Daily Cinema Digest – Tuesday 15 April 2014

Berwick cinema

The Wall Street Journal examines the plight of small-town single-screen cinemas that are unable to make the costly transition to digital in the article ‘Is Film the End of the Road for Small Cinemas?‘. It highlights one particular cinema near Scranton, Pennsylvania, facing imminent death-by-digital.

Hollywood’s major studios are in the final days of distributing movies on film reels and moving to digital distribution sent via hard drives or satellite, a method that is cheaper for studios but requires significant investment by theaters in new equipment. The conversion means theaters like Mrs. DiAugustine-Bower’s Berwick Theater could fade out for good.

The theater, about 50 miles southwest of Scranton, has raised only $6,000 so far, a difficult amount to earn by selling baked goods and old movie posters in an economically depressed town.

“I got a backlash from patrons when I mentioned raising ticket prices” to $5 from $4, said Mrs. DiAugustine-Bower.

But help has come for some from an unexpected quarter: Indian digital cinema integrator Scrabble.

About 87% of the 5,762 theaters in the U.S. are now digital, according to the National Association of Theatre Owners. The remaining 13% is mostly made up of one-screen independents, in rural communities with no multiplexes for miles.

More than half of the approximately 600 drive-in theater screens in the country have converted so far, according to the United Drive-In Theatre Owners Association.

Scrabble Ventures LLC has begun leasing digital projectors to small theaters that can’t afford a lump-sum payment. Chief Executive Ranjit Thakur said the company has converted 370 theaters so far with more than 400 scheduled over the next three months.

Kickstarter, the Colorado State program, Kiwanis International club, state department funding and local donations are ways that some of that other cinemas have managed to raise funds.

Business

LAemmle Santa monica 4

USA (CA): As we highlighted in our item on ArcLight coming to Santa Monica, existing cinemas there will have to shrink to compete.  Hence Laemmle’s 4 screen will ‘expand and contract’.

The Second Street cinema currently has four screens and about 1,100 seats but a proposed makeover would add two screens and drop the seat total to below 500, said Laemmle CEO Greg Laemmle.

The largest theater would hold about 150, which is about the capacity of the current smallest theater. Two mezzanine-level theaters would seat about 35, Laemmle said.

“The row spacing is better and we believe the sight lines will also be better,” Laemmle said. “The added screens provide flexibility to show more movies for longer.”  LINK

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America’s Greatest Cinema Export to China Is Under Threat (Not Movies, Popcorn)

Chinese and american cinema audiences

Could Chinese authorities be about restrict imports of the quintessential multiplex staple imported from the United States?

No, we are not talking about movies or Hollywood; the greatest American export success to Chinese cinemas does not come from California but from the fields in Nebraska.

Different Attitudes – Changing Habits

Nothing illustrates the difference between Chinese and American cinema goers more than the respective attitudes to 3D and popcorn. While American audiences are increasingly turning their back on 3D, their appetite for concessions appears undiminished, to the point of circuits like Marcus and Laemmle installing larger seats to accommodate the expanding backsides.

Meanwhile, the challenge for Chinese cinemas is how to get people to consume more concessions to match their seemingly insatiable appetite for 3D films and thus increase average revenue per cinema visit. But a change is already underway.

The importance of popcorn to the growing Chinese cinema sector was highlighted by the recent revelation by Dalian Wanda Group that nationwide popcorn sales for its Chinese cinemas totaled 390 million yuan (USD $62.8 million) last year.  This amounted to 72% of total concession sales and 9.5% of its total earnings of 4.1 billion yuan. (By way of comparison Wanda’s American chain AMC earned USD $1,847 million from ticket sales and USD $787 million from food and beverage in 2013, with concessions thus representing over 28% of total revenue.)

The push to pop in China is understandable because the ingredients for a bucket of popcorn cost just 3 yuan (US$0.48) while selling for 20 to 30 yuan (USD $3.22-$4.83). Huang Qunfei, general manager of the Chinese exhibitor Beijing New Film Association,  was quoted by Xinhua as saying, ”It is very common to have an 80-percent profit margin in selling popcorn due to its low costs. Although tickets sales make up the largest share of revenues, popcorn and snacks can sometimes contribute more to profits.”

Sales of popcorn accounted for as much as 20% of the total revenue of Chinese cinemas turnover in 2013. Wanda is the largest but not the only circuit benefitting from growing popcorn demand. Quoted in the Want China Times:

An executive at the Beijing UME Cineplex stated that popcorn and beverages were usually the only derivatives sold at domestic cinemas and that the complex’s popcorn sales accounted for 10% of its total revenue of at least 30 million yuan (US$4.8 million) last year.

However, the issue of concessions is complicated by the increasing tendency by Chinese cinemas to bundle cinema tickets, popcorn and sodas as one combo.

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Daily Cinema Digest – Monday 14 April 2014

4D_4DX_rumble_seat

The Wrap takes a look at the growth of ’4D’ offered by the likes of D-Box, CJ 4DPlex and MediaMation and whether there is a business case for it. Not if it shakes the popcorn out of the tub, it seems.

Indeed, some theater owners have experimented with the technology, only to decide that it is best served up in small doses. Rolando Rodriguez, president and CEO of Marcus Theaters, installed 30 motion seats in one of his fifty theaters. While the seats are popular features when paired with big-budget blockbusters, he has decided not to invest in the technology. The $8 surcharge the 4D seats carry limits their appeal, he said.

“We’re investing in other amenities that play better with our customers,” Rodriguez said. “We’re pleased with the performance, but from our perspective, investing in things like large screen theaters and in-theater dining is more important.”

But other exhibitors and manufacturers counter that this is more than just a novelty act.

“We’re finding that people turn into aficionados,” Michel Paquette, vice-president of marketing of the 4D manufacturer D-Box Technologies, said. “Once people try it, if they like it, they usually get hooked.”

Likewise, Heath Thomas regional manager of the Goodrich Quality Theaters, has placed 4D seats in 16 locations and reports they are a big hit with audiences between the ages of 18 to 30.  LINK

 Odeon logo

UK: UK/European cinema major Odeon-UCI saw its revenue and profit drop sharply in the past year, dragged down by the lack of a Skyfall-size hit and by its Spanish arm.

Odeon’s earnings before interest, tax and other charges dropped by 24 per cent to £69.2m while sales fell five per cent to £706.7m.

In Spain, where Odeon operates 43 cinemas, Odeon’s market volume fell 15 per cent last year.

“In 2014, there are some early signs that the economy may be turning: unemployment has started to fall slightly and retail sales have started to grow,” Odeon said, adding that it has now grown its Spanish market share to 21 per cent.  LINK

Odeon’s results do not include its property arm.

NCR logo

USA: Marcus Theatre is deploying the full range of services offered by NCR Cinema software.

NCR Corporation (NYSE: NCR), the global leader in consumer transaction technologies, today announced that Marcus Theatres®, a division of The Marcus Corporation (NYSE:MCS), has now deployed NCR’s full suite of cinema and restaurant solutions to improve its business operations and enhance its customers’ movie experience. Marcus Theatres has been a long-time customer, using NCR’s mobile and fixed point-of-sale (POS) systems, indoor kiosks, takeout and delivery software and NCR MovieTime mobile application.  LINK

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Vista Continues Strategic Growth and Diversification With Stake In MACCS

Murray Holdaway, Bert Huls and Mathieu van As

(From left): Murray Holdaway, Bert Huls and Mathieu van As

One of the more important stories to come out of this year’s CinemaCon is one that didn’t even get announced until more than a week after the show ended. By then anyone who follows such news was already well aware that the cinema exhibition software firm Vista Entertainment Solutions had acquired a stake in MACCS International, the developer of market leading distribution software. We’d like to summarize why we believe this is a significant industry development.

As I noted just before this year’s CinemaCon, I have a great deal of respect for Murray Holdaway, Vista’s Chief Executive, and Derek Forbes, the company’s President of North America. Over nearly twenty years they, along with a growing team of smart executives, have taken the New Zealand based outfit from being a small player in a crowded field of cinema point-of-sale vendors to being the dominant exhibition software solutions developer in the space. In the process, Vista has left a wake of once prominent entities such as Splice and Titan Technologies.

In all fairness, Vista still faces a field of new and perennial competitors. They include, though are not at all limited to, regional and worldwide entrants such as Allure Global, Compeso, Diamond Ticketing Systems, Jack Roe, NCR, Omnico, Omniterm, Ready Theatre Systems, Retriever, TicketNew, TicketSoft and Vendini.

What has helped set Vista apart from some of these rivals is how the company has been able to think beyond its own systems and offerings to see opportunities in related or adjacent markets. They have managed to avoid pitfalls, even when enticing distractions beckoned with the promise of future riches. A great illustration of this would be Vista’s decision to not develop a theatre management system (TMS) for digital cinema installations. Such software is generally forced upon exhibitors by integrators and has become commoditized, save for a few solutions offered by Arts Alliance Media, Cinedigm and Unique Digital.

At the same time, Vista has been adept at increasing its revenue through a series of wise decisions about building or acquiring product offerings that have expanded its customer base. For instance, the company developed Veezi as a cinema management and ticketing system for small and independent cinemas; a market it didn’t serve and one that couldn’t afford Vista’s current solutions.

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Daily Cinema Digest – Friday 11 April 2014

Benjamin Zeccola Palace Cinemas

A row has broken out in Australia about the high price of cinema tickets (which we have written about before) and its relation to, or supposed-justification for, film piracy. Quoted in the Brisbane Times,

The chief executive of Palace Cinemas, Benjamin Zeccola, said cinemas were just trying to stay in business by increasing the top ticket price to $20.

“If you took away screen advertising, we wouldn’t have a cinema that survived,” he said. “If you took away the bars, we wouldn’t have a cinema that survived.”
Jamie and Cersei Lannister.

Mr Zeccola, whose chain fully or jointly operates 22 upmarket cinemas around the country, is upset at widespread claims that the cost of movie-going excuses illegal downloading.

Highlighting Australia’s high labour costs, Zeccola points out that Palace staff are paid AUS $25.60 (USD $24.10) per hour, compared to AUS $15  (USD 14.12) for London staff  (just don’t tell him London’s Ritzy staff are going on strike today over low wages).

Dumaresq Street Cinema in Campbelltown

Locations is probably the second highest expense, as this family-run cinema in a suburb of Sydney makes a virtue of its cheap tickets (all shows are AUS $6 – USD $5.65) and affordable concessions:

Forget spending hundreds on an evening at the movies – a trip to Dumaresq Street Cinema in Campbelltown would rarely cost a family of four more than $30.

A serving of popcorn will set you back just $1.50 at the family-run cinema, as will a small drink.

In fact, the three-cinema premises has only ever raised its prices twice since it was taken over by the Moore family in 1992 – once with the introduction of GST and again in recent years, when all tickets – adult, child and otherwise – were set at $6 for any session.  LINK

Business

Blitzmegaplex

Indonesia: South Korean multiplex major CJ CGV has strengthened its minority stake in Indonesia’s second largest cinema operator, confirming the country’s significant growth cinema potential.

South Korea’s largest cinema chain CJ CGV has advanced into the Indonesian market following China, Vietnam and the United States, the company said Friday.

CJ CGV said it took over a 14.75 percent stake in Indonesia’s theater chain Blitzmegaplex after it was listed on the local stock exchange on Thursday.

Blitzmegaplex opened its first location in Bandung in 2006 and has continued to expand each year, now running 11 theaters with a total of 86 screens in six cities around the country.  LINK

Meanwhile Blitzmegaplex has announced that it will use the proceeds from its recent IPO to open three more multiplexes this year.

The cinemas would be built in Yogyakarta; Bandung, West Java, and Balikpapan, East Kalimantan, costing around US$2 million for each cinema, Graha Layar Prima’s marketing director, Ferdiana Yulia Sunardi, said on Thursday.

“Since becoming a public company, we will be more aggressive in our expansion plans, starting this year,” Yulia said during a press conference.  LINK

Reuters informs us that “PT Graha Layar Prima, the operator of movie theatre chain Blitzmegaplex, plans to develop 30 new cinema complexes by 2017, with a total investment of up to $60 million, said CEO Bernard Kentz Sondakh.”

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How the Gates Family Foundation Saved Small Town Cinemas from Death-by-Digital

Fox Theatre Walsenburg

As the clock ticks down for the end of 35mm film prints, so the race is on to save the last few small town cinemas that cannot afford the switch to digital. We are now talking months, not years.

In the United States funds typically come from one or a mixture of three sources, all of which we have profiled here at Celluloid Junkie in the past: local community fund-raising, on-line crowd funding and even grants or donations from the local Chambers of Commerce. There was even an effort to tap the Pepsi Refresh Project a few years back, while Honda did something similar for drive-ins.

But philanthropic foundations have had a relatively low profile until a recent effort got underway in Colorado. While charities alone cannot save all the small cinemas across the US, the experience in the Centennial State shows that they can provide critical seed funding. Over the next 12 to 24 months, this can mean the difference between life and death for thousands of small town cinemas across the United States.

Colorado’s Rural Theater Digital Conversion Grant

The key to the success of Colorado’s venture has been the bringing together of three critical actors: State authorities,  non-profit bodies and private charities. As outlines last year in The Denver Post:

A number of foundations, the Colorado Office of Economic Development and International Trade, and the Denver Film Society have teamed up to create grants ranging from $10,000 to $30,000 for theaters converting to the new digital equipment required by the film industry.

Film distributors, which no longer distribute traditional celluloid prints, have converted to digital format. The new distribution method requires digital projectors, which cost an average of $60,000 to $70,000 each.

The state said many rural theaters can’t afford these projectors and will probably close, threatening the arts, culture and fabric of the community.

The last sentence has been crucial in mobilising government, business and philanthropic support, as we will see.

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Daily Cinema Digest – Thursday 10 April


Kulturhuset stockholm

Three stories from my native country Sweden, to start off the Daily today. Click on the link if you are using Chrome browser (as 35.40% of you are) and you get the option of an automatic translation.

Stockholm’s Culture House is taking back the running of its small in-house cinema from SF Bio. More varied film selection and ticket prices are to be expected.

Kulturhuset tar över Klarabiografen från SF vid årsskiftet. Nu väntar en storsatsning på kvalitetsfilm och språklig mångfald sju dagar i veckan – till varierande biljettpriser.

I måndags sades avtalet med SF upp. Det går formellt ut sista december i år. På nyårsdagen 2015 inleds den nya bioverksamheten i Kulturhuset Stadsteatern på våning 2.  LINK

The decision to hand over the running of the cinematheque had previously been heavily criticised by the Swedish Film Institute and other cinema chains.

SF Bio popcorn

Concessions – SF Bio is revamping its concessions menu: by changing the name of combo deals, abolishing ‘up-sizing’ and increasing the price by SEK 5 (USD $0.77).

Mellanläsk. Stor popcorn.

I SF Bios kassasystem heter den beställningen ”Klassiker mellan+” och kostar 64 kronor för kunden.

Men från och med 14 april ska en mellanläsk och en stor popcorn kallas ”Superklassiker” och kosta 69 kronor, enligt ett internt mejl som Nöjesbladet tagit del av.  LINK

Bio Maxim

Cinema Opening/Closing – The Bio Maxim cinema in Helsingborg is NOT closing, but the the landlord will be taking over the running from the current operator who is unable to make the switch to digital.

Ryktet om Bio Maxims död är betydligt överdrivet. Ägaren Max Klintman har visserligen gett upp men nu lovar Peter Billquist, vd i bolaget som äger fastigheten: “Jag ska se till att Landskrona har en bio även i framtiden”.

I dagarna stod det klart att Bio Maxims ägare Max Klintman efter en längre tids ojämn ekonomisk kamp kastar in handduken. Gjorda investeringar och nödvändiga framtida investeringar blir alltför kostsamma. Därmed skulle ridån på Maxim gå ner för sista gången i slutet på april.  LINK

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Latin American VPF Deals Hide Regional Problems – UPDATED

Butch Cassidy and Sundance Kid

[Ed: We have received lots of feedback and updated info from readers fram and active in the region. ¡Muchas Gracias/Muito Obrigado! The article has been UPDATED THROUGHOUT as a result.]

Much like Butch Cassidy and the Sundance Kid headed to Bolivia after they had run out of banks in the Wild West to hold up, so too digital cinema integrators have moved on to Latin America, now that virtual print fee (VPF) coffers are empty in North America and Europe. Yet despite the flurry of Latin America-related VPF press releases at the recent CinemaCon, there are fundamental issues that will make it a challenge to migrate the continent to digital cinema.

We have already discussed the press releases from CinemaCon 2014, including those  related to Latin America, so for a full breakdown have a look HERE. We will not provide a full analysis or analyse each deal, but try to look at the context and outlook for the region, as it struggles to catch up with the rest of the world in going digital.

As we pointed out during ShowEast 2012 it was the last chance for Latin American countries to get a VPF deal and we are unlikely to see many more major deals after this one. Gary Johns from Sony Electronics commented then that their VPF deals for North America were available until 31 March 2013, i.e. almost exactly a year ago. While international deals do have a little longer to run, studios like Twentieth Century Fox have politely but firmly informed exhibitors, distributors and (perhaps most importantly) government representatives in Brazil and elsewhere in Asia that the end of 35mm prints is nigh.

GDC at the Forefront – of press release announcements

It is noteworthy that deployment entities like Scrabble and GDC have signed separate VPF deployment deals with Hollywood studios (here and here respectively), highlighting that the continent could not easily follow deployment patterns and terms even for non-US or EU territories such as India and China. Of these two entities GDC has been the more active, with no less than five announcements relating to Latin America, while Scrabble has been largely silent recently. So what’s the motivation to be aggressive on the VPF front in Latin America?

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Daily Cinema Digest – Wednesday 9 April 2014

ArcLight Santa monica

Normally we bury cinema openings further down in the Daily, but this merits top billing.

Back in January we wrote about how premium cinema operator ArcLight had set its sights on Los Angeles’ Santa Monica market and whether this would create a screen glut.

Now news reaches us that ArcLight is already planning a second multiplex in downtown Santa Monica, which would include an Imax screen.

ArcLight Cinemas is in negotiations with City Hall to put a theater on the land where Parking Structure 3 currently stands — on Fourth Street at Arizona Avenue, said Andy Agle, director of Housing and Economic Development.

A preliminary agreement that would allow ArcLight to start drawing up official plans could go before City Council later this month.

At that same meeting, council will consider final approval of another ArcLight theater proposed for the third level of the Santa Monica Place mall. Those plans have been in the works since last year. The Santa Monica Place theater could include up to 13 screens and 1,500 seats.  LINK

Meanwhile other cinemas in the area, such as Laemmle, are reducing seating capacity and expanding concessions and cafe areas instead. AMC is also expected to reduce the number of seats.

Business

Russian cinema

Russia: Rather than introducing a quota on foreign films, as had been previously mooted, it looks like Russia will instead introduce a levy this summer.

The government plans to popularize Russian films on the home market by introducing extra charges for Western movies and granting tax breaks to domestic ones may do no more than mildly handicap foreign competitors while failing to meet the industry’s underlying needs.

The suggestions, published Monday on the government website, are directed at increasing the presence of Russian films in theaters, Prime Minister Dmitry Medvedev said at a meeting of the council on the development of national cinema in late March during which the measures were discussed.  LINK

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Daily Cinema Digest – Tuesday 8 April 2014

Imax China

Imax is to sell 20% of its China business to two Chinese-based entities in return for USD $80 million and a firmer foot hold in the world’s soon-to-be largest cinema market.

IMAX Chief Executive Richard Gelfond said in an interview that investment fund China Media Capital and private-equity firm FountainVest Partners would pay $40 million each for 10% stakes by early 2015. He said the deal gives IMAX local partners who will open up expansion opportunities in one of its most important markets.

The investors will shepherd a public offering of shares of the China operation, IMAX China Holding Inc., in the next five years, Mr. Gelfond said. IMAX China will be paying IMAX Corp. an ongoing trademark and licensing fee for the right to use the IMAX trademark in China, a spokeswoman said. IMAX China is aiming to list in Hong Kong but will be positioning itself to list on other China exchanges, such as in Shanghai, in case that doesn’t work out or a better opportunity arises on the mainland, a spokeswoman said.  LINK

Not only will this allow for expansion in China, but Imax must also be hoping to neutralise the nascent threat from CFGS - though this is not mentioned in the above article.

NAB

Barco laser projection

USA (LV): Lasers are coming! This follow-up article from David Keene provides excellent insights from the pre-NAB Cinema Summit on what is happening on the laser front.

The first shots were fired on Saturday, in the session “Laser Illuminated Projectors: What’s New and When Will They Arrive? Bill Beck, President of BTM Consulting moderated panelists Pete Ludé, CTO of Mission Rock Digital; Goran Stojmenovik , Product Manager Laser Projection, Barco; Richard McPherson of NEC Display Solutions; and Don Shaw, Senior Director of Product Management for Entertainment Solutions at Christie.

The panel was straight forward– not your typical panel involving a lot of speculation and vague talk of coming solutions. It was three major projector manufactures explaining their new Laser projectors. And surprisingly, this was not a “me too” exercise: each company is launching a very different kind of Laser projector and/or 3D solution into the market this spring.  LINK

You Will Be Amazed To Find Out What The Differences Between The Different Laser Projector Solutions Are!

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