Strategizing CinemaCon 2017 – Futuring Cinema at a Crossroads

Notwithstanding the myriad of options available for viewing content in 2017, the theatrical film experience remains a vital component of the infrastructure and economy of Hollywood.  People around the world continue to go to the movies on a regular basis.  Revenues and awareness of product created as a part of the feature film system drive many other downstream markets on a global basis, employing thousands.

The industry, though, is at a crossroads as it looks to the future.

From our professional point of view, attending key conferences is a great way to remain in sync with changes that are occurring on what seems to be a daily basis.

We’ll be at CinemaCon, formerly known as ShoWest, scheduled for the week of March 27, 2017.  This show is primarily about theatrical distribution and exhibition and all the companies whose products and services feed into or out of those industry segments, everything from the movies themselves to the numerous option available at the concession stand.

Here is an overview of what we expect to be hearing, learning and discussing as we traverse the halls of the conference and meet with various executives from several industry segments.

1. Box office – Box office for 2016 increased globally by a mere 1% according to the MPAA. The primary reason for the low increase was a 1% decrease in China, a surprising development given the meteoric trajectory over the past few years.  North American box office is up 5.5% year to date as of March 27, but will that continue through the next 9+ months?  We’ll be discussing how this will impact future production options by the studios and others doing business in China and elsewhere, since, after all, today’s box office/film rental fuels future year’s production and distribution.
2. Windows – The theatrical window has been shrinking for years, although it has now mostly stabilized, but the performance of many movies and the plateauing of the box office at least for now, prompts the topic to be raised again. Will we ever see a day and date release to the home?  Will it include a high ticket price to compensate studios and exhibitors?  Probably not on a regular basis, but a further shrinking of the window seems likely in the coming years.  This is particularly true in light of the robust production of the many streaming/OTT companies led by NetFlix, Amazon, YouTube and Hulu.
3. New technologies – Tech is always a part of the work in which we have been involved and that includes the theatrical market. Exhibitors continue to upgrade technologically as a means of providing customers with an experience they cannot have at home, even with the latest UHD TV technology.  We are going to be concentrating on:
   • Driven by the tech companies’ and producers’ willingness to incorporate new technologies into their projects, will exhibitors continue to upgrade theaters to include bigger and higher performing screens and the best new digital sound systems? The key question is whether it will sell more tickets and as a direct result provide a return on that investment.
   • We are also interested in the latest laser projection technology and the inroads it is making globally as exhibitors continue to work through their investments in digital projection of the last decade and other aspects that provide the all important customer a better experience and more bang for their buck, so to speak.
   • Imax has had a global impact by bringing their giant screen experience to multiplexes around the world and generating significant box office as a result, with the emphasis on opening weekends of major event movies. Will they continue to grow at the same or a higher rate as the past decade or two?  Will exhibitors continue to push their private label large format experience?
   • New immersive experiences such as Barco Escape, a system that incorporates three projectors and three screens that envelop the audience to some 150°. Will studios adopt the technology and spend the time and money to produce for this format?
   • VR – Virtual reality has found its way into theme parks to a limited extent, but will it find itself in theaters? Will augmented reality have a higher probability of success?  We think so, but whether the audiences are willing to pay a premium in ticket prices for the experience remains to be seen.
   • Motion bases – This technology is enjoying a comeback after having been introduced several years ago as a means of bringing theme park type of experiences to the local cinema. There is a push to incorporate VR/AR technology into the experience as well, albeit nascent as of now.  We’ll be talking to several vendors as a means of gaining an understanding as to their market acceptance to date and prospects for the future.
   • Apps – Apps of all kinds are becoming the norm for everything from buying tickets and concessions to exchanging information with our friends and social circles. We are planning to see a translation app demo, one that will enable me to watch in English while others watch the same movie simultaneously in another language.  These days, with day and date releases occurring more as the rule than the exception, this is possible.
4. Creature comforts – Gone are the days of sticky floors, musty smelling theaters and sub-par conditions, an aspect that was once the “norm” in the cinema. It is a competitive environment when customers have the ability to select from multiple theaters for the out of home experience as well as the aforementioned home systems.  Attracting an audience is no small feat, especially when so many enjoy watching at home on large UHD or HD screens with sophisticated sound systems.  As a result, more and more theaters are upgrading to recliners, enabling the theater goer to kick back and put one’s feet up and watch the movie.
5. Types of movies – The industry has transitioned over the years from live action movies to traditional animation and eventually to computer animation. This year, with the success of Beauty and the Beast as a live action adaptation of the hit animated movie of the same name, Disney has embarked on a series of such live action adaptations.  Will the next one be as successful?  Will other studios attempt to create similar movies?  All TBD.
6. Event cinema or alternative content – Digital Cinema enabled theaters to be used for such events as the highly successful Metropolitan Opera. The ongoing restoration of older classic movies continues to enable special event showings, long available at home, to the theater for select and limited runs.  We expect this to continue as there is a niche audience to see movies on the big screen, sometimes for the first time.
7. Sequelitis – While on the topic of types of movies, there is continued criticism of the summer (and other) seasons being full of the “same old.” How many Transformer movies are required is but one of the examples often cited, especially as many of these movies cost significantly more to produce and distribute?  When will studios come up with new ideas, stories and, of course, compelling characters?  What will the paying customer accept?
8. Reigning in costs – Movies are expensive to produce. Years ago, the MPAA discontinued reporting the average cost of the movies that its members produce.  The last numbers I recall being published was in excess of $100 million with a similar amount spent on marketing, advertising and related distribution cost.  (At one time in my career, I was responsible for supplying my employers cost numbers to the MPAA).  The need for reigning in the cost is but one of many reasons that the production incentives offered by many locales, US and around the world, are sought by studios.  Saving money today can help to minimize risk while simultaneously increasing the possibility of a profit.  We expect there to be discussion on this topic, especially at a time when there have been executive changes at several major studios, with some analysts and pundits suggesting that some industry consolidation is inevitable.
9. Concessions – While many people still like basic popcorn and a cold drink, the array of food and beverage offerings at movie theaters continues to expand, with alcoholic beverages increasingly available. We’ll be sampling some of the offerings at the conference.

The foregoing is but a part of what CinemaCon is all about.  We’ll be discussing these topics and more at Digital Hollywood in May 24 for my Future of Film panel.  We hope to see you there.