CinemaCon 2014, Las Vegas, March 24, 2014—Dolby Laboratories, Inc. (NYSE: DLB) and Lippo Group announced today that Cinemaxx, a new exhibitor under Indonesia’s Lippo Group, has committed to installing Dolby Atmos in 100 cinema screens over the next three or more years, with 30 of the 100 screens scheduled to be launched by the end of May 2015. With this news, the revolutionary new Dolby Atmos® cinema sound format reaches a significant milestone: more than 600 screens worldwide have now been or are scheduled to be equipped for Dolby Atmos.
Dolby Atmos unleashes the potential of sound in storytelling by giving filmmakers the creative freedom to easily place or move sounds anywhere in the movie theatre to create a lifelike, virtual reality of sound and the most engaging cinema experience ever.
“Dolby looks forward to working with Cinemaxx to bring the ultimate cinematic experience to moviegoers in Indonesia,” said Mahesh Sundaram, Vice President, Asia Pacific, Dolby Laboratories. “With Dolby Atmos, you feel as if you are in the movie, not merely watching it. We are confident that moviegoers will go back again and again to Cinemaxx once they enjoy their first Dolby Atmos film.”
“Our goal is to offer state-of-the-art technology with first-class amenities,” said Brian Riady, CEO, Cinemaxx. “With Dolby Atmos, we aim to take the Indonesian cinematic experience to the next level.”
Dolby Atmos has quickly become the preferred choice for next-generation cinema sound among major studios, award-winning filmmakers, and exhibitors around the world. To find a Dolby Atmos equipped theatre and showtimes, please visit www.fandango.com/dolby. Movie patrons who would like to experience Dolby Atmos can visit iwantdolbyatmos.dolby.com or check with their local cinema for select showtimes when tickets become available.
CinemaCon 2014 Daily Round-Up
CINEMACON TRIUMPH AWARD
Jose (Pepe) Batlle
Former COO, UCI/Cinesa Continental Europe
Interview By Daniel Loria
Jose Batlle is the former COO of UCI/Cinesa in continental Europe. He was responsible for seeing management and direction in five key European territories: Spain, Portugal, Italy, Germany, and Austria. A 28-year veteran of the exhibition industry, Batlle retired from his post earlier this year.
BoxOffice recently spoke with Batlle in a wide-ranging conversation about his career and the state of the global exhibition market.
How did you come to work in this industry?
Michael Forman was in charge of Pacific Theatres in 1986 and was also overseeing Cinesa in Spain. Cinesa had finished 1985 with heavy losses and Michael decided to change the management. I was selected by Spencer Stuart Management Consultants to restructure and reorganize Cinesa and see if we could generate profits.
Those profits happened at the end of 1986, and in 1989 we opened the first multiplex. From 1989 to 1991 we opened additional multiplexes in Spain, and I approached Michael with an aggressive expansion plan to build even more multiplexes across Spain. He thought it was a great idea but wanted to go in with a partner because he wasn’t keen on investing so much money in Spain at that time. That’s when we came into contact with Paramount and Universal; they operated UCI and were building multiplexes in England and Ireland and had begun an expansion into Germany. They had also just started to look into Spain, and that’s how we came up with our joint venture—Cinesa UCI—for the Spanish market.
In 1992, Michael Forman decided to sell his 50 percent of the company to UCI. This meant that Cinesa went from being a family-owned company to a multinational corporation.
In 1995, the executives at Paramount and Universal asked me to open multiplexes in Brazil. So while we were undergoing an aggressive expansion in Spain, we were simultaneously expanding aggressively in Brazil as well. I spent seven years of my life traveling between Spain and Brazil, where I opened 111 screens.
I was asked to take over Italy in 1998, where we didn’t have a single multiplex at the time. We opened our first multiplex there the following year and today we have 450 screens in Italy.
In 2003 they asked me to take over Germany and Austria, which were coming off big losses. But in 2004, Paramount and Universal sold UCI to Terra Firma, without including Brazil in the deal. This took me from working at a multinational into working for a private equity firm. By that time, I was already senior vice president of continental Europe, and Terra Firma made me COO of the same region.
We started growing rapidly because of acquisitions. From 2004 until I retired this year, we acquired 10 companies in Italy, Germany, Portugal, and Spain. We now have more than 1,200 screens across continental Europe and we are the largest exhibitor in the whole of Europe.
What is the biggest change you’ve noticed since you began your career in the industry?
There have been several changes. When I first started in the industry, cinema was in a downswing. The arrival of multiplexes changed that, and the sector began to grow rapidly.
Secondly, there were too many small exhibitors all across Europe. The market is more uniform now. For example, the UK has three important players, Spain has two or three, Italy has two, and Germany has three. This wasn’t the case before; there used to be a lot more regional players in every country.
I have also seen a dip in admissions, and it has been a big shift for our markets. The way we watch movies has changed so much. Consumers can easily access a movie anywhere they want, even through piracy.
I can’t forget to include the influence of digitalization. The analog era is over in our business, everything is digital today.
There have been extraordinary changes in the industry throughout my 28 years working in exhibition.
What is your perspective on the European market today?
It’s hard to speak about the “European market” as such; we have to speak about each country individually. When I arrived in Germany, the market was in a crisis. Now Germany is showing big gains and exhibitors in the market are working better. There were no multiplexes when I arrived in Italy and now it’s a healthy market.
Spain is a very different case. We entered a very serious financial crisis as soon as there was a surge in multiplexes, and attendance dwindled soon thereafter; in 2004 attendance was around 145 million and today it’s down to 78 million. The market shrank in half from 2003 to 2014.
What are the drivers of sustained growth in a market?
Disposable income and purchasing power are very important, as is the cultural environment: a university presence, the number of people living in urban versus rural areas. The quality of an exhibitor’s installations is also an influence.
The key factor, however, rests with national film production. Italy has a very healthy production industry; about 30 to 35 percent of the country’s annual attendance comes from national films. Germany has good years and not-so-good years, but maintains a consistently good level of quality in its productions. Unfortunately, that is not the case in Spain. Spanish cinema has not been able to attract enough of its own audience.
The current economic crisis is also playing a big role. We used to say that the exhibition business was immune to a country’s economic problems. That is no longer the case. People today have more alternatives and the quality of in-home entertainment has grown tremendously. Exhibition will have to completely reinvent itself in order to convince people to leave their homes and watch the same film at the cinema.
Which markets show the most potential for growth?
You have to enter the market when commodities are low and sell when they are high. Spain is at a very low point right now, so I consider it to be a market that can grow again in the future. I think Germany and Italy still have strong potential for growth, too.
I’d approach England with caution. There are a lot of multiplexes being built and they have to be careful not to make the same mistake as Spain, where there were too many screens built in relation to the country’s population.
Brazil has grown a great deal. The country has doubled is attendance figures since I arrived there in 1995, and I believe it can continue growing. Every day in Brazil you have more people joining the middle class.
China is an impressive market. I think that it will grow in a tremendous way. The issue there has to do with the business climate, where entering the market can be complicated. There’s also great potential for growth in Russia.
What is the situation in Spain?
In Spain you have a combination of several factors. Firstly, Spain should never have tried to reach 145 million spectators. I think the normal figure for Spain is around 100 million.
Why was that estimate so high? Because there was a big real estate boom and a large number of shopping centers were built, and every shopping center had to have its own multiplex.
We have had as many as 4,600 screens in Spain. That is just stupid. The capacity according to the number of people living in Spain should not be more than 2,500 screens. Right now we have 3,800, so I believe there should be even more closures until we get to 2,500, maybe 3,000 tops, but that’s pushing it.
The economic crisis is affecting attendance. People have less disposable income and they stay home instead. Pricing is therefore important.
Perhaps the most important factor, however, is piracy. Spain is the most piratical country in Europe and among the most piratical in the world. The culture around piracy in Spain is horrible; even schoolteachers educate with illegally downloaded material. The consumer doesn’t see piracy as a bad thing, and that’s fatal. There need to be firm laws in place that work against piracy. We also have to educate people to understand that downloading content without paying for it is the same as stealing from Macy’s—it’s exactly the same thing: you’re stealing.
What is the importance of CinemaCon for international companies?
I think that CinemaCon is an important event for any exhibitor that cares about its business and the trends in the marketplace. It’s great for networking with people from other countries, learning more about best practices, and seeing the films that will be released in the coming months. It’s an event that exhibitors can’t afford to miss. CinemaCon isn’t only for the North American market anymore; it’s a global event.
CINEMACON PASSEPARTOUT AWARD
Senior Vice President, Sales & Strategic Planning
20th Century Fox International
Interview By Daniel Loria
Craig Dehmel had a hard time finding the right position after graduating from a small liberal arts college with a history degree. His grammar skills landed him at an advertising firm based in Burbank, California, where he picked up experience as a theater coordinator between studios and exhibitors.
An MBA from UCLA launched him into a marketing career at Fox, where his analytic and strategic skills eventually led to a position in the sales department. He would go on to work on the international releases of some of the studio’s biggest hits of all time, including Avatar, two Ice Age sequels, and Life of Pi.
BoxOffice spoke with Dehmel to discover more about his role at Fox and the company’s upcoming slate of films.
Could you tell us about your current role?
I work at the sales and strategic planning department. The sales side is really the sales reporting side. I have a small group of people working with me in L.A., and we keep our systems and box office estimates up to date.
On the planning side, we do the dating for all our films. We come up with estimates of what we think our films are going to do. We do a lot of competitive analysis and analysis on the seasonality of releasing films. We’re constantly looking at what genres are working where; which regions work better for certain things; and where the growth is in the business. It’s a lot of analysis: looking at the industry landscape and seeing how it’s working and changing.
There’s a third part, smaller but very important—the sales operations side: managing the digital deployments around the world and making sure that the transition to digital is happening quickly because we’re running out of 35 mm stock. Thirty-five millimeter becomes more and more expensive as there is less of a need for it, and that is an issue for us in places that have been slower to transition to digital, those markets usually coincide with less commercial screens for us. If our 35mm print costs are higher but we’re only shipping 35mm prints to lower-grossing theaters, we really have a problem. It behooves us that markets transition to digital as quickly and easily as possible so we don’t have to do an inventory of our prints. Before it was just sending canisters with films in them, more recently it has been sending hard drives with digital cinema packages, and now we’re starting to get into satellite transmission.
Which regions show the most promise in the coming years?
We do very well in Latin America. They are consistently strong performers for us. The biggest problem we have there is that the currencies tend to be unstable, so while we can come out with a great result in the local currency, the grosses can come out taking a beating against the dollar.
Southeast Asia is a strong place for us. Places like Malaysia and Indonesia are strong up-and-coming markets with big populations and there’s real promise for growth.
Russia went through a growth in the last decade and it’s still growing but not nearly at the same rate as it was. China is obviously the biggest growth market, but you can’t get all your films in, so it’s very hard to plan when you don’t know which films are going to play. We still look at China as a bonus. The Middle East is a strong growth area, Eastern Europe as well.
Even in some of the mature markets you have potential for growth. Australia is a place that continues to do well; it’s a strong market with high-frequency moviegoing, so that’s a great part for us as well.
Don’t get me wrong, we’re not down on Western Europe, but like the U.S., it’s very mature. The growth there isn’t significant from year to year.
Fox is taking a big risk in releasing 'How to Train Your Dragon 2' in Brazil during the World Cup. Can you shed some light on that decision?
It’s a huge risk, but the fact is that we have enough years of seeing how films play during European Cups and World Cups to make a judgment call. The decision came down to this: do we push back How to Train Your Dragon 2 to July and go up against, at the time, the latest Fast & Furious and the new Transformers, Guardians of the Galaxy, or our own Planet of the Apes?
There are a lot of big movies this summer and waiting until after the World Cup is over has an air of risk as well. You might not be fighting the World Cup anymore, but you’re going up against three or four other films.
The other issue is that holidays are over come the end of the Cup. In South America you have short winter holidays that end in the middle of July, when the World Cup is over. In Brazil they aligned the holidays with the World Cup so people would have time to enjoy the tournament.
What we’ve seen is that when there aren’t games happening, people go to the movies. We expect there will be days when no one will go to the movies during the Cup. On days there are no games, or games that aren’t important to people in the region, people will be going to the movies.
And there are still people that aren’t really watching the games as fervently. There are going to be parents who feel guilty about keeping the kids at home while they watch all these games. We feel we will have big box office on non-game days and take losses on game days. Going in that window will allow us to make decent box office and we will still be playing when the World Cup is over.
The other factor is that How to Train Your Dragon is a very beloved film; it’s not like we’re trying to launch a new film or franchise; it’s a film people know about. That awareness gives us an opportunity. People are going to need to have something else to do a couple of weeks into the World Cup, and I think we’re going to be that alternative.
Could you tell us about your experience overseeing the international release of 'Avatar'?
One of the highlights of my career was reporting the international numbers on Avatar. It’s probably one of the most satisfying experiences that I’ll ever have in the business.
We were in production for Avatar for four, five years. We knew in 2003 that they were going to make it, and we didn’t release it until late 2009, so it took us six years to get it out after I had first heard about it.
Obviously there were a lot of expectations for it. I imagine it was similar to what the team that worked on Titanic went through: a high-pressure atmosphere where you have this very high negative cost and you’re not so sure how it’s going to do. The tracking wasn’t necessarily where we wanted it to be—people weren’t so sure about seeing these blue people on film—so it was a bit scary leading up to it. We really believed in the film, the organization got behind it, and the opening weekend did around $150 million internationally, a big number but certainly not the biggest—a lot of films have done that or more.
It turned out to be the movie that people who only go to the movies once every ten years go to see. It was exciting to see how that film captured the imagination of the whole world. I had the fortunate job of getting to report the numbers of that film every Sunday, and it felt gratifying for me to know that there were filmmakers and executives out there that couldn’t wait to get an e-mail from me. It felt great being able to deliver the good news since I have to deliver my share of bad news as well.
The 'Ice Age' movies were a huge international hit from Fox. What films on your current slate can do big business internationally?
From a family-film perspective, the first Rio movie was much bigger than our first Ice Age movie. We’ve got the second Rio coming up now, done by Carlos Saldanha, who also directed some of the Ice Age films for us.
What was interesting about the first Rio is that we released it in the middle of a heat wave in Europe during the spring, so we got hurt a little bit by that relative to how it did in Latin America and other markets. I think this is one of those franchises that will grow exponentially in the same way Ice Age did.
We’re also looking forward to Peanuts, which we think has the potential of becoming a big global earner for us.
On the live-action side we have X-Men: Days of Future Past this year and our new Planet of the Apes franchise.
That first Apes film took people by surprise after a disastrous attempt to reboot it earlier. While Rise of the Planet of the Apes wasn’t the biggest film of that summer, it grossed over $300 million internationally and was incredibly well liked. I think the new one coming out can be one of the most talked-about films of the summer. We also have Exodus, Ridley Scott’s version of the Moses story, coming out around Christmas.
CINEMACON GLOBAL ACHIEVEMENT AWARD IN EXHIBITION
CEO, Kinepolis Group
Interview By Phil Contrino
Eddy Duquenne took over as CEO of Belgian exhibitor Kinepolis following a successful spell as CEO of Sunparks. Once installed, Duquenne prioritized a new organizational structure in managing cinemas and promoted direct marketing techniques to better understand consumers.
BoxOffice recently spoke with Duquenne to learn about his strategy in making the most of an exhibition chain in a difficult European market.
What were some of the first things you discovered when you transitioned into the exhibition business?
Coming out of the tourism industry, I was amazed by how everyone was talking in terms of tickets and not in terms of customers. When I [became CEO], we immediately set up sales and marketing departments with a focus on introducing direct-marketing techniques. In Europe we have a population growing grayer, so you have less and less youngsters, and I would ask myself about the long-term evolution of cinema, which is clearly not a growth business when paired with the demographics of a population growing grayer.
What was the strategy behind reaching out to consumers directly?
Could we increase frequency knowing the preferences and the taste of each individual customer? For that reason we started introducing CRM techniques, customer-relationship management, and we started pushing online ticket selling and ticket selling through automatic ticket machines. That way you have a digital moment with your customer so you can start identifying who your customer is.
On average we sell 20 million tickets at Kinepolis; we have about 5.5 million unique customers and we have e-mail addresses for 2.4 million of them. [We track] based on their behavior-what they're buying, when they come to the movies, who they come to the movies with. For instance, a transaction with two adults and two children for Frozen on a Sunday afternoon or an individual ticket for Wolf of Wall Street on Friday night can be the same customer but in different circumstances, so we started looking at why [people] come to the movies-which genres they like, which directors, which cast? And based on that, we have been building algorithms that take those three elements into account and are now trying to push new content.
How did you go about restructuring the company's operations?
We have 23 theaters, of which we operate 22 ourselves, and we came to a new organizational structure where we created budget ownership, and now we have someone responsible for box office, someone responsible for in-theater sales, for experience-meaning the cleaning, infrastructure, projection, sound and security-and someone responsible for business to business. On top of that structure we have the theater manager.
We introduced a new management reporting tool where we only highlight those revenues and costs that each of them can have an impact on. We benchmark between the different budget owners throughout the cinemas and find there's always someone who is doing better. Based on their approach, we try to lower our break-even point from year to year and we incentivize them with a bonus system. We try to lower our break-even point by making profit plans based on 5 percent less tickets but resulting in the same bottom line.
What is the role of NATO and CinemaCon for your business?
The basis of our business is simple: we sell a ticket, a bucket of popcorn, and a Coke. But in general it's a difficult business, because there are a lot of elements and trends in the environment-macroeconomic trends, trends in taste, demographic evolutions, Hollywood focusing on the world market rather than on continents, weather impacts in the short term-and it's not always that obvious to know what exactly is happening and what we should anticipate.
And the comparables are difficult in our industry as well, because the product we have from season to season and year to year is always different. That's why it's good to share with others and to understand how they feel and how they see what's happening.
We see that a strong organization like NATO makes sure all the different aspects and trends in the business are covered very well, so it's a huge source of information. And with CinemaCon you can [connect] with a lot of colleagues from the industry and with more and more representatives coming from Asia, Russia, and South America, so you can speak with them. It's an opportunity to meet with the number one's of the majors as well, and it's Las Vegas, so that's always fun.