Studios like higher ticket prices. Exhibitors like higher ticket prices. Manufacturers want to sell new features to add to the movie-going experience, helping drive up ticket prices. But just as there’s elasticity in ticket prices, there is also elasticity in demand. Ticket prices having gone up, most markets are now experiencing strain in sales. This is cause for two channels of thought, neither of which is mutually exclusive of the other: how to sell new levels of experience to audiences, and where to focus new development?
It’s rare to hear praise for IMAX, but when it comes to branding the experience for cinema, IMAX gets it right. With IMAX, the audience has only one brand to remember. In every other cinema, the audience is inundated with a mixture of technology brands, including RealD, Dolby3D, Dolby Digital Cinema, Disney Digital 3-D, DLP Cinema, Xpand, Barco, Christie Digital, and Sony 4K/Cinealta. (Yes, there’s also the rare screen that displays the THX logo.) Exhibitors, particularly in the US, further confuse things by adding auditorium brands such as Big-D Experience, XD Large Format, UltraAVX, Regal Premier Experience, and Enhanced Theatre Experience. If the presence of these brands stimulate you into buying a ticket, then you are truly the ideal movie goer. Most people, however, haven’t a clue as to what any of these brands mean. When members of the public are seeking a quality theatrical experience, the one uncomplicated brand that stands out is IMAX. As a result, more cinema chains are seeking to include IMAX screens in their complexes. IMAX’s backlog for new screens was up 34% in 2011.
Brand congestion is a huge challenge to monetizing new technologies, from open technologies such as HFR to proprietary ones such as Dolby Atmos. Identification of the branding opportunity is not new. When DCI was formed, branding the digital cinema experience was on many people’s wish list. That wish, however, never materialized. While 3-D is an experience for which audiences are somewhat willing to pay extra for, the brands that convey 3-D aren’t well understood. To RealD’s benefit, most movie goers believe that all 3-D presentations are RealD.
Dolby would seem to have an edge in this regard, having both 3-D and sound technologies. But what would you think of a Dolby-branded cinema that had dim 3-D? Dolby doesn’t make projectors, nor does it establish light levels. THX, often thought of as the brand with no clothes, once could brand and control the cinema experience with 2-D and 5.1 sound with no more technology than a 2-way audio crossover. But THX has long since lost its way. THX has no presence in 3-D quality, and would be chased out of the theatre if attempting to establish precedence over a technology such as Dolby Atmos. IMAX, on the other hand, rebrands every component in its system as well as establishes and monitors performance levels of every screen to eliminate brand clutter and guarantee that its audiences have a good experience. It’s an extreme methodology for branding experience, and may not be the most efficient way to do it, but it has been proven to work in 52 countries.
It may be hard to argue with success, but success doesn’t close the door to fresh competition. There is plenty of room for a 2nd branded experience to emerge in cinema. The audience is waiting.
The difficulty in monetizing new technologies in cinema is the Achilles heel of new technology development. Should a company redesign its media block for higher compression bit rates and frame rates? How about incorporating Auro3D or Atmos in the media block? And watermarking all of those audio channels? Will it pay to solve all of the issues related to laser illumination?
With exhibitor financial liabilities at an all time high, and a massive sales cliff on the horizon, a more productive area to focus one’s development effort is on technologies geared to reduce the cost of operations. Improving cost of operations is a hugely underserved area of the market. Few, if any, exhibitors today can say that the cost of operating digital projectors is less than that of film projectors. For nearly all exhibitors, the cost of operating digital projectors is higher. The irony in this is that the great promise of digital projection as originally pitched to exhibitors is that it would reduce the cost of operations.
In terms of non-labor expenses, the cost of xenon lamps may be the biggest part of an exhibitor’s operations budget. But workflow inefficiency and monitoring costs shouldn’t be overlooked. Monitoring services today treat digital cinema as a cash cow, which should be a hint for further examination. Monitoring services are largely valued for their help desk support, and the need for help desk support is driven by the gross inefficiencies in security key management. To really dig into workflow issues, though, one should begin by re-thinking the information shared at the time of booking. Those who book movies need to know where to collect certs for making the right KDMs. Don’t get this wrong – it’s not useful to share certs at the time of booking, because that information will invariably change. What’s needed is to share the location at which the certs can be collected when it’s time to make KDMs. Fix these issues and reduce or eliminate the cost of monitoring, even if only within the ecosystem of one’s products, and you’ll have some hot products on your hands.
If you think you need to wait for DCI to fix these issues, then I have 8 years worth of monthly reports for you to read that will change your mind. What are you waiting for?