Coming to a Theater Near You: The Premium Large Format Revolution
Using the airline industry as an analogy, Premium Large Format (PLF) auditoriums bring a business or first class experience to moviegoers around the world. These auditoriums often combine the latest in cinema technology—cutting edge sound and projection—with amenities like premium ad recliner seating. According to research by IHS Markit, the number of PLF auditoriums worldwide nearly doubled over the last three years, from 1,667 in 2014 to 3,202 in 2017, making it one of the hottest trends in exhibition today.
There are two routes exhibitors can take to implement PLF auditoriums in their theaters. They can tackle the challenge in-house, developing their own exhibitor-branded PLF offerings by handpicking the tech and amenities that suit them best, or they can call upon a cinema technology provider to implement one of many third-party PLF offerings across their locations. According to IHS, circuits around the world have shown a slight preference toward what it labels “Global” PLFs (1,877), from cinema technology providers, against exhibitor-branded versions (1,325).
These definitions have become increasingly muddled as the industry welcomes a growing variety of premium formats. Offerings such as ScreenX with 4DX, the panoramic screen/immersive seating format from CJ 4DPLEX, or legacy brands like IMAX, offer a notably different experience—making their grouping in the same category. “It is becoming much more of a cluttered space, and it’s become quite confusing for consumers,” admits JL Pomeroy, Global CMO for IMAX, who doesn’t consider her company’s offerings as part of the PLF family. For Pomeroy, differentiation is key to the IMAX experience, making it exclusive than any other way to see a film. To be frank, the same could be said about any PLF system, but perhaps the focus of the label should be on the first word, Premium, rather than the last, Format.
There has been much made of the decline of 3D at the North American box office; an understandable concern based on the 40 percent decline in grosses since its 2010 peak of $2.2 billion. 3D grosses remained level at $1.8 billion in the span between 2011 and 2013, but have since been unable to reach those heights—finishing last year at $1.3 billion. That decline coincides with the expansion of PLF formats around the world; the audience demand for a premium experience isn’t on the wane, it has instead fragmented across a variety of different offerings—grouped together under the PLF label. The decline of 3D must therefore be considered alongside the rise of PLF; the premium market isn’t necessarily shrinking—it’s simply becoming fragmented.
3D leader RealD recognized the importance of diversifying its premium offerings, launching its own line of PLF auditoriums, LUXE, in 2013. While there are LUXE auditoriums in Russia and Eastern Europe, the concept has found the most traction in the booming Chinese market. Opening its first Chinese LUXE auditorium in 2015, there are now 40 screens across 21 of the country’s major urban centers. 8 of those auditoriums are in Shanghai alone. “We see continuous growth of PLF demand in China with most new cinemas owning at least one PLF screen on location. We are very positive in the rollout of LUXE,” said Edman Chan, RealD’s VP and General Manager, Asia Pacific, in an email to BOXOFFICE. “We are also providing our technologies to our exhibitor partners who want to build their own PLF brand powered by RealD.”
According to RealD, a LUXE auditorium can generate approximately 25 percent of the box office for an entire cinema location. This sort of revenue potential is one of the principal reasons why PLF auditoriums have become so desirable in recent years. “While technology is a primary driver for the rise of PLF, the fact that these differentiated screens create demand for audiences to experience strong content at higher price points is at the core of this investment which has seen the market grow by over 70 percent since 2015 to 3,202 screens,” explains David Hancock, Director of Film & Cinema at IHS Markit. “PLF screens deliver a more immersive experience through technology, but the concept increasingly includes enhanced design and comfort too. The underlying rationale stems from the need to compete, above and beyond, with evolving standards in the home. Maintaining this competitive edge is what drives cinemas to invest in bigger, better, bolder. However, these premiums will increasingly translate to smaller more intimate screens, and represents a further opportunity for the PLF market to expand.”
AMC, the leading exhibitor in the United States, is a good example of an exhibitor that has a diversified, non-exclusive approach to its PLF offerings. The circuit is the largest IMAX and Dolby Cinema operator in the United States, with 186 and 96 locations respectively as of May. It also operates ten AMC Prime locations, its proprietary PLF brand, along with several BigD auditoriums—Carmike’s PLF brand— that it absorbed through its acquisition of the Georgia-based circuit. AMC’s approach to premiums caters to consumer choice—allowing viewers to decide from an array of different experiences. Premiums have become so central to AMC’s current identity that they are the principal marketing point behind its new subscription service, AMC Stubs A-List, allowing members to attend any 3 screenings across its circuit for $19.95 per month.
Dolby Cinema’s partnership with AMC proved to be a crucial foundation for the format, which only launched in 2015. Today, IHS reports Dolby Cinema has commitments in place to double its screen count—from 155 to 330 screens—in the coming years. At CineEurope this year, Odeon, the U.K. arm of the AMC’s global network of theaters, announced it has plans to install 7 plans across its circuit in the coming years. The format will be making its debut in Germany later this year, at Munich’s Mathäser Palast.
Another global PLF brand that has been gaining traction in recent years is CJ 4DPLEX’s panoramic format, ScreenX. Following the discontinuation of its former rival format, Barco Escape, earlier this year, ScreenX is now poised for a rapid global expansion. According to CJ 4DPLEX, ScreenX is currently present at 142 screens in 8 countries. 130 of those screens are in China and South Korea. The company expects to expand that footprint to 200 screens in 27 countries by the end of the year and has begun rolling out ScreenX with 4DX auditoriums, combining its two premium formats in one moviegoing experience.
B&B Theatres was the first major U.S. exhibitor to embrace the format, announcing at CinemaCon its plans to install 4 ScreenX systems, including the world’s largest at its Grand Screen PLF auditorium in Liberty, Missouri.
ScreenX continued that momentum with the biggest single-circuit deal in its young history. Cineworld had already announced its plans to add 145 4DX immersive seating systems in the U.S. and Europe at CinemaCon; it followed that up at CineEurope with a commitment to install 100 ScreenX auditoriums across its global network of theaters.
Brandon Choi, President and CEO of CJ 4DPLEX Americas, recognizes the importance of the Cineworld contract, calling it a significant milestone for his company and validation that premium cinema is the future of the movie industry. The biggest impact of the Cineworld/ScreenX partnership will reverberate with Hollywood studios, providing the necessary footprint to develop more ScreenX-friendly titles in the coming years. “While 4DX has found its footing in the industry, averaging 70 titles a year, it is a big step for ScreenX,” admits the CJ 4DPLEX executive. “From last year, we have already doubled the number of Hollywood titles released in ScreenX. With the direction of our growth and strengthening relationships with studios, it can only grow from there.”
The interest around PLF has led cinema technology companies to begin developing and launching out their own solutions. The Ymagis Group’s CinemaNext has begun the rollout of SPHERA, a PLF offering that combines the company’s suite of services—including EclairColor HDR presentation—to cinemas around the world. There are only two SPHERA installations currently on the market, in Athens and Paris, with plans for 9 additional locations for the near future. THX became the latest company to enter the PLF space this April, announcing at CinemaCon its plans for THX Ultimate Cinema. The system will ensure all components meet its rigorous THX Certified Cinema standards—including 4K image resolutions and an immersive multi-dimensional sound system.
North American exhibitors have their pick of partners in their approach to implementing a PLF concept to their circuit, and the market shows no signs of slowing down. According to the MPAA’s annual THEME report, the sector has experienced global growth of over 20 percent per year since 2014. North America has the second-highest concentration of PLF screens by region—trailing Asia Pacific—where the number of auditoriums has grown from 763 in 2014 to 1,115 in 2017. Exhibitors have poured millions of dollars on improvements to the comfort and presentation at their cinemas; the biggest challenge now, according to Cineworld CEO Mooky Greidinger, is picking the right partner and communicating this investment to their audiences. “The audience needs a very clear message—IMAX is a clear message, 4DX, VIP—people need to know what they’re getting,” he said. “But we must also not forget that what we would call our ‘regular’ screens, shouldn’t be just regular. For us, they are premium as well. The masses are still there—and we need to give them the best sound, seat, and picture.”