BoxOffice® Pro - December 2010

EXECUTIVE SUITE
JOHN
FITHIAN
NATO
President
and Chief
Executive
EXCITING TIMES AND REEL CHALLENGES
Highlights from recent movie theater industry gatherings
by John Fithian and Gary Klein
Over the past two months, we have had a busy schedule of industry gatherings: the annual
meetings of NATO in Washington, D.C., the ShowEast convention in Orlando and five
different regional NATO events across the country. During the various meetings, NATO
members discussed a host of important issues. Though any one of the individual topics
might warrant its own magazine column, we think it more important to provide a summary of
the key issues, so as to be as timely as possible in bringing BOXOFFICE readers up to speed.
Officer
PREMIUM VOD WINDOWS CAUSE EXHIBITOR
CONCERN
The suggestion that studios might release movies in a
very early premium VOD window was the most discussed
issue at all of the gatherings and the most significant
threat to exhibitors. Without any concrete evidence of an
actual business plan, several national newspaper reporters
have suggested that some major studios intend to release
VOD movies 30 to 60 days after opening in theaters.
Many exhibition companies have established strong individual
policies regarding such windows, and have communicated
their position to the major studios. NATO will
also be taking appropriate trade association action and
those steps will be reported privately to NATO members.
In the meantime, Boxoffice readers should keep in mind
several fundamental points. Domestic and international
theatrical revenues continue to grow and expand through
increases in both demand and pricing. Our studio partners,
however, are facing the opposite reality in the in-home market.
It is in the best interest of the studios that they address
their current revenue challenges in the home market without
importing those problems into the theatrical market. As
NATO stated in a published resolution this past summer, any
experimentation with premium video on demand should
occur within the existing home movie window.
DIGITAL CINEMA AND 3D ROLL-OUT
ACCELERATES
Movie exhibition in 3D has provided the most important
positive change in the economic models of the business
in years. Frankly speaking: without 3D, the business
model for digital cinema provided few significant quantifiable
benefits for cinema operators. With the success of
3D, exhibitors are now installing digital cinema systems
as fast as the manufacturers can produce the equipment.
Today’s data on installs reflects substantial growth. In
the US, as of October 25, 2010, exhibitors operated 12,966
digital screens, with 6,843 equipped for 3D, out of a total
national screen count of 39,284.
Given the pace of the transition, it came as no surprise
that digital cinema was the second most discussed issue
in our recent travels. The conversations have become very
sophisticated and focus on topics such as integration and
virtual print fee deals, financing arrangements, equipment
upgrades and servicing, competing 3D technology
options, desired resolution levels and the availability of
digital “prints.” (NATO members will hear more about
these topics in member reports.)
NATO’s Cinema Buying Group, in partnership with
chosen integrator Cinedigm, has also made great strides.
(continued on page 12)
10 BOXOFFICE DECEMBER 2010