Having experienced a decade of technology infusion unlike any other, the cinema industry is not exactly in position to absorb more. Yet the transition to digital projection has unleashed a wave of technology advances, including those that promise immersive sound, higher brightness 3D, higher dynamic range, and higher frame rates. One could say everything is on the table but a guarantee of higher audience numbers that will pay higher ticket prices.
The theories of economic cycles are well known, described by hailed experts such as Schumpeter and Kondratiev. But until 2014, no one in print has attempted to apply these theories to the success of cinema technologies. That praise is directed to Oleg Berezin of Nevafilm, who tackles this subject in his book titled “Betting on Box Office: Major Cycles and Market Conjuncture of Film Exhibition.” Don’t rush to Amazon just yet – Mr. Berezin’s book was first released in Russian, and is now being translated to English. [Editor update 12 Jan 2015: it’s now available on Amazon.] The book compares Russian market cycles with those of the US, and provides some insights into what we might expect in future cinema technology.
Cinema in the US was experiencing a severe downswing in the 50’s and 60’s, and didn’t begin to experience an upswing until the 70’s. Not coincidently, it was during this period that numerous innovations appeared in image presentation, including Cinemascope, Cinerama, Todd-AO, and at least 60 other formats as cataloged by Schneider Optics . Cinema was seeking to differentiate itself from the new home entertainment format of television, and there was no shortage of formats introduced to attempt it.
It’s not hard to see that similar behavior is now taking place. Mr. Berezin employs the term “home screen” to describe television and other shared screen home viewing technologies, and “personal screen” to differentiate the evolving technology that allows you to read this. Both impact the business of the cinema screen, and no one needs to read this to grasp the point. But it is useful to gauge where to place one’s bets when it comes to investing in differentiating technology.
The principle noted from similar periods before are that multiple formats will arise, but its unlikely that more than one will emerge as a winner. Winners emerge as economic cycles move into a growth phase. While the roots of the technology may be around us during the down phase, it won’t be understood to be the winner until the business cycle moves into the up phase. In fact, the winning technology may not even be available during the down phase, as it’s more likely that the luck of good timing will drive a winner in the future. While that winner could introduce something completely new, it’s more likely that its roots will be traceable to the concepts that emerge during the down phase.
Examples abound. Few would disagree that immersive sound will thrive in cinema’s future. But will that format be based on DTS MDA, Dolby Atmos, Barco/Auro 3D, or something else? This author has argued that it’s more likely to be something else, as none of the current systems do an efficient job of conveying the values that sound mixers, and presumably audiences, value. On the visual side, Barco has introduced its Escape format, somewhat emulating early Cinerama with three projectors. Dolby has announced its intent to bring Dolby Vision-style high dynamic range to cinemas. These formats may not agree, but it’s evident that image presentation will change in some manner in the future. Diversity in exhibition is taking place, most evident with the trend for premium large format screens. While these screens utilize the same content as any other screen today, will that still be the case tomorrow? And a favorite of this author is that of SMPTE DCP, which will have a very hard time rolling out during a down cycle. It’s supporters would be much smarter to envision what will be needed during the future up swing, and work on stabilizing the format for that.
The big question, of course, is when the future up swing will take place. Predictions of timing are really for others, but it would seem reasonable for a new phase to emerge within 10 years. It will take until the end of this decade for the impact of subsidized financing to dissipate. New financing for new investment will not be available until then. (This is not to suggest that studios will provide this financing, as such an event is unlikely.) The innovations that one should expect to emerge will not be limited to those of movie format, but to the entire business model of cinema. This will include innovation in the financing of projection equipment.
In the meanwhile, cinema investment is most likely to focus on audience comfort and operational efficiency – areas where high technology is less of a driver, and where management is more attuned to make beneficial decisions. It may well be that the technology leader of the future is not one that is hailed for cutting edge technology, but rather one that finances its technology in a manner that is friendly to the cyclic revenue generation of the exhibition business.
Cinema has long been fractured in technology, where diversity drives differentiation at at the expense of efficiency. The beauty of the digital transition is that it leveled the diversity of screens to support, bringing about a new degree of efficiency for content distributors. But the benefits of leveling and efficiency are quickly eroding, all of which are characteristic of a down swing. In a down swing, there is no clear path or reason to do things in a certain way, as the search continues for innovation that will help grow revenue.
Buried in that innovation are the seeds for future growth. It may very well be before us now. If you can spot it, then you could be a winner.