Theatre owners turning to TV-style content to generate alternative revenue streams

Coming to a theatre near you…television programming. As movie theatres across the country install digital projectors, the operators are looking at moving toward providing viewers with film alternatives, such as TV programming, at the cinema in non-peak movie times to generate additional revenue. “There is a lot of compelling broadcast out there that has the potential to cross over to big screen, provided the people who own the intellectual property see the benefit to them in doing that. I know that I can fill theatre auditoriums with raving fans to enjoy these shows,” Ken Prue, director of marketing at Galaxy Entertainment Inc., tells Canadian Communications Reports. For example, Galaxy Cinemas – a theatre chain serving small- and medium-sized Canadian communities – screened in its Peterborough ON theatre an episode of Alliance Atlantis Communications Inc.’s popular CSI series that had been broadcast on TV. The screening was accompanied by guest lectures by such people as a former police investigator and an academic from the nearby university. “People were blown away, even people who had seen the episode before on TV,” Prue says. “Because seeing it on a 50-foot screen with 18-speaker surround sound is pretty different than seeing it on your 27-inch TV at home.” He also is hoping to obtain the rights to screen the last episode of Buffy the Vampire Slayer in his theatres this month. “What better piece of alternative programming for that date,” he says. “I don’t have clearances yet from CHUM, which owns the distribution rights in Canada. We’re having discussions now. If I get the clearances, I will show Buffy, and I believe it is a two-hour finale. And if it isn’t two hours, I plan to screen the finale episode with a classic called Hush that is known by Buffy fans.” Theatre owners attending ShowCanada 2003, the annual conference of the Motion Picture Theatre Associations of Canada (MPTAC) that wrapped up last weekend in Ottawa, heard other examples of television-style programming – much of it similar to television’s pay-per-view offerings – that is being shown in theatres. Maureen Dennis, manager of new business at Famous Players, told conference delegates that some of the chain’s cinemas in British Columbia screened their first Vancouver Canucks game in March. She added that the theatres would be back with more Canucks Large’N’Live games next season. The Canucks games are shown in theatres in areas of the province where TV blackouts are in effect and the team management doesn’t see the cinema screenings as compromising their broadcast. Like other cinemas, Famous Players also has been showing monthly World Wrestling Entertainment (WWE) events. She notes that Famous Players offered the WWE screenings in 17 theatres in 1999-2000 and will be expanding to 37 theatres this year. As well, Famous Players is planning to screen rock concerts and other sporting events and to use the theatre for such things as corporate presentations or for educational purposes. Prue says that Galaxie has so far screened one hockey game, featuring the Ottawa Senators and the Toronto Maple Leafs, near the end of the 2002-2003 season in its Cornwall ON theatre with the permission of the Canadian Broadcasting Corp. “We got more than 300 people out to see that game in Cornwall, and people came for a hockey game – they came dressed in jerseys and faces painted,” he points out. Howard Lichtman, president of the industry consultancy firm Lightening Group, says, “(Alternative programming) is a blip now. There’s nothing to track; everyone is experimenting right now. But if you ask me to look at my crystal ball, I would tell you three to five years from now, I think it is going to be a significant piece of theatrical exhibition’s revenue if we do things correctly.” He points out that the installation of digital projectors in cinemas is making it easier to bring alternative content to the movie theatre. “Once you’re placing digital projection equipment into the business in any event (for the movies), then the capital expenditure goes away and the incremental cost becomes only the cost of your content, which you can do on a revenue-share basis,” he adds. “The business model works better today then it did three or five years ago, because Famous Players and AMC Theatres, etc. are installing digital projectors in a significant amount of their theatres. If they weren’t, the alternative content model wouldn’t work. But now that they’ve got the digital projectors, they are sitting there saying, ‘How do we generate new revenue?’” Acquiring rights an issue One problem in the alternative entertainment model, according to both Lichtman and Prue, is developing a system for obtaining the rights. “The whole thing (about) who is going to get the rights and who is going to manage that process hasn’t been worked out yet. The other thing that we’re dealing with is the whole marketing and advertising aspect,” Lichtman notes. Tribute Entertainment Media Group, a Toronto-based multimedia company specializing in entertainment marketing with the motion picture industry, has formed Closed Circuit Digital Events Inc. (CCDE) for the purpose of negotiating such rights. CCDE is a joint venture between Tribute and IMG, a supplier of sports and entertainment programming. In September 2002, CCDE did a test transmission with about 20 cinema complexes across the country, including several Famous Players and Galaxy theatres as well as one Cineplex Odeon and an Empire theatre, using a Telesat Canada satellite to bring the Ryder Cup final to the big screen. “It was successful in that we got a good signal. But it worked in some theatres but not in others (in terms of attracting spectators),” Prue says. Lichtman says another challenge is coming up with an appropriate business model. Dennis notes that Famous Players is trying both the sponsorship route and also a model of generating revenue through ticket sales. “You have to create events that people will want to pay to come for, and it has to be self-sustaining in terms of generating advertising to get that revenue. Because right now, it is like living at home with your parents, because someone else is discounting your projection technology, and the radios and newspapers are giving you the free space to advertise. It’s not like you’re living on your own,” says Lichtman, a former VP at Cineplex Odeon who experimented with alternative forms of entertainment at the movie theatre a decade ago. “I think that the last little world of Buffy is a quick hit, an easy fix that is not sustainable as an ongoing business. WWE is an example of something that works. It’s profitable and the reason why it works is because you have something that is not available on television and is not available unless you go to the live event. And the fact that there’s an event once a month eliminates some of the advertising headaches. You can produce a poster advertising 10 WWE events.” Lichtman adds that he is working with clients to develop interactive in-theatre, such as in gaming. Prue also notes that the pre-film experience, currently consisting of a mix of trailers and commercials, could soon be turned into something resembling a TV show that would be exclusive to the theatre. “I think most of the major chains in Canada and several in the United States as well are moving toward a situation where movie theatres show more than just movies, and find revenue from more than just movies and popcorn,” he notes. “In part what that means is some of the pre-show advertising that you see will probably eventually happen in the format of a digital pre-show that will resemble a half-hour TV show. Right now, you get bare-naked advertising with no structure or editorial. So the notion that we’re all discussing is the development of a pre-show that interweaves editorial and advertising like a television show does…Imagine an Entertainment Tonight that was made specifically to be played pre-show at movie theatres.”

Theatre owners turning to TV-style content to generate alternative revenue streams

Broadcast | May 8, 2003

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