Digital Dreams - is the Picture Still Blurred

SAWA Newsleter October 2008

by Peter Seabrook-Harris

Regional Sales Director Pearl & Dean

UK Report on the recent Screen International Digital Cinema Conference  

 

London September 25th 2008    

 

The Background

Having seen the draft agenda, I was frankly a bit surprised to see that nobody from cinema advertising appeared to have been invited to speak so naturally I was soon onto the organizers and eventually successfully lobbied for a slot so that our voice could indeed be heard. Cinema advertising is not just a vital source of revenue for most exhibitors but our industry also provides vital research & insights too of course into audience trends etc – a vital area of expertise when seeking to grow and develop these audiences. I appreciate that what follows is essentially a UK perspec- tive but hopefully some of this will strike a chord in your own markets and may be helpful in helping shape your own strategy. 

 

Personal Overview  

The general mood was a notably weary, collective groan from where I was sitting with a distinct feeling of “Oh dear, here we go again!” For many, the same old arguments & issues ping ponging back and forth and, whilst at least a common industry digital projection standard has emerged under the stewardship of the DCI, the ever complex issue of just who pays what, to whom and for how long remains as uncertain as ever. The recent global credit squeeze (combined with fairly flat admissions here in the UK of late) has now brought this all into sharper focus I guess as exhibitors find it even harder to justify let alone attract the sheer scale of financing required to convert wholesale over to digital with anything like the VPF deals being currently discussed.  As ever there is a distinct evaporation factor it seems as regards what is announced and what actually happens with all things to do with D-Cinema  - with those most likely to gain from the switch-over of course being the keenest (and yes most vocal)  advocates. 35mm film projectors last for donkey’s years and have an operational history that can be translated into a viable and familiar CAPEX plan. The lifespan of all things digital on the other hand is a bit like your mobile phone - can you seriously imagine still using the same one from 10 years ago let alone 20 or more? Of course the reality is that whilst your mobile phone is perhaps 3 years old, the write down or lease for some of this digital projection gear is maybe 10 years. And banks would probably baulk at more than 5 years for a financing package? It’s this reduced potential lifespan combined with the high cost of the switch-over which is stalling things right now as much as the much debated VPF.   In desperation perhaps, 3D is now perhaps being viewed as a Trojan Horse to “force things along” with the lure of sev- eral big budget movies being slated in this format for next year. The UK’s FAME cinema research confirms that whilst there is indeed an active interest in seeing 3D movies, almost half the respondents also claim it will make little difference to their cinema going habits.  Therein lies the rub. The average cinema goer will not notice any massive change in their cinema experience unless they view 3D (which will never be a major % of total releases). They will certainly be adverse to paying any significant admission premium unless it’s a must-have event such as a major sporting or rock/pop event etc. 

 

Current situation

Imagine you have a nice 35mm railway set which does its job but you want a shiny new Digital version. In a perfect world you’d just pull a long lever in the junction box and send all the trains and passengers happily along a bold new digital highway. Unfortunately we can’t do that. We must build the digital layout alongside our existing track and it will take quite a while before we have enough track & traffic to complete it. Running two lay outs will be a costly but unavoidable burden for many of us for some time I guess - as we must somehow cope with a dual projection business. There is also a danger of a two tier cinema exhibition business being created here with the little guys who can’t afford D-Cinema being squeezed out? Like the cinema goers, our agencies and advertisers will not be terribly interested in just how the films and content are delivered. For them its all about the physical audience numbers delivered and their greater ability to maybe target the new audience strands created etc 

 

The Future

Our presentation made it clear from the outset that, whilst we have some digital credentials and experience over these past 9 years, we are not digital experts and are happy to leave the spe- cialist digital debate to the experts. However we are a key part of the supply chain and we must be included in their collective thinking so that our operational needs are met and we can main- tain (and hopefully increase) advertising revenues for exhibitors.   Whilst much of the regular digital debate is naturally fixated on the method (and cost) of digital film/content delivery, our presen- tation made it very clear that it is also about these new audience strands being created and their impact also on both current and future advertising revenues. Digital can have a positive as well as a potentially negative affect on future audience profiles and rev- enues. Whatever side of the fence you are on, even the most die hardline digital luddite would have to admit that digital is when not if argument and whatever the timescales the hard work starts now.  As ever, our task will be to segment, optimise and market what will become an increasingly diverse audience and much will depend on exhibitors and the cinema advertising contractors working in close harmony. Somehow we also have to slot this all into a dramatically chang- ing media landscape and ensure that we all continue to market cinema as a unique medium and maintain our rate premiums as best we can.   In gradually losing our unique 35mm film based business, we must at all costs avoid the inherent trap of allowing the progressive digital changeover to commoditize us alongside regular digital TV which our move towards alternative content could prompt. We enjoy a significant rate premium largely justified by our supe- rior cinematic impact so let’s not throw the baby out with the bath water by adopting TV terminology etc as TV would love to close this gap and indeed have tried to hard with their “Home Cinema” pitch. That is one particular area where we just can’t afford a blurred picture.