Cinemas worldwide are preparing for what is now commonly called the second wave: a technology renewal where they will install next-generation digital projection equipment. However, the journey ahead poses different considerations and challenges compared to the film-to-digital conversion of the first wave. Before we forge ahead, it’s important that we consider the old adage: To know where we’re going, we need first to know where we’ve been. So let’s take a look.
The initial conversion from 35mm to digital movie presentation was somewhat unnatural, mostly stimulated by the availability of virtual print fees and the need for brighter projectors to show 3D movies, which were experiencing a revival in the market. Cinemas around the world adopted digital equipment as a must-do, with the first wave reaching its peak between 2009-2013.
The first wave was typical for any market confronted with new technology. End users, investors, and partners all asked the same questions about the new products: In addition to other functional and performance-related questions, what can it do and how does it work? Aspects like quality, reliability, and total cost of ownership were also important, but less fact-driven, as most stakeholders didn’t have a reference point except for the previous generation of 35mm equipment.
Since discussions about the renewal wave have emerged, we’ve already seen a shift in the topics and priorities. Everyone is confident that the equipment does what it’s built for, and understands the quality and reliability levels offered by the various manufacturers. The focus is now shifting toward the next level of detail. How can I improve my operational efficiency even more? And how can I optimally integrate?
In this article, we’ll go deeper into key drivers and differences between the first and second wave, and how the industry as a whole can prepare for it. While we cannot predict the future, the second wave will very likely have a profile as unique the first one.
With several years of digital experience behind them, most exhibitors have begun to optimize key operational aspects in their digital workflow. We see that the market is consolidating at the same time it’s looking at investing in the second generation of digital equipment. An industry that converted and re-invented itself at an incredible pace – 10 percent to 90 percent conversion in less than five years – is now preparing itself for true digital maturity. In this respect, digitization is no longer regarded as a collection of individual digital components, but as a true ecosystem that can be optimized to maximize value.
The scope of this renewal wave is not limited to cinema projectors (the author’s domain of expertise). Other industries, such as point-of-sale systems, theatre management software, audio equipment, automation systems, have all taken steps forward since the first digital equipment was deployed. Some of them have expanded their scope. As an example, many TMS systems now offer on-board POS functionality. Others have worked hard to make the interfaces with other systems more powerful: automation products are a good example, migrating from electrical interfaces to IT-based protocols.
However, the timing of the second wave is proving to be a fuzzy thing. Where the first digitization wave had a clean and sharp bell-shaped curve, the conversion ahead of us is looking very different. First there’s the start: when will exhibitors begin re-investing? And how will this differ across regions?
The key parameter in defining the next wave is what triggers an exhibitor to renew? To understand the answer to this question, ask yourself an analogous one: What triggers you to buy a new car? Some people will buy a new car when what is available on the market better meets their requirements. Others will not be tempted by new entries on the market and only let go of their current car when it’s becoming too cumbersome to own and drive. For example, if it starts to lose oil or it needs to go to the garage every three months.
Very similar differences can be seen in the cinema business, from conservative to highly future oriented. This introduces the first spread on the shape of the second wave. The other contributing factor is the timing difference introduced in the first wave; North America was the first region to start digitization, while Latin America finalized the conversion some years later. A similar offset in timing is expected in the second wave.
All this is a nice topic for tech geeks like myself to anchor product roadmaps around, but, in the end, the key decisions are all driven by the strategic goals of each individual exhibitor. The technology behind the scenes of a cinema – the how – is an enabler for the customer experience – the what. Technological renewal only makes sense if it strengthens the value proposition and differentiation of an exhibitor. Whether it’s delivering the most personal service, the biggest screen or the fastest online ticketing, the strategic objective of the cinema is the driving factor. Exhibitors, integrators and manufacturers should select and design their products to serve that goal. Not the other way around.
From an exhibitor and integrator viewpoint, the following aspects will be key going into the second wave:
Migration: as mentioned above, the scale and scope of the renewal is not small. How we all managed to successfully implement the first wave will remain one of the biggest success stories in technology. With the second wave most likely progressing without the same time pressures, it will be critical to engage in careful planning for the migration project. This is even more valid when you realize that the expected lifetime varies depending upon the different types of equipment involved. Computer-alike devices are typically renewed every five to seven years, while more professional equipment is built to last 10-15 years. What piece of equipment should be replaced first? How long will it take to equip any number of rooms? How will the different components talk to each during the migration phase? Should you renew per-site or per-screen?
The most important question is probably what does not need to be replaced? Being innovative and evolutionary does not only mean adding or changing things for the sake of being new. It can also mean dropping certain building blocks or focusing attention on the most important aspects. A practical example: the projection booth pedestal. It’s typically used to support the projector on top and house the server and/or audio gear inside. If the next generation of that equipment still fits (on top and inside), it makes sense to keep the existing pedestal. From a migration viewpoint, it not only avoids cost, but also layout complexity. It allows you to consider your renewal as a true drop-in-replacement where the new equipment goes into the same location as the old.
Taking it one step further, one could not only ask do I need a new pedestal but do I need a pedestal at all? With higher availability of integration and automation options, one might consider redesigning the booth layout and dropping the concept of a pedestal altogether. Some cinemas are already adopting this and creating booth-less solutions, taking care to note that eliminating the pedestal is not necessarily the same thing as going booth-less. Clear benefits come from optimizing available seating capacity, real estate cost, serviceability, and other factors.
When it comes to getting ready for the migration aspect of the second wave, there are two key messages:
Consider the timeline far in advance for the different building blocks. What is the current and expected age of the different products? What throughput time is needed for deployment?
Ask your integrator and tech suppliers what they can do for you when it comes to optimizing the scope of work. Is it possible to re-use certain building blocks? Is it possible to eliminate certain building blocks?
Integration & Automation: the digital maturity that we mentioned before becomes most tangible in the domains of integration and automation. By integration, we mean a certain product taking on board more functionality. For example, 10 years ago, a person had to buy a separate satellite navigation device and attach it to their car dashboard; today, most cars have a navigation system available as part of their onboard computer.
By automation, we mean that a certain task requires less configuration and handling. A nice example is the play-out schedule for a cinema that can be provided once in the POS, and transferred to the TMS and SMS without any extra intervention. Both these technology trends were already present in the 35mm days and formed an important step in the first digitization. You should expect them to become even more important in the future.
The big driver behind integration is reduced cost and complexity: by having fewer boxes in the room with fewer connections between them totaling fewer cables, the whole cinema technology ecosystem becomes cheaper and easier to install, use and maintain. The big driver behind automation is faster implementation and higher predictability: fewer steps in a process make it run faster and with fewer errors.
When it comes to the different technology building blocks in cinema (POS, TMS, audio, automation, projection, building) exhibitors should consider that there are no limits, both regarding integration and automation. Some might call me crazy when I make this claim, but one would have also said that to someone claiming in 2006, that a cell phone, MP3 player, camera and GPS could be included in a single device.
The proliferation of IT technology is the big driver to take integration and automation to the next level. More and more products have web-based interfaces; more and more functionality is becoming software-based. When I say that there are no limits, exhibitors should even try to take this literally and think about what a cinema-in-the-cloud could look like. Imagine only one network cable coming into the building, over which one processes all ticketing data, scheduling data, content, remote operations, etc. No more need for separate boxes in the building to perform these different tasks.
Just imagine the impact on cost, reliability, ease-of-use, to start. This is not something for the near future, but it helps exhibitors prepare for the second wave and the role of automation and integration, prompting questions like:
How do I want to differentiate my offering for movie-going customers? What am I best at? And consequently, what do I not want to spend time on? What under-the-hood tasks should be automated? What is running best and most efficient in my current operations? Where do I struggle or lose energy? Which building blocks in my operational flow are causing the most headache (and therefore the first candidates to integrate and automate in a renewal)?
Compatibility: as mentioned already, the second wave will not happen overnight and it will not happen to a cinema’s complete infrastructure. From that viewpoint, backwards compatibility is critical when selecting new technology: can the new stuff still temporarily work will the old stuff?
On the other hand, the second wave is not the last wave. The technology that we consider state-of-the-art today will feel outdated 10 years from now, driven by innovations in the cinema industry as well as others. From that viewpoint, forwards compatibility is important: will the new stuff still work with the future stuff? Both of these topics, backwards and forwards compatibility, are crucial components of preparing for the second wave: you don’t want to break something by migrating; at the same time, you want to make a future-proof investment. This topic is the most technical of the three, and the hardest one to tackle without expert advice.
Exhibitors preparing for the second wave should reach out to their service partner, integrator and tech suppliers and ask:
How are the different building blocks interfacing today? What physical connection is used? What software protocol is used? What is the performance of the interface (e.g. bandwidth)? What do I need to look out for when replacing a building block with a new one?
How are you tackling forwards compatibility? What trends do you see in the next three to ten years and how do your products help me anticipate for them?
The cinema industry, like any industry, will constantly evolve and raise the bar for itself. The same is true for technology used in cinemas, and the processes it drives. Any system can be made more efficient, from booking and planning, to scheduling, over-ticketing and customer relations management, down to screening. Improvement is the only constant. What we are calling the second wave is just a bump in the road: an important bump, one worth paying attention to, but one to consider in the right perspective.
The strategic objective of the exhibitor remains the key driver: how do I want to create value for my audience and differentiate? The technology in the second wave is the tactic to enable the strategy (the how behind the what). What processes are running well today? Which products create inefficiencies? Where can I improve to enable more focus on my strategic goals?
Compared to the first digitization, this renewal wave will be characterized by more variability: more spread in time – when it starts, how long it takes –and more spread in scope – which products, how they interface, and how many different brands. More variability is a good thing for exhibitors and the cinema industry as a whole: it drives more differentiation, innovation and competition.
In order to get the most value out of the conversion and come out a winner, exhibitors should prepare well and work in the domains of migration, integration, automation and compatibility. After all, evolution depends on survival of the fittest. And smart exhibitors will seize the opportunities to adapt and subsequently prosper in this new era.
Tom Bert is senior product manager cinema at Barco