-By Andreas Fuchs

With the New Year upon us, it is time to think balance sheets, budgets and how to better one’s business. Elsewhere in this issue, our survey of new cinemas reviews how to build a better mousetrap, to quote one enterprising exhibitor. And here, we take a closer look at how Cinemark USA, the country’s third-largest exhibitor, is using advanced technological measures to further improve the bottom line.

At the end of March 2011, Envysion (www.envysion.com), the Louisville, Colorado-based developer and provider of Managed Video as a Service (MVaaS) systems, signed a multi-theatre deal with Cinemark to upgrade existing on-site video-surveillance tools and “improve operations and the customer experience, lower concession costs and increase overall theatre profitability.” (www.envysion.com/Cinemark)

As the company attests, “Envysion puts the power of video into the hands of a multi-unit operator’s entire organization, enabling users to easily leverage remote video to gain actionable business insights that will improve operations and deliver demonstrated 10-15% profitability improvements.” In a nutshell, Envysion goes “beyond traditional security and loss prevention applications by combining video with business intelligence,” according to the company.

“Traditional video surveillance is primarily a security application and fairly straightforward,” notes Matt Steinfort, Envysion’s president and chief executive officer. “You put up cameras and you record. When something bad has happened, you can then review the footage. People put that investment into their places of business to make their employees feel safer and more secure. It’s very much an insurance policy.”

Furthermore, Steinfort observes, video surveillance is “traditionally used by a small group of people within the organization and on a very reactive basis for a very limited set of use cases. If an event has occurred, someone will try and find the matching video.”

Despite this standard business practice representing “a several billion-dollar industry,” Steinfort says Envysion’s MVaaS offers a much broader value proposition to its clients in the cinema, restaurant and retail space (www.envysion.com/customers). “We are providing people with instant and unfiltered visual context into their business, and in an intelligent way that helps them better understand what is happening [so that] they can improve the ways in which they operate… Nobody can say no to that. How could you run your business less well if you actually knew what was going on?”

After a business partner of Envysion made the introductions, Cinemark was one to say yes. “We originally met with the loss-prevention team,” Steinfort recalls. “They were excited about the prospect of using video for more than just security.”

Steinfort describes the process. “What we typically do is to put our service into a handful of test locations, be it stores, restaurants or movie theatres. At Cinemark, we integrated with the point-of-sale systems and defined the business-intelligence rules that they wanted to see implemented. Then we trained a much broader user base. It is no longer just their security personnel; we also trained their area and general managers on how to utilize this new video source of information as part of their standard management practices. After several months of usage, we measured the financial impact versus a controlled group of theatres that didn’t have our solution installed. The resulting savings of thousands of dollars per month per theatre are very impactful on the business.”

Upon completion of that trial, “Cinemark decided to roll us out more broadly into their network of theatres.” Although Steinfort does not feel comfortable disclosing exact numbers and locations, he assures that Envysion is installed “in a good portion of their theatres. We are also in a number of strong regional theatres and conducting tests with some of the top circuits.”

Steinfort declares, “By marrying visual information with business-intelligence tools, and by scaling both across a network, we are providing the full context that comes with the video to everyone in the organization who can benefit from it. There is a lot of rich value that they can derive from understanding—based on data that they already have—what is really going on in their business.”

While traditional video users still include the security department, Steinfort suggests other benefits. “Marketing, for instance, wants to understand who is buying what product, how promotional material is being displayed and what the customer experience is. From an operations standpoint, there are clearly loss-prevention benefits and other advantages when you tie in video to the point-of-sale systems and to other key events inside the business. So, instead of just having financial reports that are telling us how the business performed, we can now actually provide the visual context behind those transactions for a deeper level of understanding.”

He uses the example of introducing a new kids’ meal with small soda, popcorn and a select candy. “The concessions people could look through every kids’ combo that was sold across a region and see whether they are actually attracting children or if they are trading down college-aged women who would’ve bought a larger size of all of those items if you didn’t have that meal option for them. It is that level of visibility that we can associate with any and all of the data that the business collects.”

When Envysion provides “this very capability to customers like Cinemark, Chipotle Mexican Grill and a host of others, they are seeing between a point and two points of revenue dropping to the bottom line as profit from being able to better and more effectively manage their businesses. Because of the complexity of running ten, a hundred or thousands of locations, it is very difficult to ensure consistent execution and brand deployment as part of the customer experience. Not to mention managing the cash handling at the registers. Adding Envysion’s video and data capability has proven incredibly impactful on the bottom line throughout our customer base in these types of industries.”

How does the Envysion MVaaS package work? “The first problem you have to solve is to make the video available to everyone,” Steinfort notes, referring to his company’s expertise as a telecom provider. “Being able to access a variety of different sites, stores and/or theatres over the company’s existing broadband infrastructure is more of a network problem than it is a security issue. Envysion is able to address that by putting video into the hands of everyone who has access and permission to view it.” This said and done, “if the video is not meaningful and does not provide easy access to the information that is relevant to you, it doesn’t have much value,” he opines. “Without a direct way of drilling into what is of interest to you, that still leaves you viewing hours of surveillance video.”

By providing a time link, Envysion can correlate visual to transactional data from other business systems that the organization deploys. Steinfort gives a few examples. “Show me all the times that any store had a certain number of a particular kind of exception transaction like a refund. Collect sales data of a new product across all stores. Then I want to see which cashier sold the most. If you marry that information with the video of each of those transactions, you can actually see how that person was doing the best selling.”

Even better, Envysion tells you what to look for and when. By hosting copies of “all that data from the many point-of-sales systems and financial tools out there [as part of its managed video service,] we enable companies to create exception boards and run reporting against that catalog of rules and events,” Steinfort assures. “We can take whatever [drives] their attention…and generate an automatic e-mail alert so that they can take an instant look at the underlying video.” With receipt data and all line items available for review at the same time, “they can validate whether it was legitimate or a case of fraud.”

Moving on to system architecture, video recordings are not hosted in the cloud “unless the company identifies something interesting that they want to keep.” Envysion software as a service is hosted, however, as Steinfort explains. “If our clients want to access their video material, they log into our interface and access the copy of their point-of-sale data that is stored centrally in our data center. When they identify video—whether they want to pull up a live feed right now from a camera or check previously recorded video—the footage is linked to their transactional data. Streaming directly from an edge device that sits in each of their locations is much more cost-effective…than the bandwidth of streaming it all into a central server.” Typically, companies store distributed video at their locations between 30 and 90 days, he has observed. “Then again, our application can pull any and all video that they identify from those edge devices and into the network where they can remain as long as needed.”

The core equipment technology that Envysion provides is similar to a cable receiver or TiVo, he continues. “You pay for the service and with that service comes your set-top box. In our world, it’s the EnVR [Envysion Network Video Recorder] appliance that sits at the location. You plug in your cameras and broadband router and everything configures all by itself… It’s a real simple device that stores video and communicates with our hosted software application,” Steinfort confirms.

Speaking of cameras, cables, connectors and related hardware, “we work with whatever equipment infrastructure our clients have already deployed, thereby leveraging their existing investment further.” What if there is no surveillance system in place? “We can make recommendations about new equipment as well. Although this is not our core business,” he adds that Envysion has reseller agreements for numerous products.

In mid-September, Envysion took that idea one step further and teamed with Sony Security Systems Division on its line-up of surveillance cameras and video analytics as well as tapping into Sony’s digital-cinema expertise, professional installation services and “strong customer relationships.” Lauding Sony’s “very high-quality” products, Steinfort sees the services of both companies as complementary. “We make the cameras more valuable to Sony’s customers because they can leverage them for more purposes than they could before. It’s a very complementary relationship. We are also integrating some of Sony’s video analytic capabilities into our service.” He mentions people-counting and queue measurement. “Sony’s IP cameras have the functionality to count the number of people that come through a door, let’s say, or measure the time it takes for someone to go through a line.”

What about the “Big Brother” aspect of all this? Steinfort concurs that “much of the general population’s view of what video is and can do is indeed shaped by movies and television shows like ‘CSI.’” He goes on to mention “the heightened, crazy ability to drill in on all kinds of scary things. Most of that stuff, however, is actually not practical,” he reassures. “If you think of analytics just being able to count individual people coming in and to distinguish them from carts, shadows and all other kinds of stuff, that’s really the level of sophistication that the industry has today. And that’s fine.”

Even finer is the relationship that Envysion has developed with Chipotle Mexican Grill. “They agreed to put us into all of their restaurants even before we had officially launched our service,” Steinfort acknowledges. “We were still in beta. They are a great example for the value of the service. Chipotle went from a handful of people in their organization that could view video to 1,300 users on our service now. They went from using it sporadically during a handful of times a year to hundreds of thousands of log-ins into the system to watch videos of their business. They have been a phenomenal customer and great user of our service.”

Any parting words of advice for the New Year? “The key message for movie theatres and all my customers,” he obliges, “is to think about how much more effective they could operate if they had the visual context of what was actually happening. If they get their wheels spinning on that thought, they come up with a lot of opportunities how to improve.”

Thanks to Envysion’s software and system architecture, Steinfort reiterates, “it is less thinking about the technology or whether this is a security application or not. It is more about what are the areas where visual context of what is happening would help you be more effective. The companies that are using the system have already proven financial improvements. But that’s only the beginning. MVaaS is a very impactful capability to have. My expectation for two or three years from now is that companies are going to expect to have that kind of access.”