One of the inevitable consequences of HD video on cheap in-home devices, especially when it is played out on larger and larger, flat screens, is that the Cinema as a launching pad for films will change radically.
We reminded ourselves of just how bad the multiplex experience was by going to the cinema last night, and reinforced that opinion, first voiced in our Danger on the Digital Horizon paper, that the experience leaves more and more to be desired.
It’s fairly easy to note that Cinema is making up less and less of the total income of major motion pictures, and that this is partly due to the growth of DVD revenues, which are now flattening out. But given that the opening weekends at Cinemas are being massaged by opening in a wider number of countries and locations, the appearance is that Cinema revenues are growing, when they are not.
One of the crises that Cinema owners are going to reach at some point will be the diversification of their services and a switch in focus from being ‘content’ led to being ‘customer’ led. They will have to make the customer enjoy the cinema more, regardless of what’s on, and worry less about what films they are going to be given.
The outbreak of online Cinemas, whereby free to air film viewing is offered with advertising support, will further dilute the need for Cinemas. Already Cinema is now merely a signal that the film is ready to be released and finally make money, rather than the bulk of revenues which it used to bring for a film.
What happens if Cinema revenues fall from the 40% of so that they are now of movie total revenues to perhaps as little as 20%, or less. Will it still be worth creating a ‘point in time’ promotional spend, to kick off that big weekend.
Gradually as more and more online film entrants come into the market, direct contact with their customers will cheaply and efficiently nail the floating viewer and tell them what’s been released this weekend, for online viewing. Once the online viewing figures begin to dent the Cinema going public, then the writing will be on the wall, and existing revenues will not sustain Cinema chains and many will collapse.
So what can they do about that? Well one thing is to begin building their own relationship with their customers, and start offering them a little more of what they want. We have never seen a suggestions box in a Cinema, but some way of consulting with customers is needed urgently.
And ‘customer’ orientation means more comfortable seats, drinks delivered to your seat, customer controlled comfort breaks, smaller screening rooms, private screening parties, genre nights, 24 hour flexible screening of classics, self serve units like banking counters, and voting to source the next set of films. The marketing will mean collecting clients emails, online ticket ordering and seat selection which actually works, reminders of the coming season, and budget bundles and service clusters, and staff that can look after your kids, food that is edible, the removal of the noise and expense of arcade games in the foyer.
This will present the major chains with a huge investment problem, needing yet another infrastructure rebuild (new seats, more but smaller screens, an increase in screening areas), which will make them less and less profitable in the short term. Also there will spring up innovative smaller chains that get this right, and these will drag people away from major multiplexes. But the effect on films is even more interesting.
If the building is being put to use in a more interesting way which suits customers, and if the selection of films is left to the customers, not the supply chain (studios) then better films will last longer and be called back time and again, and make more money, and weaker films will be totally ignored and crash and burn. This itself will be a drive to getting rid of Hollywood formulas and an incentive to testing out story lines on UGC sites, using poorer production values, and internet audiences.
Promotion and advertising costs could potentially fall dramatically, because the customer relationship development of Cinema chains would lead to direct connections with the Cinema-going public. Transaction costs, staffing, everything would come down in costs.
And what would be the fate of advertising in Cinemas. Do people actually LIKE advertising before Cinemas. They certainly love the trailers and the large dark room experience and collaborative viewing. How long would it be before someone tried out advertising driven, free to air cinemas. Perhaps that would be Google’s contribution to the art form.
But whatever happens, staying the way we are now will lead to mass exodus from the Cinema as a genre, something my sore back can testify to having spent one evening in a Cinema chair, and that will create a more urgent need for films to be successful over the internet, which is where we came in.