-By David Hancock, Head of Film and Cinema, Screen Digest

Alternative content (or additional content as some prefer to call it) in cinemas has been slow to develop. From the early days of digital cinema, a small handful of exhibitors have experimented with showing programming other than movies in their venues. They have been very much in the minority, with most exhibitors preferring to wait until digital technology became more widespread to contemplate one of its potential benefits.

However, in the past 18 months the situation has evolved, as the digital-cinema rollout has extended to over 17,000 screens worldwide, driven by the clear economic attractions of stereoscopic 3D. This has enabled a growth of alternative programming to become a $100 million business globally, According to Screen Digest forecasts, alternative content will be a small but significant revenue stream for cinema exhibitors, worth a predicted $526 million globally by 2014, from a level of $45.7 million in 2008, but ultimately revenues from non-theatrical programming in cinemas could exceed $1 billion. This level would still represent less than five percent of gross global box-office levels. In 2009, alternative content represented 0.5% of U.S. box office.

The driver market is the USA, due to its screen base and the relatively large number of screens already digitized, but the U.K. and now other European markets are also becoming extremely active. The USA accounted for two-thirds of global alternative-content revenues in 2009, but this will decline to 47.9% by 2014, as the market for non-movie programming in cinemas expands globally. This season’s Metropolitan Opera is being screened on 1,000 screens in 44 countries, underlining the interest that global cultural brands can generate when they become more easily accessible.

For an exhibitor, outside of generating revenues, the principal rationale for not showing movies in cinemas is increasing occupancy, especially at off-peak times. This is not always possible as some key events happen at peak times, but many events can be scheduled at times that are non-competitive to film screenings. For peak times, there is clearly an opportunity cost to screening something that isn’t a movie, even if you can charge up to five times a cinema ticket price for it. An exhibitor’s key supplier for their core business is a theatrical distributor, and taking out peak slots for their movies creates the risk of degrading that central relationship.

That is why alternative content is likely to stay a minority activity for most exhibitors. However, for a minority of cinemas, alternative content represents a whole new business model. For example, Swedish part-time rural cinema chain Folkets Hus has re-energized its business by screening operas in its wide network of cinemas, specifically The Met, to which the circuit has attracted nearly 70,000 visitors during the 2009/10 season. Swedes in rural areas can also watch theatre from the U.K. and concerts that they would otherwise have no access to. Cinemas within the circuit went digital (although not always according to DCI specifications) solely to benefit from alternative content.

As a result of the growing awareness of alternative content, and on the back of the global success of “The Met: Live in HD,” a new group of players are entering the theatrical distribution and exhibition arena, specializing in the production and distribution of these innovative forms of content. These include U.S. screen-advertising companies NCM and Screenvision, digital deployment groups such as Arts Alliance Media, Cinedigm and XDC, the U.S. studios Disney and Sony, and specialist outfits including the U.K.’s more2screen and Quantum Digital, French company Ciel Ecran, U.S. distributor Emerging Pictures, digital pioneer D&E Entertainment, Brooklyn, NY-based company BY Experience and Russian digital-cinema integrator NevaFilm. In some cases, this also includes producing the event, and has led to events being specifically crafted for release in cinemas. The high-profile events tend to be opera, theatre and some sports, but a wide range of other content is appearing on cinema screens, including live Q&A link-ups, comedy, music concerts, poetry, President Obama’s inauguration and even Michael Jackson’s memorial service.

Digital 3D, which is doing so much to revitalize the cinema experience, will also drive the development of alternative content in cinemas. Live-action concert films, such as Hannah Montana and U2 3D, were the first experiments to provide viewers with non-movie 3D entertainment, and this area is now developing fast. Technology advances have made live 3D possible, enabling broadcasters to experiment with live 3D sports in preparation for 3D TV channels. U.K. broadcaster Sky has already launched its 3D channel, even if it recognizes that the installed base of 3D TVs is currently very low. Other genres, such as opera and gaming, are also showing signs of promise in 3D, offering a different experience for the audience than they would get elsewhere.

Further growth of alternative content depends on several factors coming together, chief among which is growth of the wider digital-cinema market. This was driven by 3D during 2009 in preparation for Avatar, and we are now seeing the wider digital rollout gathering pace in many countries. Live programming also needs a digital distribution infrastructure in place, such as satellite, something that is still in the early stages, and this will also limit growth in the short term. However, alternative content has shown that it can be a small but crucial revenue stream for exhibitors, also enabling the cinema to become a multi-arts venue, offering a range of live and recorded events attracting new audiences and offering existing audiences more variety.
All data sourced to Screen Digest.