Advancing the Cinema: Theatres reinforce premium status to ensure their future
At the end of 2014, there were 128,000 d-cinema screens in the world and a further 4,000 e-cinema screens, making 93% of the world’s cinema screens now digital. With the digital conversion of the cinema sector nearly complete, the attention of exhibitors and technology manufacturers has turned to the development of other technology that can drive innovation, new revenues and enhance the audience experience.
There are a number of technology advances being worked on, but they sit broadly in two types: technology aimed at the creative process of filmmaking and technology aimed at enhancing the projection of films in cinemas. Both types end up having an impact on cinema exhibition, as improvements in the creative process also need to be reflected on the screen. In the middle of these two sits distribution, and this sector also needs to cope with the changes on either side and build them into the logistics of the distribution workflow. Technology is thus being used to create a higher-value product for customers and a more streamlined industry.
The most visible (and audible) technologies are probably laser illumination and immersive audio, but High Dynamic Range (HDR) is also now entering the public consciousness through Dolby Cinema (in collaboration with Christie), a premium concept incorporating HDR and 4K 6P laser projection. To summarize (a lot) the idea behind HDR, it is to make black blacker and white whiter and therefore the picture sharper overall. One of the first systems will be installed in new Dutch cinema JT Bioscopen.
Another technological advance is that of motion seating (4D), moving out of the theme park into cinemas. There are two types: motion seating only and motion seating plus extra sensory add-ons such as smell and visual as proposed by Korean company CJ4D. There is a precedent in 3D, a theme-park staple, that managed to migrate from that environment to the cinema (50.8 % of cinemas are now equipped for 3D worldwide), and 4D is now aiming to do a similar thing. There are several issues with 4D, such as how to mix 4D seats with regular into a standard cinema screen, but the revenue upside is of interest to exhibitors. While the penetration of 4D is currently low, it is certainly being trialled by a number of exhibitors around the world.
Laser-illuminated projectors come in two types: the high-end 6P premium types being developed and marketed by Barco, Christie and Imax (the latter not so much marketed as developed and installed) and the lower-end, significantly cheaper single-laser/phosphor machines being developed and marketed by NEC. There are now two versions of the latter, for small screens and for medium-sized screens. By the end of 2014, there were around 200 lower-end machines sold into the market, but only a handful of the more expensive high-end machines have been sold. This is in line with expectations, though, as this generation of laser is very much for the very early adopter and is highly priced. Costs need to come down significantly for a wider adoption.
Imax is beginning the installation of 63 machines during 2015 into its larger footfall sites, mainly in China and the USA. Barco has sold the high-end laser to a number of circuits, including the Belgian Kinepolis, Cinemark and Santikos in the USA, a number of Chinese exhibitors, and most recently leading Latin American circuit Cinepolis. Christie has become the partner for Dolby Cinema’s proposition and is also having some success with laser in the institutional sector, such as the Moody Gardens giant screen in Texas and Shanghai Film Art Center. Christie is also marketing a sound solution (not in the same way as Auro or Atmos but the speaker backbone) named Christie Vive Audio. Sony is actively engaging with laser but takes a longer-term view of this technology in cinemas, not seeing a viable business case at the moment after an expensive decade of digitization. Certainly, high-end laser is expensive and at the very beginning of its journey into cinemas. This may not be the case when the bulk of cinemas begin their technology replacement cycle.
Immersive audio is proving a popular addition to the exhibitor armory, especially as part of a wider premium-cinema offering. By the end of 2014, there were around 1,200 immersive audio units installed or committed worldwide and the current number is closer to 1,500. These are spread all over the world, and Asia has experienced a good take-up. Dolby Atmos is ahead in numerical terms (just over 900 as of April 2015), the brand name ensuring a head start in market acceptance, but the cheaper Barco Auro offering is also gaining ground (around 550 systems currently committed and installed). The Dolby system is ahead in the number of films mixed in the format, although both systems have been successful at driving forward the idea of enhanced cinema, and immersive sound is certainly a key plank in the rise of Premium Large Format.
It is not just technology in the bits and bytes sense that can help the audience experience. The seat itself is becoming an important element in creating a premium environment, with U.S. circuits in particular taking out regular seats and installing fewer premium seats (which will be charged at a premium), which are expected to generate more revenues overall. The U.S. circuits in particular have been experimenting with premium seating and other measures. For example, Marcus Theatres spent $50 million during the last year to introduce new premium features into its cinemas, including premium seating, food and programming. In a business where occupancy rates of 20 to 25% are the norm, there is flexibility to reduce the volume of seating and not harm the overall revenue. Premium seating is also being installed in PLF screens, adding to the increased segmentation of the cinema offer. The screen can also help, with companies like Harkness Screens advancing the efficiency of the materials used for the screen itself.
The digitization of the world’s cinema screens is almost complete, 16 years after the first commercial screening and ten years after the DCI specifications were first launched. The problems encountered along the way are best left to an academic textbook (and ten years of slide decks, in my case), but what is clear is that technology is now a fundamental part of the cinema exhibition sector in a way that was fiercely resisted by many at first but which can now be seen as a necessary progression of the sector. Ultimately, the cinema is only as good as the films that pass through it, but cinemas cannot control that aspect. The Pandora’s box of innovation in cinemas has been opened and we are now taking the first steps into the technology-rich future of the second “hundred years of cinema.” In its current progress, and taking into account the developments in TV and home entertainment moving to subscriber-based consumption models, the cinema is increasing the perceived value of its product—meaning, it can justifiably charge a premium but also offer a genuinely differentiated viewing experience and remain highly relevant in a complex and fragmented media landscape.
David Hancock is IHS Technology’s research director for film and cinema. He is moderating a panel session at this year’s CinemaCon on this theme.