State of the alternative: New forms of programming earn foothold in today's cinemas
The burgeoning alternative-content market continues to develop quickly: The market for providers is more competitive, the content better-quality. Depending on whom you speak to, there is either a glut of content in cinemas, or not enough to go around. The next 12 months will see some fascinating developments in the industry as distributors jostle for position, exhibitors grow in confidence, and continued digitization and satellite deployment of cinemas facilitates the growing awareness of this new medium.
This unique business is characterized by several key factors: content, marketing and budget. The industry is still young; the first live broadcast took place only six years ago and there are distributors in every major territory and many of the minor ones too. Exhibitors have increasingly embraced alternative content and understand the importance of local marketing to make an event a success, a massive shift from the big-budget, studio spoon-feeding that has sustained them since the ’70s.
Alternative-content releases are now regularly being built into the overall marketing for many music and theatrical releases, not as a standalone revenue stream but much like a theatrical release for a major studio. If it covers its costs, then it’s a viable marketing tool for an artist’s new album or tour, for example.
However, the industry is not yet standing on its own two feet financially. Given the increasingly broad scope of events, it would be foolish to generalize wildly, as some events are making good money (opera) while other genres are still struggling to make a profit (e.g., sport, in Europe anyway). But an emerging theme would seem to be that while the industry is beginning to mature, there are still weak links in the chain that, once addressed, may drive business forward.
In the U.S., the big names of NCM Fathom and Cinedigm continue to dominate the space and promote content with comfortable marketing budgets, using cross-pollination marketing techniques and sponsorship to increase sales. Michele Martell, chief operating officer of Cinedigm, notes that her Kidtoons program in the U.S. has successfully secured long-term sponsorship from Stila Cosmetics, whose makeup tips prior to the feature have led to a life of their own in moms’ networks on Twitter and the blogosphere as a result. By appealing to mothers as well as children, their marketing has had twice the impact with half the outlay.
Kurt Hall, CEO of NCM Fathom, feels that the landscape in the U.S. is less progressive than in Europe, and has watched developments there with interest. Accessing sports for cinema release in the U.S. continues to be a battle for rights with the TV networks, whose stranglehold means that the most effective form of sports event in cinemas is in 3D, particularly as 3D TV has yet to take off there.
Smaller outfits such as D&E, Emerging Pictures and BY Experience are pushing the envelope, using innovative marketing ideas such as signed merchandise and engaging with exhibitors on a personal level. “Local marketing is where alternative content lives and dies,” says D&E’s Evan Saxon, so the engagement of the exhibitor is essential. Content is coming through thick and fast these days, however, and it’s not all Oscar material. It can be difficult to engage exhibitors in the face of such an onslaught. As Saxon observes, “I’m a fan of a crowded marketplace, but poor-quality content brings the side down.”
Exhibitors on both sides of the Atlantic have experienced a “barrage of content,” as one U.K. exhibitor put it, in the last 12 months. Managing the expectations of the exhibitors, whose distributors all promise a hit, is a key challenge for distributors everywhere. Exhibitors expecting 80% capacity on a rainy Wednesday night should prepare themselves for a disappointment, but 60 people on the same night, given the marketing budget, the niche material and the high ticket price, should be considered an achievement. Just don’t expect it to happen twice in a week—alternative content is at its best on day of purchase.
The Holy Grail for distributors everywhere remains a series of events, which, beyond an opera season, has so far eluded the industry. One-off events are costly and unpredictable. A season enables strategic ongoing marketing, fewer resources, and the opportunity to build your audience. But finding content sustainable enough over several visits is not easy; one might think sporting tournaments would work, but who wants to go to the cinema to see the early stages of a knockout tournament? You want to see the final, even the semi-final, but only if your team is playing, and chances are you can see it in the local bar anyway for free. Pulling in audiences can only be achieved via 3D and clever marketing, and in the U.K. it’s happening gradually.
In Europe, the same concerns about content are voiced, but the fragmentation and cultural/language barriers in each territory are also impacting the market’s development. Fabrice Testa, VP of digital-services company XDC, explains that “one program can work in France but not in Italy, and vice-versa. This also means that content with speech needs to be dubbed or subtitled, increasing the distribution costs. Marketing is also more complex because it must be addressed country by country.” Perhaps Europe is more progressive about its content because it has to be.
Echoing Martell’s sentiment that “locally sourced content is the future” is Silvana Molino of Microcinema in Italy, where there is a very strong arts tradition. Molino notes that “the alternative-content industry [in Italy] is more focused on opera and ballet and less on experimental content such as circus performances, museum virtual visits and 3D concerts.”
The latter are very popular in the U.K., the second-biggest territory for alternative content.
The U.K. has seen an explosion of alternative programming in the last 12 months and the arrival of several new players in the market—Omniverse Vision and Altive Media are just two. James Dobbin of Omniverse explains that a key factor is relationships with exhibitors. “It’s not necessarily the number of screens,” he observes, “but how engaged the cinema staff are.” Relationships are absolutely essential to making a success of a product where the profit margins are slight, the effort required to market it is disproportionately large and the budgets limited.
In the U.K., the trend towards live music, often in 3D, has been the most successful at the box office, with anniversary versions of Les Miserables and Love Never Dies (Omniverse) proving popular. In the U.S., BY Experience is looking to Broadway for their next triumph, though there are legal challenges, not least from actors’ unions, management and publishers, so this is likely to be a slow burn, like much of the acquisition process.
Elsewhere there are alliances springing up between European and South American distributors, North American and European distributors and, tellingly, Australia’s CinemaLive relocated to London from Sydney last year, citing that business was easier to do in the same time zone. Pushing the business into Southeast Asia and Australasia remains a challenge on a practical level, as the time difference and satellite coverage make selling a live event pretty much a non-event, and the result is the less enticing “as-live.” The answer would seem to be to acquire content from within the Far East rather than import it; at some stage it would seem inevitable that a distributor spreads its wings in that direction.
In Russia, the content available is the same, but the economy there means the ticket price is prohibitively low and shipping costs high, thus preventing expansion from other external distributors.
The same can be said of India; despite its booming economy and exploding population, few inroads have been made. Even the ever-ambitious Met, with a presence in 56 territories and 1,700 theatres, has yet to establish itself in the subcontinent.
Meanwhile, in South America, digitization of cinemas is holding up the progress of alternative content; well behind the rest of the world in terms of digital screens, the continent is upgrading rapidly in comparison. There is a growing appetite for non-studio content, and several homegrown distributors now furnish the region with music and sports events, though, surprisingly, opera is not proving popular.
Cityscreen Cinemas in the U.K. is actively producing its own events, uniquely straddling the role of exhibitor and distributor, and enjoyed recent success with “Leonardo Live,” a tour round the National Gallery on the opening night of a Da Vinci exhibition. A brave initiative, it was hugely successful in the U.K. and has also been released in the U.S. by BY Experience. Experiments like this are what drive the industry forward, though it would be fair to say there are as many misses as there are hits at present.
Challenges undoubtedly lie ahead. Not least is awareness from the general public about this frenzy of activity at the fringes of the film industry, of whom perhaps 10 to 15% regularly attend cinema events. LiveScreenEvents.com, a new initiative from the U.K., will be addressing this need by promoting events online supported by subscription, advertising and editorial. Launch date is likely to be toward the end of this year.
Another weak link in the chain is the bland and indeterminate label that has blighted the alternative-content sector for too long. It could just be that in time the distinction between alternative content and the mainstream will simply evaporate, though this is likely to be a long way off. In the meantime, the industry needs a positive, identifiable name, indicating something more than a vague alternative to typical movie fare.
Quality control is another challenge, especially as the market gets flooded with content. Distributors need to take a step back from a project and be wary of seeing dollar signs before understanding how many people would really want to go see their offering at the movies anyway. “The biggest issue facing distributors is finding regular programming with passion,” Martell reflects. This goes hand-in-hand with managing expectations all-round—in a new business, the temptation to over-hype the product is naturally high.
VIP cinemas, built with alternative content in mind, are becoming more of a reality everywhere, and in-movie fine dining is the latest concept. The Lounge, opened by Odeon in London, includes lavish waiter service, reclining leather seats and a unique “finger, fork and spoon” menu, enabling the diner to eat delectable food in semi-darkness.
Some are surprised that the studios haven’t made more inroads into alternative content by now. Given the downstream market potential and the vertically integrated nature of Disney and Fox, for example, and their interests in sports programming such as ESPN’s, it seems an obvious profit line, but such monolithic organizations rarely act quickly. Others intimate that once alternative content has established itself as a viable revenue stream, the studios will act. The last few years have not been easy, however, with major restructuring everywhere, so the climate is perhaps not right to be investing in new industries.
An old chestnut it may be, but the possibility that the audience might just stay at home is as relevant now as it’s ever been; the growth of Netflix and various streaming options, along with the explosion of online channels, is fragmenting audiences from all age demographics like never before, and making the job of an alternative-content distributor and exhibitor harder all the time.
NCM Fathom’s Hall agrees. “The Internet is yet another group of networks, and we will have to rely more and more on 3D to attract programming and audiences.” Making the audience aware, via external marketing, of the value of being in a cinema with other like-minded people is the cinema’s unique selling proposition. “Feature films don’t need a full auditorium, but alternative events do, especially sporting events, and it makes the event special,” Hall continues. Ultimately the goal, he says, is to “provide in cinemas what TVs can’t.”
Whether it’s with venison chili from The Lounge, 3D or even 4D, champagne or sponsorships, the alternative-content community is going to have to be seriously creative in the next five to ten years to capture and retain their audience, although indications are this will be a big business indeed by 2015. With good-quality content surfacing, awareness increasing and the professionals at the marketing helm improving their efforts all the time, a happy upward trajectory seems likely for everyone involved.
Melissa Keeping is director of Thirty Five Mil Ltd., a London-based post-production consultancy specializing in international cinema distribution of mainstream and alternative content. She is also the co-author of Dodona Research’s October 2011 report on alternative content.