Cinema: After a year of delays and uncertainty it’s still no time to die

The pandemic wreaked havoc on the cinema market. But as Tim Kridel found, it’s far from dead.

Everyone knows that Covid-19 did a number on the cinema market. But the numbers themselves look more like a near-death experience.

“We reckon that US$12.5 billion was taken in box office revenue last year compared to US$42.5 billion in 2019,” says David Hancock, OMDIA senior research manager for cinema. “They lost at least US$30 billion because we think the market would have been bigger in 2020. It’s 50-50 between exhibitor and distributor, so [exhibitors] probably lost US$15 billion in box office [plus] concessions and advertising revenue.”

“We think 2023 will be the time to get back to, broadly speaking, 2019 levels,” Hancock says.

Less revenue means less money to spend on new projectors and other AV systems, right? Yes, but in many cases, no.

Take Saudi Arabia. In 2017, the kingdom began allowing movie theatres and invested roughly €27 billion in entertainment complexes. It’s an example of how some exhibitors had upgrades and new construction that were too far along to pause or abandon.

“The economic restrictions for those builds were already at such a pace where they couldn’t really stop,” says Brian Claypool, Christie executive vice president of cinema. “We actually did a pretty good business in the Kingdom of Saudi Arabia during 2020. Africa and the Middle East still have some room to grow.”

China is another hot market, with February ticket sales at record high of US$1.7 billion.

“When they opened back up, they got all their theatres up and running, and they even built quite a few new theatres last year,” says Mark Collin, Harman Professional senior manager for global cinema. “They own almost all of their content, which means they're not dependent on Hollywood. That really is the key.

“The other part is that China doesn't have as much streaming as other countries do. Put all those things together, and that’s why China's really taken off.”

Even so, some vendors expect more growth to come from mature markets rather than ones that have spent the past several years in a flurry of new construction.

“The larger volume will certainly be the refresh that will happen in established markets over the next few years,” Claypool says.

The homegrown-content factor isn’t limited to China. It’s also noteworthy considering all of the handwringing over No Time to Die, the James Bond flick that’s been postponed repeatedly, most recently to September 2021 in the UK.

“Other countries that have their own content will start taking off very, very quickly once they open up,” Collin says. “Australia used to have only 10% Australian-made content, but now some theatres are at 25-30%, so they don't have to depend as much on what Hollywood does.

“It's the same thing in India, South Korea, Japan and the European countries. As soon as they open up, they won't have to necessarily wait for Hollywood. They will definitely start promoting their own content and building and upgrading their theatres.”

 

Freshening up

Whatever they’re showing, exhibitors have several technology refresh options. Some will get second-hand projectors and other gear on the cheap from peers that went out of business. Others will retrofit their lamp set-ups with lasers.

Laser offers a lower total cost of ownership (TCO), which is an obvious plus when ticket, concession and ad revenue are lean. But laser’s picture quality also is one of the many tools that exhibitors will use to compete with one another.

“Differentiation between exhibitors is going to be a key part of it,” Claypool says. “Higher dynamic range, better contrast, better image performance, brighter images, higher frame rates. We see innovation still happening on the top end of the portfolio.”

"We actually did a pretty good business in the Kingdom of Saudi Arabia during 2020. Africa and the Middle East still have some room to grow." - Brian Claypool, Christie

Innovation also could help exhibitors compete with streamers such as Disney+ and Netflix by providing experiences that even the best home theatres can’t match, from football-pitch-size screens to 4D.

“For example, Barco Series 4, our next generation of laser projectors, makes it easier for any theatre — from independent cinemas to multiplexes — to offer audiences an experience that cannot be replicated from their home,” says Carl Rijsbrack, Cinionic chief marketing officer. “We are combining our leading laser solutions with new ‘sign-up’ as-a-service models to provide a range of solutions and services that remove the barrier to entry created by new technology investment. It’s about delivering the flexibility to get ready for tomorrow, today.”

 

Strike up the band

Possibly the only sector harder hit than cinema is live events. But some people are finding opportunities by combining them.

One example is Jonny Tosarello, who spent the past decade as the lighting, video and set designer for Lynyrd Skynyrd. In March 2020, he and a partner re-opened a Midwestern US drive-in that was abandoned in 1980. Besides classic films, it now also doubles as a concert venue. Hence the name: Rock 'N' Roll Drive-In.

Cinema concerts have been around for decades, but they’ve usually been on screen, meaning a live or recorded show broadcast over a closed network to theatres. The pandemic expanded that model to tours party because vehicles inherently enable social distancing and partly because many artists jumped at any opportunity to get back in front of live audiences.  

Before playing a Rock 'N' Roll Drive-In concert in October, country musician John Schneider told a local newspaper: “A lot of my traveling music friends, they say they’re coming to the drive-in, but they’re really not. They’re doing a concert on the screen from somewhere else. To me, that’s not really coming to your drive-in, your town.”

After the pandemic, will drive-ins become a permanent stop for more tours? Or will they return to traditional venues such as amphitheatres?

“I think it depends a lot on what artist it is and what their production requirements are, not to mention capacity of the venue,” Tosarello says. “Obviously your typical drive-in’s capacity is going to be much less than your average amphitheatre and/or arena. So depending on who it is and what size venue that production is, programming and routing really makes those decisions. It all comes down to math. 

“How many cars can the drive-in hold? How much can you afford the ticket price per car/person/market? How much does the artist and its production cost?”

Another factor is whether a particular drive-in has the infrastructure that an artist and its promoter need. This is a potential opportunity for rental-and-staging providers.

“Most drive-ins won’t have the infrastructure to handle a tour system,” Tosarello says. “So what does the tour do with all of their sound and lighting equipment just sitting in their trucks, being paid for? Is the tour only running the festival circuit and using house sound and lighting systems that most drive-ins don’t have? [Then] someone needs to provide a mobile or festival stage, sound and lighting.”

In May, Rock’n’Roll Drive-In will host an event that’s providing everything: a stage, sound, lighting, cameras, backline and crew.

“They need a feed to the house projector and a few other things here and there, but nothing major,” Tosarello says. “They have designed a tour around drive-ins theatres knowing that they aren’t set up to properly host live entertainment.

“I think most tours will enjoy their experience at Rock’n’Roll Drive-In as we have some extra bells and whistles most drive-ins don’t. We have a fiber optic/Dante network that ties our laser projector, stadium sound and DMX lighting together, making it quite easy for tours to incorporate any of these into their production.”

 

Cinema as festival

The drive-in phenomenon isn’t limited to the US.

“In Germany, for example, there are hundreds of new drive-ins,” says OMDIA’s Hancock.

The Great British Drive In (TGBDI) features the country’s largest drive-in LED screen: a 100m2 ROE MC7-H 7mm LED screen from iMAG Displays that’s part of a system set up by Graymatter and staging company NoNonsense. Unlike the weekend-only schedule that most drive-ins keep, TGBDI has enough content and customers to run seven days. Besides films, it hosts quiz nights and live entertainment such as comedians and music. What were the big draws?

“It was all about the feel-good movies,” says Craig Wilkinson, one of the TGBDI founders. “We were disappointed that the classics didn't gain as much traction as the musical numbers, but given our situation in 2020, those feel-good movies and making people laugh through comedy were an essential part of our year.”

As with concerts, drive-in operators face the question of whether audiences will head back indoors for films over the long term. Time will tell, but ultimately it’s about providing an experience that people can’t get elsewhere — inside a multiplex or in their living room.

“We had audience members comment so many times how cool the experience was, pandemic or not,” Wilkinson says. “We had a real festival vibe. The fact that you park up and hang out by your car means you don't have to walk a great distance to the car park or pay for parking elsewhere. We feel if produced correctly, drive-in's can help films continue to be released and experienced in a cinema setting with confidence but also offer a quality entertainment experience.”

More than blockbusters

Fathom Events also sees opportunity in concerts — more so indoors. Jointly owned by AMC, Cinemark and Regal, Fathom once brokered a Prince concert that was fed live from Staples Center in Los Angeles to theatres.

Granted, that was before music streaming and downloads were the norm. But the event is noteworthy today as an example of the kind of outside-the-box thinking that could be key for the success of exhibitors long term — and for the AV firms serving them.

“Everybody who came to the theatre got a free CD,” says Ray Nutt, Fathom Events CEO. “That was a huge attraction. Essentially what we did from a business model perspective is bake the cost of the CD at wholesale price into the price of the ticket. They were the first to get it. They loved it.”

Like drive-ins, indoor theatres can provide in-your-face productions that home theatres can’t match. This outlook bodes well for the vendors and integrators proffering the AV systems capable of delivering those experiences.

"We think 2023 will be the time to get back to, broadly speaking, 2019 levels [of box revenue]." - David Hancock, OMDIA

“Everybody has a front-row seat at a concert or sporting event in the movie theatre,” Nutt says. “We’re in discussions with several A-list artists right now,” Nutt says. “We’ll see where that goes. It’s kind of a timing thing. I think they’re also champing at the bit to get into arenas and stadiums, but right now, the capacity limitations on those is pretty strict. This may be a window of opportunity for them to perform in our theatres.”

Fathom distributed 43 titles in Q4 2020, including anime, arts, inspiration and classics. This mix shows there’s an ample audience for yesterday’s blockbusters and other curated content.

“We had a very successful horror series,” Nutt says. “The horror audience came out on Halloween. We found our anime audience came out, as well.”

The arts audience has been slower to come back.

“The average age of the Metropolitan Opera fan is 73,” Nutt says. “Once they get vaccinated and that gets open, I think you’ll see that crowd come back out quite aggressively.”

Photo credits: rodwey2004/Shutterstock.com, Crystal Eye Studio/Shutterstock.com