May was a memorable month for Mike Campbell. Early in the month, Mike stepped down as CEO of Regal Entertainment to become the company’s Executive Chairman, where he could focus on company vision. Amy Miles, his former CFO, is now CEO. Greg Dunn retains the title of President and COO. Mid month, Mike took his new visionary role to heart, and announced to the industry that Regal Entertainment will forgo its plan to convert to 2K digital technology, and instead replace its film projectors with 4K technology from Sony Electronics. In one fell swoop, this was a major coup for Sony, a stab in the heart to TI, and a statement from the world’s largest cinema circuit that technology matters.
How the decision was made is as fascinating as the decision itself. Regal’s technology team learned of the decision only a day earlier than most everyone else. Rob Del Moro, Chief Purchasing Officer for Regal, hopped on the corporate jet to personally give the bad news to suppliers, explaining that the decision came from the board of directors. An examination of Regal’s BOD reveals that it is entirely made up of experts in property and investment management. These are people who know little more about Sony Electronics than what they can learn at Best Buy, making them unlikely instigators. This could only be a shot from the hip by Mike Campbell. He had plenty of reasons to do so.
By no means is Regal’s BOD deficient. The big business of cinema is property and capital management. But now that the world’s largest cinema chain is planning to undergo a sea change in the underlying technology for its operations, one would expect it to get close to its technology partners. Is the direction of these partners also Regal’s direction? Can Regal rely on them to keep it competitive in a technology-driven environment?
Such thinking led Regal to Thomson Technicolor, who, up until late January, was committed to provide Regal with a state-of-the-art Theatre Management System, designed to streamline and speed up Regal’s operations to an extent not possible with competitive systems. Having lost Technicolor as a technology partner when Thomson made its terminal decision to eliminate all exhibitor-facing endeavors, Regal was left to utilize lackluster TMS products from Dolby and Doremi. Both suppliers look upon the TMS as a necessary piece of software required to sell servers. Unlikely that either of these companies were ready to jump through the hoops that Technicolor was willing to do.
Perhaps the most stunning failure in establishing a partnership with Regal, though, was that of Texas Instruments. TI saw itself as king of the hill. It ignored the DCI spec in implementing an SPB type 2-compliant link decryption input, leading to the unpopular Gore board and the forthcoming Series 2 design. The company distanced itself from exhibitors by not only making the (now reversed) decision to license 3-D capability in its projectors, it also hid the decision from exhibitors. Above all, TI failed to show leadership in technology by not establishing a 4K path with its key customers.
All of this was paving on the road for Sony. Sony brilliantly moved in, shared its vision of the future with Regal, pitched its engineering capability in Japan, and sold itself as Regal’s technology partner of choice. The decision to switch to Sony was a fait accompli. TI, deeply stunned by the decision, tried to win back Regal, but to no avail.
For Regal, the next move is Sony’s. Sony will either meet whatever demands were placed before it, or Regal will be left with yet another decision regarding technology partners. Just as the game was previously TI’s to lose, it is now Sony’s. Make no mistake, the technology partner game is still in play.