24/9/06

“Cinemas Go Entertainment Venue!” (#507)

Stinger REPORT Skinny!

(2/09/06) Since the 1920’s when today’s version of the cinema industry was born, movies have mostly stuck to a single format: the patron show ups and sees one, predetermined, studio-produced feature (of whatever length). But the classic ‘Movie Going Experience’ may now be on the brink of a revolution. The whole character of “a night at the movies” may leap simultaneously forward, thanks to new technology (digital content produced on the cheap by non-professionals) and also backwards (to the ancient “cinematograph” format, where penny arcade patrons paid to see a grab-bag of short films). What could spark this potential revolution? A 9% decline in worldwide box-office revenues has coincided with the development of the Digital Cinema infrastructure. The possibility of the iPod-Night equivalent for cinemas (combined with the playing of home video games on the big screen) is just one of the issues that could see the movie theatre as a hidden threat to amusement.

Main REPORT:

For the third year in a row, the cinema industry is looking at a major in a key profit barometer: the average Friday opening box-office take. Industriously hyped films, like the 2005 remake of King Kong, achieved $500million worldwide box-office (for a near $200million development/marketing spend…not counting PR costs, which sometimes run nearly as much as the cost of the film itself. Despite what sound like huge earnings to the outside world, there was still a strong feeling of disappointment by the powers behind the Hollywood movie machine.

A 9 per cent decline first reported in March of 2006 has been blamed partly on DVD and bootleg home entertainment (and on plain old lousy films). But this drop is also believed to indicate a change in audiences’ tastes for the ‘Movie Going Experience’. To address this, shifts have been instigated by the movie industry to simplify costs-of-distribution; improve utilization of their expensive real estate, and diversify the cinema market.

The move towards digital projection was seen to offer the answer to many of these issues. The industry (predominantly the American cinema scene) started to go digital in 1999 (seen with the major Star Wars trilogy). With the coming of a universally agreed digital theatre technical standard, 2005 saw over 800 screens in North America equipped with digital projection equipment – the agreement of a standard forced upon the cinema industry in the face of a revolt by their audience.

The ability to distribute hard drives, rather than cumbersome and expensive film platters, and the fact that a single hard drive can service multiple screens, offers a vast improvement in quality. Add to this the future prospects of digital high-speed communication circulating multiple releases effortlessly (and without the high cost of making thousands of celluloid prints, which quickly deteriorate) and the cost-reduction of the cinema infrastructure could spell incredible dividends.

The added benefit of digital cinema is the move towards technological application to the movie experience. Removing the film, and the technological application of 3D can be more easily and cheaply attempted. The Stinger has reported the troubled development of the REALD and In-Three hardware infrastructures (Stinger #486).

Movie exhibitors’ thinking has come around to the fact that using the digital projector for other things will turn these multiplex cinemas into diverse entertainment venue. The thinking so far has been to offer the declining audience a means to experience an original Out-of-Home experience. Already there are venues in America that offer the ability to hire a screen at a venue to play personal DVD’s and PC played on the big screen. Customers bring their own entertainment to the venue the equivalent of iPod Nights in the jukebox business!

But it is the offering of playing video games on the big screen that has led to a second area of utilization of the environment that a cinema has created towards amusement style development. A number of chains are about for the second time in recent history to look at expanding their arcade component towards being a major part of their venue, developing unique gaming environments.

In 2006 the idea that the amusement scene crawling from a crippling depression could be in direct competition with the cinema industry for the future audience buck is a frightening consideration. That the $9billion grossing motion picture industry could turn its sites to offering ‘out-of-home’ leisure entertainment destinations (beyond just depending on supplying the film and the snacks) should have us all worried. 

Specialist attractions housed in available cinema screen space is “a crossover too far” for many that watch the industry. Some favor a more direct route that would see this space utilized in mini-Casino operations, mixing the entertainment element with the vast profits of gaming, though local legislation will play a part in this development. However it comes, the move is on for cinemas to provide more than passive film-based entertainment and expand into the future of ‘Entertainment Centers’.

What Could this all Mean:
In the coming weeks, the Stinger’s HOT TOPIC annual feature on the new facility business development will demonstrate a growing convergence in the cinema facility and the gaming halls that accumulate with them.