Amazon Netflix IMAX releases?

They may still buy or launch their own cinemas to showcase and monetise their original output, but discussions on IMAX screenings seem closer...

Once again, we see convergence - in this case between traditional media (cinemas, though IMAX and IMAX 3D are more recent as a relatively mass market feature) and the digital streaming upstarts. The traditional film industry, especially the distributors and exhibitors who are usually cut out by online-only distribution, have been openly hostile, with annual rows at the Cannes Film Festival the most high profile example of this (there have been protests over allowing Netflix films to screen - quickly blocked by rules which require a long gap between cinema and online release).

Here's a snippet from the article:

According to The Hollywood Reporter, Gelfond, who has led IMAX for the past decade, was a speaker at the Goldman Sachs Communacopia conference earlier this week – the same conference where the new owner of HBO called Netflix the Walmart of streaming services. Gelfond, however, had nothing bad to say about Netflix or any other company. 

Instead, he said that his company is “in active discussions with all of the streaming [services] about an IMAX release”, so we may be looking at more than just a Netflix IMAX partnership, but a team-up between the large-screen exhibitor and every streaming service out there – assuming these talks lead to deals. Gelfond called out the fact that many of the streaming services’ original films are lacking an “opening day,” and implied that IMAX was the best way to cut through the clutter of the entertainment marketplace, saying “the number one way to event-size the size [of a movie] is in IMAX.”

Cinema $10 unlimited month pass brings Netflix style to theatres

NoFilmSchool brought my attention to a HUGE landmark moment in the US - a Netflix-style $10/month pass for 'unlimited' cinema screenings.

NoFilmSchool article.

The MoviePass homepage.

That brings the disruption of digitisation to the a new level, and undermines (though it may take time yet for its impact through user numbers to grow) the traditional cinema exhibition business model: movie 'prints' (just as likely to be streams, Blu-Rays or HDDs now) are rented by cinemas from distributors and a further share of ticket revenue passed back to distributors. There is variation in this basic model depending mostly on the power of the distributor and whether its a tentpole big six production they're touting, but thats a rough outline of how the production (sell all rights to or agree a revenue share with a distributor) to distribution to exhibition film cycle ends up (before further distribution and exhibition through TV, and distribution through physical media, downloads and streams - rental and purchase.

If the audience figures are no longer a simple guide to box office, that suggests a steep medium to long term decline in revenues. Unless its the cinema-avoiding public (non-noisy nuisances, ie kids/teens!) that mostly takes up these passes. The 15-24 age range is the key cinema market as you can see from this BFI chart (page 4):


You can find a great analysis of the older audience in 2017 here, by Stephen Follows. This US analysis by Nielsen also shows roughly 30% of the cinema audience as 12-24, or nearly 50% for 12-34.

There is dispute over how big a revenue driver concessions (popcorn etc) really are, but this certainly will (in the style of bucket airlines like easyJet) shift the profit-making onus onto food and drinks - which distributors are locked out of. See this post for details on how vital the huge mark-ups cinemas make on concessions (typically 85% profit on every dollar spent) are.

The unlimited is limited: one viewing a day, no IMAX or 3D (maybe a supplement charge for longer movies?), but that still means a possible 30c viewing!

This isn't actually completely new ... many moons ago I bought Virgin Cinema monthly passes - £15 if I remember right, back in 1999. That enabled me to be amongst the shellshocked hordes stumbling out of the Phantom Menace midnight premiere wondering what the hell we'd just seen, and what kind of evil madman could invent JarJar Binks - but get over it by going to see plenty more decent movies in the days and weeks that followed.

I figured Curzon, with its membership scheme, would likely do something similar, and sure enough they also offer an unlimited annual pass for its cinemas.

Here in Luxembourg you can also get a monthly pass from the monopoly chain.

UPDATE: PREMIUM FOR HOT NEW FLICKS + AMC LAUNCH RIVAL
MoviePass are selling this as working with the industry to help push passholders to their quieter midweek slots: charging a $2 premium for some new releases, though often specifically for weekend screenings; they're also adding 3D/IMAX to their offering.
MacRumors reported:

Surge pricing is a dynamic, time-based strategy that apps like Uber use when a large amount of customers are requesting rides in the app but there aren't enough drivers to taxi them around. 
Now this will extend to MoviePass, so on opening weekends or at particularly busy late-night showings of popular movies, monthly subscribers should expect to pay a bit more above their locked-in $9.95/month subscription price. 
For IMAX and 3D movies, users will be given the option to pay an added fee for the premium screenings, ranging from $2-$6 according to Lowe.
The MoviePass news comes after AMC just yesterday revealed its own movie subscription service, which will let customers watch three movies per week for $19.95 a month -- including IMAX and RealD 3D showings. 

...

Popcorn is cinemas sweet spot not movies

This is a companion post to the analysis of the $10 MoviePass announcement, and what that (and other schemes I also discuss) means for the distribution and exhibition industries.

From a business point of view, cinemas are only partly about films. "When we bought [Odeon]," Guy Hands of private equity group Terra Firma famously said, "the management team really believed they were part of the film business. I had the difficult job of explaining to them that they were in the popcorn-selling business." (Oliver Thring, Guardian 2012)

With the emergence of NATIONAL movie passes, not just schemes within individual chains (Curzon and Kineopolis being being two examples), the revenue model of the film industry faces a huge shake-up with a disruption of the traditional models of renting 'prints' and passing some share of ticket revenues back to distributors (depending on the movie).

That hideous diabetes/clot-encouraging popcorn is set to become the main revenue stream for cinemas - movies could become a loss-leader, just as budget airlines seek to make money from flight 'extras' and in-flight sales more than the actual seat purchase - very bad news for distributors.

That process is arguably already here though...

The pic above is from a Guardian article on an American cinema-goer launching a doomed lawsuit against the US cinema chain for charging $8 for a coke. From the same article:

BIG FIVE Fox selling to Disney have 40pc of 11bn US market

Another megamerger is cleared in June 2018 and boosts the hopes of NBCU owner to trump Disney's bid for Fox...
AT&T $85.4bn takeover of Time Warner approved by judge in blow to Trump

https://www.theguardian.com/media/2018/jun/12/att-time-warner-takeover-approved-trump?CMP=Share_AndroidApp_Copy_to_clipboard

The story continues! Comcast are launching a new bid, all cash as Murdoch rejected it on the basis of complications with shares (and possible monopoly issues). Disney's inexorable rise not confirmed yet... Comcast prepares to top Disney’s $52bn bid for 21st Century Fox

https://www.theguardian.com/media/2018/may/23/comcast-prepares-to-top-disney-52bn-bid-for-21st-century-fox?CMP=Share_AndroidApp_Copy_to_clipboard

Further update - the Comcast (NBCU owner, with Universal having a 9% share of the US market v a combined Fox/Disney 45% on latest figures) counterbid had been rejected by Lachlan Murdoch, but I'd suspect shareholders are likely to demand Disney improves it's bid, and try to spark a bidding war. The Murdochs can see a chance for continuing power through the 'merger' as they would become the single biggest Disney shareholders, so it could be quite a battle.
And Comcast is proceeding with its counterbid for Sky, which Murdoch(s!) has already bid for (the remaining 61% of shares).
Comcast are offering CASH NOT SHARES, so the Murdochs would be incredibly wealthy but stripped of most of their media empire...

An update from my earlier blog... The Disney deal had been announced, subject to FCC (US government media regulator) agreeing, so it is now the big 5 with Disney's new dominance almost certain to spark off another merger to compete.

The business or economics term for this is consolidation. Media academics don't view this process as benign, neutral, not an issue. Chomsky and Herrman's propoganda model includes 'concentration of ownership' in its 'five filters', ways in which radical or counter-hegemonic content are removed from mainstream mass media.

This Disney giant isn't going to be producing politically driven fare like This is England (or even '71 ... or how's about She's a Chinese?!).

Economist Anita Elberse's book Blockbusters is looking more and more like the industry bible.

Rupert Murdoch set to sell off 21st Century Fox assets to Disney

https://www.theguardian.com/media/2017/dec/13/rupert-murdoch-set-to-sell-off-21st-century-fox-assets-to-disney?CMP=Share_AndroidApp_Copy_to_clipboard

I'd read last week about rumours of ole Rupe (Murdoch, the 'Dirty Digger' and inspiration for the Bind villain in Tomorrow Never Dies) selling up his Fox film and TV studios to Disney.

Now I see fresh reports are exciting stock markets over Comcast getting involved - the owner of NBC-Universal.

Is an already narrow range of dominant companies about to shrink further?

Comcast reportedly targeting 21st Century Fox for acquisition https://www.theguardian.com/media/2017/nov/16/comcast-reportedly-courting-21st-century-fox?CMP=Share_AndroidApp_Blogger

Remarkable - just a day or so later I stumbled on news of Warner being involved in a mega-merger, the focus this time on TV, with AT&T bringing it's dominant DirecTV satellite provider to the home of HBO, CNN and more. If eventually allowed after legal appeal, I wonder if Warners will follow Disney in removing their content from the likes of Netflix in favour of their own subscription channel (which they could offer in a bundle to existing subscribers)?

NETFLIX worlds biggest media company as APPLE launches rival

2018 update: Netflix puts content above costs but is the policy sustainable?

https://www.theguardian.com/media/2018/may/25/netflix-puts-content-above-costs-but-is-policy-sustainable?CMP=Share_AndroidApp_Copy_to_clipboard

I've written a few times that Apple's entry into the subscription TV streaming market is inevitable ... and here it comes, with an annual $1bn budget for 10+ new series and some incredibly high profile industry names signed up
Apple has Netflix and Amazon in sight as it hires British TV executive

https://www.theguardian.com/technology/2017/oct/25/apple-has-netflix-and-amazon-in-sight-as-it-hires-uks-top-tv-executive?CMP=Share_AndroidApp_Copy_to_clipboard

More niche than Netflix: nine specialist streaming services you should try https://www.theguardian.com/tv-and-radio/shortcuts/2017/oct/23/more-niche-than-netflix-nine-specialist-streaming-services-you-should-try?CMP=Share_AndroidApp_Blogger

STREAMING Disney quit Netflix for own service. Fragmentation?

Disney now offering streaming TV.

Apple will have to join this suddenly crowded market, with Netflix, Hulu, Amazon and more facing increasing competition.

If more of the big six follow suit, surely that will actually undermine the paid-for streaming industry and encourage a resurgence in piracy?

Not in Lux. yet, but a fullscale streaming option is being rolled out.

UPSTREAMING RIP DVD Netflix Amazon dominate UK TV by 2020

The outlook for cinemas is uncertain as home cinema continues to grow in the quality offer, all-you-can-eat ticket offers on the rise, the likes of NBC-Universal's Prima service offering home screening of cinema releases, and the falling appetite for 3D - the extortionate ticket prices of which have been boosting cinema revenues for years, a golden goose that is now shedding its feathers...

The music industry has had to accept the sharp decline of physical sales, but the film industry hasn't yet reached that point of acceptance - but DVD and Blu-Ray alike are heading for the same cliff-edge of sales that CDs reached some years ago, another huge revenue stream under threat.

The big six also need to consider the digital upstarts Amazon and Netflix (and surely Apple sooner or later, the music industry slayer!) as key rivals ... and partners, an uneasy relationship.

A UK study has concluded that in just 3 years (by 2020) UK pay-TV revenue will be below that of streaming sites - but cinema might be more resilient (given my points above I'm highly sceptical!)

Paying for TV content from on-demand digital video services will grow by more than 30% to £1.42bn at the turn of the decade, claims consultancy firm PwC. This rise in popularity will see revenue from video services edge ahead of an estimated £1.41bn from cinemagoers. 

While Apple and Sky have also made inroads with their download services, the rise of streaming has been the biggest competitive challenge to cinemas in recent years. 

“Demand for internet video shows no signs of slowing down,” said Phil Stokes, UK head of entertainment and media at PwC. However, he warned against forecasting the death of blockbusters or the big screens where they are shown. “The figures do not signal the death of film. Look at the box office performance of films such as Star Wars: Rogue One or Fantastic Beasts and Where to Find Them to see the significant amount of enthusiasm for blockbuster movies out there.” 

Stokes said the UK film industry will remain in a “pretty healthy” position despite the boom in home entertainment. 

The report predicts movie attendance will grow from 172m admissions last year to 179m in 2021, and the number of screens across the UK will rise from 4,143 to 4,542. 

PwC predicts a “terminal decline” for DVD and Blu-ray sales from £1.22bn in 2016 to just £533m by 2021. The report predicts that internet video will overtake DVD sales this year, but some analysts claim this has already happened. 

Netflix and Amazon 'will overtake UK cinema box office spending by 2020'.

Streaming has already surpassed physical sales of film:

Total revenues from digital video – which includes services such as Apple’s iTunes as well as Sky’s store and Now TV – surged almost 23% to £1.3bn last year.The digital boost came as high street sales of DVDs and Blu-ray discs fell 17% to £894m – the first time it has fallen below the £1bn mark. The once mighty physical rental market fell 21% to just £49m.

(2017 Guardian article)

Netflix and Amazon rival big six?

I'll return to this to gather points made across many posts on this theme:
The traditional big six (7 if you count Lionsgate) vertically integrated US conglomerates that dominate global cinema have cause to be seriously worried about Netflix and Amazon (with Apple, HBO and many more bubbling away in the wings too).

The online giants are at once customer/distributor for the big six, including VoD and rental alongside DVD and Blu-Ray sales, and rival, with their film production budget growing, and the release strategies they follow undermining the concept of the release window.
Netflix’s Reed Hastings: ‘We’ve got a long way to go to get to ubiquity’.

CHINA bans Apple, Disney movie channels

While growth in the US is slowing, its international expansion is doing well, and though it may not have many subscribers in Syria or North Korea, it claims to be in all but one market globally. But that market is the world’s largest, China, where it has faced the same political barriers as other western media and technology companies.

“The Chinese government just closed down the Disney movie service. And they closed down Apple’s movie service. Those are two pretty sophisticated, relative to China, companies. It looks like the government just doesn’t want the foreign content distribution. Maybe someday in the future there’ll be an opportunity for us in China, it’s possible. We are continuing to work on it.”

Netflix’s Reed Hastings: ‘We’ve got a long way to go to get to ubiquity’.

DIGITAL DISTRIBUTION day-and-date challenges flop concept

The release window is proving resilient despite challenges from the digital upstarts Netflix et al, their disruptive force not yet shifting this fundamental feature of the film industry. Big six giant Disney soon backed down with its plans for a shortened cinema-DVD gap for Alice in Wonderland when cinema chains simply threatened not to show it.

Not all movies are produced with cinema box office as a priority or even realistic goal, however, and many of these breach the usual model - the key point being the SCALE of release. These are not wide releases, which means they're not seen to undermine the traditional arrangement that ensures cinema maximises its returns.

As I have blogged on the 48K Le Donk and Scor-Zay-Zee, though, a limited (or in its case, simply none!) cinema release means a much, much greater chance of newspaper, magazine and other mainstream media reviews that straight-to-DVD releases rarely get, explaining what seem to be shocking headlines about film releases taking under 100 at UK box office.

This strategy, of a very limited cinema release simultaneous with a DVD release, is termed day-and-date release.

“Day-and-date releases minimise costs for a distributor,” says Andreas Wiseman, Screen International’s head of news. “They only need to pay for a campaign once rather than at different stages throughout the windowing process. The growth in these kind of releases coincides with the proliferation of digital platforms. Distributor deals with platforms such as Netflix, LoveFilm, iTunes etc often require that a film is shown in a certain number of cinemas, so distributors will sometimes see the theatrical release as a box-ticking exercise.” 

RELEASE WINDOW Cinemas love Amazon, nix Netflix

TBC

Guardian article.

There have been several high profile battles over the traditional release window - the convention that there will be around a 3 month gap between cinema run and DVD release, and another before TV release (which can be further staggered in the UK between premium subscription channels such as Sky Movies and terrestrial channels BBC1, BBC2, ITV1, C4 and C5).

Disney was forced to back down over its plans for Alice in Wonderland when several of the major chains threatened to boycott the movie if they didn't stick to the release window.

Netflix seems to have suffered such a backlash with its plans for a Crouching Tiger, Hidden Dragon sequel (the biggest foreign hit in US history took $130m there) to be an IMAX release seemingly abandoned. Cinema chains again pledged to boycott the film, due to be released on the Netflix platform at the same time.

1 in 5 homes with cinema room by 2020?

This previous post looked at NBC-Universal's $35k home rental scheme, very relevant to the theme below...

According to a recent survey, a fifth of Britons aim to have a dedicated cinema room by 2020 ... and 8% already do! The rise of home cinema has long been noted, but this is a step beyond having a large screen TV in the living room, being something closer to the setup seen in The Sopranos, the classic HBO series, where mafia don Tony brings round his cronies to sit in comfort and watch DVDs of such gangster flicks as The Public Enemy.

The rise of cinemas such as Leeds' Everyman, with its large sofa seating and tables for drinks and food (with the food menu going well beyond popcorn, and premium beer/drinks available), indicate one means by which the cinema industry is attempting to fight back against the increasing numbers staying at home for their cinema experience. Everyman's pricing strategy also quite purposefully tries to exclude many of the teens who effectively ruin the cinema experience for adults.

The site I read the home cinema stat on was pushing a new concept, the rise of corner shops and off-licenses as the replacement for dedicated video rental stores, with the demise of Blockbuster the most visible sign of their disappearance from the high street, with pressure from Netflix and other streaming services, piracy and supermarket sales all proving terminal.

The article specifically cites 'automated kiosks' - have any of you ever encountered one of these? Clearly yet another means by which digitisation is opening up further possibilities for distribution.

In 2013 70% of TV sets sold in the UK were classified as big – 26in-32in – and nearly 16% were were “jumbo” – 43in or bigger. This is up 4% from the year before, according to TV Licensing’s annual Telescope report on the nation’s viewing habits.An earlier report found that 8% of Brits expect to have a dedicated cinema room in their homes by 2020.With staying in firmly established as the new going out, and consumers abandoning FOMO, the fear of missing out, in favour of JOMO, the joy of missing out, there’s never been a better time to cash in on the sales opportunity offered by big nights in, and this year OLN is looking at how to host and sell the perfect movie night.As more and more traditional video and DVD rental shops have gone out of business in the face of competition from postal and on- demand services such as Amazon Prime and Netflix – giant Blockbuster went into administration late last year – some off-licences have stepped into the gap, offering customers DVDs for rent or sale.Automated video kiosks such as those offered by Original Video (original-video.com) have taken off in the US, where they first launched in 2002 and where there are now more than 30,000 units in operation. The model is simple, with new release movies offered for a small hire charge and, according to Original Video, they can make up to £500 a week.Even if you don’t offer DVDs yourself, this is a great time of year to inspire customers to make a big night in of their film evening with an innovative aisle-end or window display – and don’t forget to lay out the snacks, as nibbles such as popcorn, crisps and sweets are a key ingredient.To get you started, we’ve lined up some classic film choices – and suggestions to drink with them.■ Casablanca: Humphrey Bogart’s Rick is a self-confessed drunkard, and in the course of the film plenty of wine, bourbon, brandy and Cognac is consumed. But when you watch Casablanca, why not have a Champagne toast along with Rick and his lover, Ilsa, played by Ingrid Bergman. They’ll always have Paris.

Universal launches $35k Prima Cinema: $500 tickets!

Prima Cinema has teamed with Hollywood studio Universal to offer the new service, which is targeted at super-rich film stars and other celebrities. The $35,000 price tag covers a digital box allowing movies to be delivered via the internet: once downloaded, they can be viewed just once at a cost of $500. Prima inspects every client's home cinema to ensure there are no more than 25 seats, so the service cannot be used to set up a commercial cinema business.
Universal is the only major studio currently offering its movies via Prima, but it is hoped others will follow suit if the service is found to be commercially viable. Upcoming films which will be available to view at home on the same day as their US cinema release include the Tom Cruise sci-fi thriller Oblivion as well as past titles such as Les Misérables, Identity Thief and Admission.

Universal is confident its latest strategy to combat the effects of online and home cinema on box office will reinforce its revenues - and it does seem a smart move. Basically, they're catering for the wealthy by offering $35,000 equipment that allows new releases to be viewed at home for $500 a pop. By 'home' they mean multi-million pads with space to accomodate a mini-cinema (up to 25 seats). The film is streamed, the latest use of digital distribution. They can verify that users don't seek to abuse the service with multiple screenings and ticket selling. See below for more info, from this article.

$35,000 kit allows super-rich to watch films at home on day they are released

Hollywood studio Universal is first to offer the service, aimed at film stars – with each viewing costing $500

• Ben Child
• guardian.co.uk, Friday 5 April 2013 13.25 BST
• Jump to comments (20)

Home truths … a scene from Jurassic Park. Owners of the Prima Cinema equipment can see the 3D version at home this weekend. Photograph: MCA/Everett/Rex

The experience filmgoers have been waiting for since the dawn of Hollywood has arrived: the chance to see new releases at home on the same day they hit cinemas. There is, however, a catch: to view Jurassic Park 3D this weekend you will first need to install projection equipment costing $35,000 (about £23,000), while each viewing costs $500 a pop (£330).