s immersive-sound format, continues to pick up steam and already numbers more than 1,600 screens in over 60 countries (including commitments) with more than 400 announced titles.
Barco, meanwhile, has been stealing headlines since announcing its Escape panoramic screen format, which it expects to reach 3,000 screens globally in the next five years, counting on China to represent a big chunk of that growth. That goal would have seemed lofty before CinemaCon, but the company’s efforts in securing high-profile releases in the Escape format have already begun to pay off. Barco announced partnerships with two production companies, Cross Creek Pictures and Fundamental Films, to produce multiple upcoming titles in their Escape format. Barco’s big fish, however, was the announcement that Paramount’s Star Trek Beyond would be released in Escape this summer. A sturdy content pipeline will be crucial for the panoramic- screen format to flourish, and Barco executives expect Escape releases to create demand for their technology with eight titles expected for release in 2017 and twelve titles to come in each subsequent year.
South Korean exhibition giant CJ CGV entered CinemaCon just after acquiring Turkey’s leading circuit, Mars Cinema, as it plans to increase its worldwide screen count. CJ’s role in the industry is largely defined by its innovative cinema technologies as well as its CJ 4DPLEX division, which is currently rolling out its own panoramic-screen format, ScreenX, along with its established immersive-seating offering, 4DX. ScreenX has since grown to a total 80 screens in South Korea and a combined 11 screens in the United States, China, and Thailand since its 2015 launch. The company expects that tally to go up to 270 screens worldwide by 2017 and 1,000 by 2020. ScreenX has focused on Asian titles so far, a reflection of the company’s present footprint, but that can change if CJ CGV looks to accelerate its activities in North America—a plausible scenario considering the circuit’s ambition.
CJ hopes ScreenX will succeed as a circuit-agnostic premium offering, similar to what its immersive-seating technology, 4DX, has achieved in recent years. 4DX is currently available at 233 sites across 37 countries and is expected to grow to 800 sites by 2017 despite strong competition from companies like D-Box and MediaMation, which have also experienced significant growth overseas. MediaMation, for example, recently announced an agreement to install its 4D seats in 15 to 20 of Dadi Cinema Group’s China locations by year’s end.
China is proving to be a crucial market for any company in the film industry, a territory that in the words of MPAA Chairman Chris Dodd “is firmly on course to become the world’s largest film market within the next few years.” This applies well beyond box office power, as evidenced by the high-profile investment from China’s Wanda Group. In just three years, Wanda has acquired AMC and Carmike, the second- and fourth-biggest circuits in North America, creating a global powerhouse with a combined screen count that exceeds 10,000 auditoriums. Wanda isn’t the only global player looking to have a bigger presence in the U.S.; leading international circuits like Mexico’s Cinépolis and South Korea’s CJ CGV have begun making inroads in North America with new builds of their own. John Fithian views this foreign investment in North American exhibition as “a statement of faith in the growth of our business,” a reassuring message of the enduring strength of exhibition.
That strength would be even greater without the adversity posed by piracy issues worldwide, one of the primary concerns for both NATO and the MPAA alike. During his State of the Industry address, MPAA Chairman Chris Dodd cited a recent study by Carnegie Mellon University that found that box office receipts would be 14 or 15 percent higher without online piracy, a figure that jumps to 20 percent if a film is pirated ahead of release. “I would love to tell you that we’re going to wipe this out. I doubt it,” he admitted at a press conference following his remarks. “But if we could reduce it substantially, when you’re losing something like $1.5 billion a year in the United States, that’s money that can go into the production of more films and benefit our industry.”
The best source to stop piracy remains inside the theater: although postproduction leaks and uploads of screeners do occur, Fithian says that “90-plus percent of piracy comes from sophisticated recording devices inside cinemas around the world.” NATO works with the MPAA and cinema chains globally in educating and training theater employees to locate and deter piracy before it occurs. “We are winning by degrees,” Fithian said. “Every day we push out a good copy, that’s millions of dollars for our industry. Damage comes down by the millions.”
Studios and exhibitors have worked in unison to help mitigate the effects of piracy, a collaboration many in the industry expect to continue as the conversation about release windows intensifies. “NATO’s members overwhelmingly declared that the preservation of theatrical windows constitutes the highest priority for the industry, and our members intend to execute that plan,” said Fithian during his State of the Industry address, adding that while “more sophisticated window modeling may be needed for the growing success of a modern movie industry, those models will be developed by distributors and exhibitors in company-to-company discussions, working together on smart windows that can grow the pie for everyone.”
Fithian’s call for collaboration was echoed throughout the week’s events. “We spend too much time slicing the pie instead of thinking of ways of making it bigger,” said Ian Shepherd, chief commercial officer of Odeon & UCI, during a panel on synergies between exhibition and distribution. Niels Swinkels, EVP of international distribution at Universal Pictures International, added that both exhibition and distribution already share a mutual goal: “Making people that already come to the cinemas come more often, and making people come back to the cinemas when they haven’t been coming.”
Successful collaborations between distribution and exhibition aren’t limited to combatting piracy. Swinkels brought up highly effective advance-ticketing campaigns for Universal releases like Les Miserables and Fifty Shades of Grey, where studios coordinated a marketing effort to ensure full houses well in advance of a film’s release.
In fact, ticketing emerged from CinemaCon as the most likely aspect of exhibition to be transformed in 2016. Mobile ticketing app Atom Tickets drew attention ahead of the event, coming into CinemaCon with the support of major players like Disney, Fox, and Lionsgate. The app enables consumers to find films and buy tickets as a group, as well as purchase concessions without waiting in line. Atom announced two cornerstone deals in its young history at the event, partnerships that will bring its service to AMC and Regal locations nationwide. Fandango also announced several innovations of its own, including ticketing capabilities through its recent acquisitions, Flixster and Rotten Tomatoes, and a scannerless mobile ticket. MovieTickets.com
and Fandango now both offer their own respective scannerless tickets, likely signaling an end to the cost and hassle of the bulky scanners at the ticket counter. Fandango’s most compelling innovation, however, is its partnership with Facebook, which will result in a Facebook Messenger bot that consumers can use to find show times and purchase tickets directly through the social media platform. Printed tickets themselves are also ripe for change, with CGV and i- Aurora each showcasing their photo ticket technology at the CinemaCon tradeshow. Photo tickets are booths, located in the theater lobby, that allow patrons to print a ticket with their picture on it, essentially bringing the fun of a photo booth to the box office.
Whereas audiences can expect to see transformative changes in ticketing, there was still one unresolved issue on the table that industry leaders are keen to see addressed. “One issue that our country continues to face—an issue that affects many industries from many sectors—is the need to do a far better job of reflecting, recognizing, and cultivating the great wealth of diversity within our society,” Dodd said during his address. “To state the obvious, we can and must do a better job.”
Demographic trends at the box office signal that there’s more than just a goodwill incentive to embrace diverse casting—there’s an economic imperative to it as well. “The overseas theatrical markets with the fastest growth rates are found in Asia and Latin America. And here in the U.S., Hispanics have the highest rate of cinema visits,” Fithian said during his own address. Hours later, while meeting the press, Fithian reiterated his stance. “I keep referring to Furious 7 as an example because I remain convinced the reason that franchise became a global box office success is the diversity of its cast—from the first to the seventh installment. That says a lot about what diversity in casting can do in terms of driving the business, not to mention that it’s simply the right thing to do.”
As many audience members have already realized, the moviegoing experience is undergoing an evolution. Time will tell which innovations truly prove to be transformative and which will be looked back on as mere trends. Regardless of the outcome, the one conclusion from CinemaCon 2016 couldn’t be any clearer: the cinematic experience remains a hit with today’s audiences; now it’s time to focus on the moviegoers of tomorrow.
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