Progress report: NATO's John Fithian talks technology, movies and marketing


Although National Association of Theatre Owners president and CEO John Fithian is usually optimistic about our industry and always a pleasure to speak with, he seemed particularly upbeat during our annual pre-ShowEast interview. “I’m excellent,” he responded when FJI asked how he’s doing. “We are coming off another record-breaking summer. Our members are quite pleased with the returns and it looks like the fall-winter schedule is strong. So there is a lot of optimism in the business.”

Early reports also indicated that attendance was up as well, possibly the best result since summer 2007. “We do not have final numbers yet,” he advises. ‘We have to wait until we crunch the official average ticket price to see how far back the attendance boost goes. But there are certainly several years in play and we are significantly up.”

As for the reason, “there was a great variety in the supply of movies and that’s why it was a record.” With five titles making more than $200 million, and one each that grossed more than $300 and $400 million, “we had a big picture range with a bunch of blockbusters and 17 films—as opposed to 12 during the summer of 2012—that crossed the $100 million mark. There was a breadth of titles with action, comedy, family and more sophisticated fare like The Great Gatsby. That’s the good news.”

Otherwise, he noted that “the losses on some big titles received a lot of attention in the press. Sure, there were a few losers in the schedule. While some of that has to do with the quality of the picture, frankly, some of it was scheduling.” Fithian is convinced that “some of these pictures would have done better had they been spread out over the full 12 months of the calendar. Looking at the family films in particular,” he opines, “we really could have used some of that product during the first quarter of the year.”

In addition to theatrical release dates, exhibitors, as ever, are also keenly observing windows. “We are experiencing real partnership with distribution on how movies are released to the home,” Fithian confirms. “This is a nice thing to be able to say after several years of fighting over release windows.” He recalls CinemaCon 2011 in particular, “when we had a big brawl over the four-studio test with DirecTV. What has happened over the last year and a half is much more constructive,” he elaborates. “Instead of fighting over when movies get released, we are working together on how they get released…all within reasonable windows.”

Fithian names SuperTicket from Cineplex Entertainment in Canada and Regal Cinemas’ Megaticket initiative as examples where “the consumer gets a bundled package of goods” that includes movie admission, merchandise or other goodies and digital access to the film down the road. “Working together on how consumers can enjoy movies in all different formats represents rather significant progress,” he believes. “The second item is that studios are beginning to experiment with their windows in a way that does not threaten or cannibalize exhibition. Twentieth Century Fox, for example, offers higher priced ‘Ultra-HD’ digital sales in advance of the Blu-ray/DVD release.” Unlike the latter creating “options for inexpensive rentals and subscription services which, I think, kill the business,” this early electronic sell-through (EST) model, Fithian feels, does not really encroach on the theatrical window.

Other than film supply and timing, “technology issues seem to be the most prevalent and challenging,” Fithian observes. “The reality is that we are coming to the end of a very successful transition from film to digital with over 90% of our cinema auditoriums in the U.S. and Canada having been converted. And more than 100,000 screens globally. We are nearing the end of the biggest technology change in the history of our industry. So do you think we can sit back, breathe a sigh of relief, ‘Wow, we’ve just spent $3 billion to dramatically improve the experience of our patrons’ and rest on our laurels? No, that is not the case. All the transition to digital has done is brought out even more ways how we can possibly innovate and bring our patrons even better experiences.”

For Fithian, those improvements include immersive sound systems, higher frame rates and laser light sources. “The number of technological opportunities just keeps expanding and that keeps us busy,” he reflects. “We have a very active technology committee of member experts and consultants who are working on all of these issues with the studios and product vendors and manufacturers.”

On immersive sound specifically, “we went out in front with our European allies at UNIC.” He mentions “putting down a marker…about wanting and needing to have an open standard in the evolution towards immersive sound systems because we simply cannot afford to have incompatible systems that won’t play all the product. Immersive sound systems are very expensive and they really have to play everything.”

On an encouraging note, “we are making some substantial progress,” Fithian affirms, providing an update on the February 2013 initiative. “Nothing has been completed yet, [but] the industry players are coming together and the concept of an open standard will soon be moving into SMPTE [Society of Motion Picture and Television Engineers].” In his view, that is a clear sign that “the industry understands that immersive sound needs to be an open platform. It does not mean there won’t be proprietary technologies—of course there will be—but we need to be able to have a single audio processor in the cinema that can play out any format to a speaker array in an open platform. And I think this is going to happen.”

Changes to the way in which films are promoted in movie theatres will be happening as well. “Our examination of marketing practices inside the cinema is relatively new and has engineered a little bit of controversy,” Fithian chuckles. “For years, the studios and the MPAA have set policies and parameters on how movies are advertised in cinemas. Some of those guidelines have made sense and others, we think, can be improved. So NATO and a task force of members have taken the initiative on testing ways to make film advertising in cinemas more effective.” He goes on to name topics like “shorter trailers and deploying advertising closer to the actual release of the film—instead of a movie that doesn’t come out until forever.” That way, the task force argues, marketing “can actually impact the consumers’ decision on buying tickets. With some of those tweaks,” Fithian believes “we can actually sell more tickets, which is obviously everybody’s goal. We have also taken input from our studio partners and are formalizing what the task force has come up with from their suggestions. Our final concept of what we want to implement will be issued soon.”

The shortening of trailers has been one of the elements in the soon-to-be-announced overhaul package. “Our feeling is if you can sell a movie in 30 or 60 seconds on television, you do not need 2.5 minutes in the cinema to do so. We proposed the ‘radical’ concept,” he says with audible irony in his voice, “to move the maximum length all the way from 2.5 to two minutes.” Admittedly, “for some of the creative types in Hollywood, it must have felt like we attacked their first-born child by trying to trim off 30 seconds. But we are adamant on the subject and believe pretty firmly that shorter trailers are more effective.” (On a personal note, this author hopes that trailer sound levels will be included as well.)

Further on the marketing front, we wanted to know how the long-discussed ideas for a generic moviegoing campaign are progressing. “Certainly, promoting the cinema experience is a priority for us,” Fithian confirms. “We are pretty far along in developing an all-industry campaign with some pretty comprehensive research [having been completed] on themes that consumers respond to.” NATO has requested official proposals from “advertising firms to develop a campaign and should be moving forward with some of the results in the next few months.”

The timing works in favor of the project, he feels. “We hope to take advantage of what has been a hot year-and-a-half for us. 2012 was a record-breaking year as well,” he adds. “We’d like to go out with some messaging that reminds consumers why they love going to the movies and gets them excited about doing it even more. If we can move the needle and get a fairly frequent moviegoer to go once more, and someone who doesn’t go very often to attend more, that will make a big difference in the business.”

Further consideration of both the industry campaign and film marketing guidelines was to take place during NATO’s annual meeting on Oct. 3. At press time, Fithian expected the amended in-theatre policies to be approved. “Then we have to take some time to explain what the final results were to our studio partners before we will announce them. On the public-relations side, the industry campaign will take a bit longer,” he foresees. “It is a matter of test-marketing the campaign in free media and to see what works and what doesn’t before we start putting money behind it. That’s more of a gradual rollout.”

In closing, we asked John Fithian for his outlook on how the remainder of the year will roll out. “The mystery of our business is you never truly know until Friday night, or increasingly Thursday night, when people start buying tickets. But the fall looks pretty strong and November is bound to be gigantic with four really big pictures coming out. With September and October looking strong as well, we are hopeful that we can keep up our record-breaking pace until the end of the year.”