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© 2014 IHS
Technology
The evolution of cinema within the value chain
Media Salles, Taormina, June 2016
David Hancock, Research Director, Film and Cinema
President, European Digital Cinema Forum
Technology
© 2014 IHS
Film production is rising steadily
2
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2006 2007 2008 2009 2010 2011 2012 2013 2014
Global film production
Digital film-making
Real-time cloud rendering
Mastering and distribution
© 2014 IHS
Theatrical film volume rising, even if majors’
volume declining
0
100
200
300
400
500
600
700
800
2008 2009 2010 2011 2012 2013 2014 2015
UK FR USA DE CN
© 2014 IHS
Global admissions and BO are rising
AD-FUNDED MUSIC ANALYSIS / OCT 2014
4
m
bn
4,000,000
4,500,000
5,000,000
5,500,000
6,000,000
6,500,000
7,000,000
7,500,000
8,000,000
20,000.0
22,000.0
24,000.0
26,000.0
28,000.0
30,000.0
32,000.0
34,000.0
36,000.0
38,000.0
40,000.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
BO Adm
© 2014 IHS
Asia is growth engine for admissions
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
W Europe C/Eastern Europe N America
C/South America Africa M. East Asia-Pacific
© 2014 IHS
China set to become world’s largest BO market
6
0.0
2,000.0
4,000.0
6,000.0
8,000.0
10,000.0
12,000.0
14,000.01
99
5
19
96
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97
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USA China
© 2014 IHS
International scale of screen density
0.0 20.0 40.0 60.0 80.0 100.0 120.0 140.0 160.0
If China had the screen density of
South Korea, it would have 58,000
screens
If China had the screen density
of Japan, it would have 41,000
If China had the screen density of USA, it
would have 161,000 screens
China will have its own screen density
but safe to assume it will be higher than
15
© 2014 IHS
The global cinema screen breakdown
0
40,000
80,000
120,000
160,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
2D 3D 35mm E-cinema
© 2014 IHS
Global d-screen penetration map
2015
97.5%
97.4%
97.4%
81.9%
91.8%
98.6%
Global progress: 98.2%*
IHS Cinema Intelligence countries only
*India: includes e-cinema
© 2014 IHS
Alphabet soup of industry jargon
© 2014 IHS
Content is widening
CINEMA AS A MULTI-SECTOR ENTERTAINMENT VENUE
TRIED BEFORE BUT WITH NON-CINEMA ACTIVITIES IN THE SAME
PLACE AS CINEMA: NOT A HUGE SUCCESS
TECHNOLOGY HAS OPENED THIS UP TO THE CINEMA SCREEN
ITSELF
• Tentpole movies – 25 different superhero franchises will exist by
2020) – When is too many Superheros? Studios starting to morph
into one ‘supertitle’ and similar strategies
• EVENT CINEMA/Pop-Up Cinema
• 4D
• 3D (Laser)
• eSports
• Filmed content for differentiated technologies (HDR; Escape;
ScreenX) – documentaries, visual impact
• VR?
More and more, the cinema is for the BIG, the epic, the EVENT
© 2014 IHS
Experience is All
• The cinema is moving into a premium world, where experiences are
memorable and worth paying extra for. Cinemas are firmly placing
themselves at the heart of the moving image experience, using a
combination of technology, content, venues, service and comfort to
deliver a more narrowly segmented experience for a more discerning
consumer.
12
© 2014 IHS
Origination: technology driving creativity
• Film production has not lost traditional means of creativity but
technology is driving creative process forward
• 3D, HFR, HDR, WCG…
• Acronyms abound but their common factor is increased quality and
progress for the cinema environment
13
© 2014 IHS
Electronic distribution: market consolidating down
• Two main players in EMEA market now
• But smaller players remain, and one of those could still become larger
with a suitable partnership
• Smaller players make useful partners in completing a network
• The technology agnostic approach seems to ‘comfort’ distributors and
exhibitors, and sends message that they are not in danger of backing
obsolescence
• Need a halt to the race to the bottom if wish to see the business thrive
and a quality service maintained.
14
© 2014 IHS
Sites connected for electronic distribution: EMEA
15
0
500
1000
1500
2000
2500
Sites connected Not connectedYear end 2015
© 2014 IHS
4D/IMS:
843
PLF: 2,100
Immersive sound:
2,800
Other RGB
LASER: 178
Dolby
Cinema/HDR:
14
IMAX D:
800
Premium
seating
In-dining
PSF/Boutique
152,000
screens:
2D: 66,487
3D: 74,562
Barco
Escape: 20
ScreenX:
84
2016 1Q
Secret Cinema/
Pop-Up
Cinema
Premium Experience of the Cinema
© 2014 IHS
Immersive sound approaches 3,000 screens
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0
200
400
600
800
1000
1200
1400
1600
1800
2000
2012 1H 13 2013 1H 14 2014 1H15 2015 20161H
Dolby Atmos Barco Auro DTS:X
© 2014 IHS
Laser: the market dynamic is taking shape
Scre
en s
ize
Large
Small
Time
Retr
ofit
mark
et
RGB laser: 3P and 6P
Laser/Phospur hybrid
First genera
tion:
pio
neers
Mainstream Retrofit
© 2014 IHS
Laser adoption
• RGB laser is highly linked to the big screen PLF experience
• Laser phosphor is widening its reach but is still geared towards smaller
auditoria, for a low cost, low cost of ownership solution
• Is it a temporary technology?
• Seeing all-laser sites now (Santikos in USA, Grand in UAE)
• Cost coming down but by how much over time: mature technology unlike
digital cinema
19
© 2014 IHS
RGB laser installs on the up as market acceptance rises
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0
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30
40
50
60
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80
Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Western Europe total Central and Eastern Europe total
North America total Central and South America total
Africa Middle East total Asia-Pacific total
Not known locations
© 2014 IHS
Immersive seating and 4D growth
21
0
100
200
300
400
500
600
700
800
900
2012 2013 2014 2015 H1 2016
Motion Extreme 4D
Total 4D and immersive motion seating footprint by type of screen
Notes: H1 2016 data is at mid-June 2016 © 2016 IHS
© 2014 IHS
PLF Technologies by Brand
PRESENTATION NAME / MONTH 2014
22
46%
41%
1%
1% 1% 4%
6% 0%
Exhibitor PLF Imax digital Dolby Cinema Barco Escape
RealD Luxe Screen X CGS Sphere X
Total PLF screens by global brand 2015 (%)
Source: IHS © 2016 IHS
© 2014 IHS
North America and Asia dominate the PLF sector
23
0
100
200
300
400
500
600
WesternEurope
EasternEurope
TotalEurope
NorthAmerica
Centraland SouthAmerica
AfricaMiddleEast
AsiaPacific
Exhibitor PLF Global branded PLF
PLF screens by region by type 2015
Source: IHS © 2016 IHS
PLF screens
© 2014 IHS
The drivers for cinema going are widening
24
venue PLF
boutique
secret cinema
outdoor cinema/pop-up
In-dining/premium seating
content Increasing no. films
documentaries
event cinema
eSports
technology 3D
4D/motion seating
HDR
immersive sound
laser illumination
social organised/planned
spontaneous
night out
leisure activity
The
Experience
© 2014 IHS
Cinema exhibition: market segmentation developing
Imax
Premium Large Format
Boutique Cinema
Multiplex/indie mainstream
Local community-based cinema
Non-theatrical cinema (village hall, schools, prisons…)
Giant Screen
So
cia
l
Ex
pe
rie
nti
al
Secret Cinema
4D
Ve
nu
e
Arthouse
Pop-Up Cinema
Th
e F
ilm
T
he
Fil
m
Multi-screen format
3D
© 2014 IHS
Analytics: the next frontier for cinema
• Software development has taken time: grew out of the TMS and market
leaders tend to come from that: Arts Alliance; Unique; GDC;
• Next phase is the use and spread of analytics: IBC panel; CineEurope
panel (data-driven innovation in cinema)
• Providers of such services are springing up: Vista is building a stable of
related companies, focusing on audience insight for campaigns and in-
cinema exhibitor services. Also, comScore acquiring Rentrak has
provided a powerful player in box office analytics
• Analytics needs data – own data is ideal as then there is little restraint
on usage and speed of access, but a good trusted partner is also a way
in
26
© 2014 IHS
Analytics…
• Analytics needs to provide insight into consumer behaviour or
operational reality, in order to provide a business reason for spending
money.
• Use and maintenance of data centres: own or hired; back-up data;
• Sole data sources not ideal, especially for consumer research, need to
integrate a range of data input sources to build up a rounded picture of
the consumer or the issue trying to resolve with data
• Not always Big Data, sometimes Messy Data and needs cleaning up to
produce usable, standardised data
27
© 2014 IHS
Technology is one of the principal drivers of
the economics of cinema and the customer
experience
28
© 2014 IHS
However, the market is shifting towards subscription
business models
30
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Retail Rental Subscription
Home entertainment revenue by business model (%)
Source: IHS © 2015 IHS
Updated Oct
2015
© 2014 IHS
And this risks eroding consumer value perception of
content
31
Note: Film & TV only
Retail, $13.33
Rental, $2.81
Subscription, $0.17
0
2
4
6
8
10
12
14
Spend per unit
European example: Spend per unit – all formats ($, 2015)
Source: IHS © 2015 IHS
Updated Oct
2015
© 2014 IHS
Cinema is increasingly the bedrock of the transactional
film value chain
32
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Cinema Physical Video Digital Video Pay-TV VoD
© 2014 IHS
And remains so when we include digital subscription for
films
33
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Cinema €bn Physical Video €bn Digital Video €bn Pay-TV VoD €bn
