Friday, June 13, 2014

The Fate Of Theatrical Exhibition in the Digital Age of TV

How Movie Theaters Will Get Their Mojo Back

                             Also published in Wired Innovation Insights - June 13, 2014

In a recent interview conducted by TheWrap I discussed how advances in home entertainment display technology will very likely trump today's movie going experience. Indeed, the next generation of home entertainment TVs will not only have greater spatial resolution and 3D, but they will also include High Dynamic Range (HDR) which significantly opens up the color gamut from 8 bits per color to 10 or 12 bits per color.  This increases the range and shades of emitted color from 36% of the CIE color space to almost 76%, creating a viewing experience that more closely mimics the color resolution of the human eye.

Advances in Digital TV Require New Standardization Specs

The latest advances in digital TV technology have spawned a new standard called Rec 2020 which is intended to replace the old Rec 709 High Definition (HD) TV standard set back in the '90's.  Rec 2020 establishes standards for 4K and 8K resolutions, which are 4 times and 8 times the resolution of our current HD TVs respectively, various high frame rates (HFR) up to 120 frames per second, as well as significantly greater brightness, up to 40 to 50 times the brightness of contemporary TVs along with an accompanying increase in contrast. Of course, most big screen TVs will also feature immersive 3D that requires passive glasses. As I stated in The Wrap interview, these dramatic innovations in home entertainment will most certainly pose a competitive advantage over our neighborhood multiplex and megaplex theater chains because our home TVs will eventually offer a far superior visual experience.

Standards In Screen Projection Will Become Essential To The Survival Of Theaters 

Xenon Bulb
I'm not including IMAX in this discussion of advanced digital TV's competitive advantage against theatrical exhibition because they are already going the direction of laser projection.  The value chain of IMAX has always been and continues to be unique to that particular format, providing an optimum standardized viewing and audio experience. But traditional theaters often do not adhere to a single standard for their exhibition screens. Entertainment professionals mandate that theatrical exhibition of first run feature films should always be projected at a minimum of 6 ft lamberts but all too often, the projector bulbs in movie theaters are either set considerably lower, often at 3.5 ft lamberts or less and/or the bulbs have not been adequately maintained or switched out at the end of their maintenance life cycle. Cost is most often the factore in suboptimal theatrical exhibition. There is often a desire by the exhibitors to maximize bulb life by turning them down in brightness. The problem with this practice is that it invariably affects the movie going experience in a negative way. This is most true in 3D theaters where the 3D glasses further reduce the brightness of the projected image.

Does This Signal The Death Nell For Theater Exhibition?

Despite future advances in TV technology, theatrical exhibition of feature films will not go the way of the dinosaurs. In reality nothing could be further from the truth.  Theatrical exhibition will continue to thrive, but only if theater owners recognize early on that advances in digital TV technology will eventually cut into their margins. This should force them to reexamine the quality of their feature film viewing experience rather than simply concentrating on ancillary income streams from online loyalty campaigns and food concessions. The value chain of theatrical exhibition has to be refocused on the essential and historical value proposition of movie going–creating a unique viewing experience that justifies traveling to a theater and paying the price of a ticket to see a first run feature film.

As a consequence, I believe that exhibitors will have no choice but to upgrade their theaters with the latest laser projectors that will serve as a solid foundation for future advances in theatrical display.

Toward that end, the dawn of the Laser Projector for theatrical exhibition is upon us. High resolution, high dynamic range, 3D laser projectors being developed by Christie, Barco, NEC and others increase the projected brightness of a feature film from 3.5 ft lamberts to 14+ ft lamberts and both gamut and saturation will be far superior to current exhibition standards. If anything, I believe traditional theaters equipped with laser projection should be able to offer IMAX a run for its money. 

Will We See A Further Consolidation of Theater Chains?

We've seen the theater industry in the U.S. change considerably over the past two decades.  The age of the downtown family run theater has long past. If they have survived at all, these single screen theaters have typically been transformed into art houses.

The neighborhood theaters found it impossible to compete with the suburban and mall multiplex and megaplex theater chains which tend to draw audiences from 4 to 5 times the distance depending on the population density. With the coming of the next generation of TVs threatening to cut into the margins of literally all theatrical exhibition, I believe the critical yet costly requirement to upgrade to laser projection will force a greater consolidation of theater chains where only the best capitalized will thrive.

Will Feature Film Release Schedules and Distribution Continue To Collapse?

Feature film release schedules might change considerably because of the advances both in home and theatrical display devices. There are really two populations that need to be served–audiences who have the resources to purchase the latest TV and prefer to watch first run feature films at home and those who, because of personal preference or various economic and/or social reasons prefer to watch feature film releases in the theater.
We're already seeing simultaneous releases where first run feature films released into the theater are also offered on TV as day and date on-demand services. As the distinction between home theaters and multiplexes eventually diminish, I believe that simultaneous day and date streaming of first run feature films to the home will become the norm.

In Conclusion

I see the exciting and dynamic future of home entertainment display devices a necessary wake up call to theatrical exhibition owners. There will come a time in the not too distant future where the survivability of theater chains, facing looming technological superiority of the home entertainment market, will depend on their timely move from antiquated xenon bulbs to the superior technology of laser projection. While the upfront installation costs of laser projection are significant, the long term economic gains from the draw of larger and newer audiences as well as the savings in terms of labor and maintenance will more than justify the expense over time. As a result everyone wins.