More boom for the buck: Premium cinema technologies offer a competitive edge
The cinema business is booming and will continue to boom louder. Not only because of more subwoofers, but because audiences around the world are responding to a much more enjoyable experience.
The conversion to digital projection opened the door to many more ways to enhance the moviegoing experience. Now that projectors are all digital and projection booths are connected with a high-bandwidth digital network, theatres are considering new opportunities to use that digital infrastructure to enhance their business. The digital network brought new offerings such as alternative content, flexible advertising and programming, multidimensional sound systems, projection screens with enhanced viewing properties and motion-enhanced seating. Which of these enhancements will be worthwhile? The vendors and exhibitors are working hard to figure that out.
While trying to improve projection and sound, it is important to keep in mind the purpose of any of these improvements—attracting customers to the cinema. Now that any cinema auditorium can be a premium location, what makes it premium in the eyes of customers? It’s an important question when there is more than one cinema for a customer to choose. If one of those cinemas offers a better environment or a special feature that the customer enjoys, that cinema will get the business.
To be worthwhile, a new cinema technology should bring more customers to the theatre. First and foremost, the customer decides to see a movie. After that decision is made, the customer usually goes to the closest theatre with a convenient showtime. If that were all there was to the decision, then location would be the only influence and projection and sound technologies would not matter. But it is possible to influence that customer’s choice. The success of IMAX auditoriums in commercial theatres shows that customers will drive farther, and pay more when they get there, to see a movie in a premium environment. Exhibitors around the world are now competing with one another to offer their customers a more enjoyable experience at the cinema. Interior design, sound, projection and ticketing are all being upgraded to draw more customers to the theatre.
Which upgrades will be most effective at increasing attendance and justifying higher ticket prices? The list below ranks the important factors in how a customer chooses a cinema in order of their priority. Exhibitors considering an investment in new technologies and features for theatres should consider these priorities when making those decisions.
4. Visual presentation
The first is convenience. It is so important that all other influences become minor. Good access from well-known roads, easy parking, nearby popular restaurants, shopping and other entertainment venues combine to make a location a more convenient choice for theatre customers. Unfortunately, once a theatre is built it is very hard to move, so convenience is hard to improve. Recently, many theatres began offering reserved seating, which is one way to add more convenience. Customers now can buy their tickets ahead of time and not rush to the theatre to stand in line to get a decent seat in the auditorium. Yes, some customers will travel farther to take advantage of reserved seating. It’s not often that a theatre can be made more convenient, but reserved seating is proving to be a great way to do it.
Next on the list is comfort, which is another large category that includes cleanliness and overall appearance of the theatre from the lobby to the auditorium, restrooms and the concessions area. If the floor is sticky, if there are unpleasant odors, or if the carpeting is shabby and dirty, customers will not be comfortable. A theatre should also feel safe, so good lighting inside and out as well as controlling the behavior of the public can be important in some locations. Comfort is important to cinema customers and that is why large premium seats are now popular. Cinema operators who install larger, cushioned seating with more room between rows, perhaps with leather upholstery and motorized reclining features, are selling more tickets even though there are fewer seats. In the U.S., AMC is taking the lead by committing to install $600 million worth of luxury seats in their existing theatres. They are not only upgrading their premium screens, but all auditoriums in a theatre. Early indications are that customers are responding well.
Audio quality has always been more important than the visual presentation, so long as the image meets certain minimum standards. When customers leave a theatre and are asked what they enjoyed about the experience, “great sound” is mentioned far more frequently than is visual quality. Surround sound and large, powerful subwoofers make theatre sound hard to replicate at home.
The aspect of visual presentation that cinema customers mention most is the size of the screen. As long as the image is in focus and the brightness is over a low minimum, making the screen larger is the best way to impress customers. It is hard to add anything to the visual presentation that will impress theatre customers to make them remember the experience.
The quality of concessions has been hard to improve over the last few decades. The soda and candy are all provided by large corporations and are the same in every theatre. In general, the food offerings do not factor into the choice of a theatre, but this is also changing. More theatres are experimenting with in-house dining and alcohol sales. Some are finding these services are attracting more customers. While it can be hard to compete with an established popular restaurant, if the quality of the food is first-rate it is quite possible that customers will go to a theatre for a good dinner and drinks and the convenience of a movie at the same location.
When you put the new offerings together—larger projection screens, upgraded sound, and premium seats that can be reserved ahead of time—you get an impressive improvement in the theatre experience.
Another factor that may overwhelm anything else on the list is a powerful brand name. IMAX has been the leader in premium auditoriums for a long time and has built one of the most powerful brands in the world. Over the last few years, they moved that brand name into commercial cinemas, converting standard auditoriums into IMAX auditoriums. The results have been very impressive, with IMAX auditoriums booking many times more revenue than standard auditoriums of the same size.
While IMAX has been the leader in premium cinema technology for decades, digital cinema has leveled the playing field. In former days, the 70mm IMAX projectors were not practical for general cinema use. But today all cinemas use the same digital projectors that IMAX theatres use. It is much easier to create a premium cinema experience that cost millions only a decade ago.
Most exhibitors around the world are now creating their own branded premium cinema experience. With names like XD, RPX, Ultra-AVX, ETX, Big-D and others, exhibitors are drawing customers from a much wider area than before. Customers are responding to the higher-quality experience, bypassing theatres that are nearby to attend a premium theatre and paying more money for the experience. The effort has been worth it. Cinemark, for example, recently reported that 25% of their revenue in their recent quarter came from premium ticket sales for 3D, IMAX and their own XD presentations.
Digital-cinema conversion is not nearly over. Yes, the projectors have been changed, but now the rest of the auditorium is being upgraded to provide a complete premium experience. Soon, entire theatres will become premium destinations with every auditorium featuring luxury seats, enhanced sound and large screens. If a cinema is designed and operated well, moviegoers will feel they got their money's worth before the movie begins; and after the credits finish, the experience should be even more memorable than before—regardless of the quality of the movie. If the customer remembers the theatre more than the movie, then the theatre owner will gain a loyal customer.
For the last eight years, Rod Archer led product management at RealD.