Giving moviegoers the VIP treatment

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Going to the movies today is a very different experience than the one our grandparents had. The changes over the decades have been significant and are definitely for the better. In the past 25 years, we’ve witnessed digital sound, larger screens, stadium seating, digital projection, 3D, and now one of the newest innovations in theatres all over the globe: VIP auditoriums.

The trend is growing and VIP auditoriums are cropping up in all sizes of complexes and in many major circuits as well as smaller independents. The common thread is plush seating, more plentiful and substantial food offerings, and customized service. It’s all about distinguishing yourself from your competition and offering your customers an undeniably great evening. This can come in many different flavors, but is certainly evident in amenities like valet parking, reserved seating, wait service at your seat, beer and wine, blankets and pillows. “VIP” can mean restricted-access balconies, dedicated auditoriums, or venues fully devoted to the VIP experience.

VIP rooms offer all the comforts of home, plus the experience of seeing films with a small audience. The idea is to make the customer feel special and exclusive. This deluxe experience comes with a higher admission price, but customers are willing to pay the freight for the special treatment and the opportunity to brag to their friends about how they were pampered.

One of the keys to success is having the operations team partner with the design team right from the outset. How will the facility be operated? The basic layout of the room will be determined by how service will be provided and what will be served, what type of seating will be used, and how many seats are needed to generate the revenue necessary for the concept to be successful.

In this issue of Film Journal International, we survey seven circuits from around the world to see what they are doing to make their customers feel like Very Important Patrons. It’s fascinating to hear about the different gourmet foods being offered, and the different amenities including call-button service and advance ticket purchases with reserved seating. Even a new circuit in China is building upscale “Directors Suites” with a minimum of 36 seats and dedicated bathroom facilities and lounges.

The upcoming ShowEast convention will feature a session on VIP auditoriums and how the trend is progressing in the U.S. If you want to attract customers, you have to give them something special now. Going to the movies is more than just seeing a movie. It must be a truly entertaining experience, and people are coming to theatres earlier and earlier to enjoy all the other benefits that are being offered.

The Global Balance Shifts
A significant trend in global box office is that the United States is losing ground to other countries. Not only is this evident in the number of production arrangements the majors are entering into with other countries to produce local fare but in the percentage of global box-office share the U.S. generates. North America now accounts for 36% of global box office compared with 32.5% for Europe and 25% for the Asia/Pacific region. In 2002, according to Screen Digest, the North American contribution peaked at nearly 47%.

The main growth area in recent years has been Central and Eastern Europe, which accounted for less than six-tenths of a percent of box office in 1995 and has now grown to 4.2%. The contributions of Central and South America also rose slightly during this period by one percent.

The U.S is still the leading contributor to global box office, with Japan the second-largest contributor. Other countries to watch are India, Germany and Spain, but perhaps the country that has seen the largest growth is Russia, which now accounts for nearly 2.4% of worldwide box office.
On the production front, the volume of world feature production dropped marginally by 1.8% in 2009, marking the third consecutive annual drop, with 100 fewer films produced from year to year. According to Screen Digest, 5,360 films were produced globally. Twelve territories had record output exceeding 100 feature films, in turn accounting for over 75% of global feature volume.

In North America, the level of production fell in 2009 to 677 titles, due to lower output from the U.S. This is attributed to the writers’ strike and more generally to production shifting away from North America.

Perhaps another reason for this trend is that average TV viewing continued to grow globally in 2009. The increase in choice, functionality and quality brought by digital multi-channel, flat-panel screens, DVRs and HDTV, as well as increased leisure time, has revived the appetite of people to turn on the tube.

New Alternatives to DVDs
It’s no secret that the decline in DVD sales is a critical issue for the major studios in their efforts to adapt to the growth in digital entertainment. Second-quarter earnings reported by major media companies have prompted concerns among investors that future home-entertainment revenues may be much lower than expected.

Studios have announced a bevy of digital distribution deals and they are experimenting with the timing of their releases to video-on-demand and other outlets to make up for the slide in DVD sales. The timing of a film’s release to on-demand pay-TV providers has been reduced to an average of five days after the DVD release. Four years ago, the DVD-to-VOD window was maintained between 30 and 45 days to protect retail sales of DVDs.
Analysts see this willingness to shorten the VOD window as a definite sign that the industry realizes DVD sales are ebbing. Consumers appear less interested in owning Hollywood content when that content is so easily accessed on rental platforms.

This trend may also motivate studios to offer premium-priced home-video deals to consumers that could make feature films available on-demand soon after they are released in theatres. This is a major concern of movie theatre owners and something that is being watched by the industry very closely.

With the availability of low-cost movie rental outlets like Netflix and Redbox as well as new online download and streaming services, movies at home have never been more convenient and inexpensive. All these alternatives are providing studios new revenue opportunities that may eventually replace DVD sales. As home entertainment continues to evolve and grow, the cinema community must work even harder to fill an essential role in consumers’ leisure time.