Trend Analysis: The Cinema of the Future
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Do you go to the cinema? Still? The Hollywood movie is well on its way to becoming the silent film of the 21st century, despite the record-breaking openings of individual productions. No interaction – just endless popcorn and nachos & cheese. One product for all viewers with a fixed starting time. And nothing that the average home cinema has long been doing better …
The marketing chains are also a nightmare: Exploding investments in film and cinema technology, ultimately helpless against piracy, and with disintegrating refinancing mechanisms. The cinema will have to reinvent itself if it hopes to have a future in the days of Netflix and The Walking Dead, 100-inch ultra HD TV sets, and standard living rooms equipped with surround sound. The future of the cinema is as a mobile service: flexible and movable, exclusive and interactive. Read this trend analysis to discover who is shaping the cinema of tomorrow and how theaters can make viewers excited again.
Cinemas have long been living off of substance – the magic of the silver screen faded long ago. Innovations in the industry within the last 60 years have been modest although, for example, the digitalization of cinemas has cost billions in public funds. The result? More of the same. Admittedly, the sound became better and the picture, too – first in 4k and later 16k – ads and trailers are digitally broadcast now as well, giving these formats better short-term marketability and thus greater precision and timeliness. But this is not an answer that can secure the future of the movie theater. In Germany alone during the last ten years, 10% of theaters have closed, and audience numbers are in decline. In terms of profits, rising ticket prices have kept this development from being too painful so far, but it is still a bad omen for the industry.
We are also seeing with increasing clarity that motion pictures no longer shape the images and narrative styles of our culture; the steadily growing complexity and opulence, grandeur and power of the film medium have long since outgrown the cinema. Now advertising, video games, and series are setting the standards here.
All of this, by the way, is happening before the backdrop of a film and entertainment industry whose central marketing principle is collapsing. For years, first-run theaters, smaller cinemas, merchandising, videos and DVD, pay TV, and free TV (in this order) secured stable margins and helped absorb the risks of film production. The market logic is afflicted not only by professional, organized piracy, but also by the growing financial success of quality TV series, the dramatic capability of today’s video games, and the free availability of creative content. The effects can be seen in the program of any local cinema: More and more supposedly “safe” prequels and sequels, less and less original content. Star Wars VII is the commercially safe option – the industry probably wouldn’t produce the first Star Wars film if it came out today. Such a defensive strategy will give this studio or that theater chain a few more profitable years. But this can’t hide the fact that the future of the cinema lies elsewhere. And it has already begun.
In the times of Netflix, Amazon Instant Video, Maxdome, Apple TV, and illegal streaming platforms, cinema operators now face a serious challenge. Mere marketing campaigns can’t save the movie theater. This trend analysis describes what needs to happen instead, what technological developments might be relevant for theater operators, what customer segments can be approached (and how), and what new business models will appear in the near future.
The cinema of the future is tech-driven
3D films are the standard in many locations now, and the development hasn’t stopped. This means that eyewear has become a common feature of theaters today. Even now, hardware and software providers are poised to replace the 3D standard with virtual and augmented reality and thus to drastically expand the possibilities of eyewear at the cinema. In a previous trend analysis, we already discussed the various possible applications here, and looked into the new business models that will grow from this. The conclusion: The smart glasses of tomorrow will reshape entire markets!
In the cinema, usage possibilities for smart glasses begin simply with the overlay of optional subtitles or additional information about the plot, the production, or the cast. Companies like InAir go one step further and exploit the space between screen and consumer to display content from the Web. Gesture-controlled, naturally. From Facebook timelines to Wikipedia articles to personalized advertising, usage examples abound. This by no means requires the use of high-end smart glasses – simple models can do this as well.
With cutting-edge smart goggles, the possibilities are much greater. In the future, a couple that wants to go to the cinema together will no longer have to agree on a film: One can see Die Hard 13 while the other watches Minions 5. This means arguments about what film to watch are now a thing of the past. Visitors receive a pair of smart glasses at the ticket counter – each with its own program. In this way, people can sit together, lean back, and share their popcorn while everyone gets to watch the film they really want to see. This option will also change the way cinema auditoriums are designed. These will sever their dependence on a frontal screen, themselves becoming a design object and public attraction of their own. Design your own to attract your audience of tomorrow!
But considering the potential possibilities of future VR glasses, even this application is far too linear a thought. The truly new cinema appears in the moment when viewers share in experiencing – and shaping – the films themselves as they watch. Eventually the line between films and video games will blur, and audiences will become immersed in the story in the most literal way possible. Through the menu for their VR glasses, viewers in the future will be able to choose whether to experience a scene in the third-person perspective, first-person from the protagonist’s point of view, or maybe in free-flight mode … And the next step: Changing the film environment actively – like in a video game! Even if the main plot will not be influenced here, this immersion makes a much more intense experience possible, a creative possibility virtually unthinkable in today’s world of passive observers. Now imagine the experience in Rogue One or Jurassic World, or maybe Alien: Covenant …
Anyone who thinks through this development a bit further will soon hit one of the decisive questions for the future business model of the cinema: Why would anyone need an auditorium at all if they can simply use their own pair of VR glasses at home?
The short answer: technology. There are obviously technologies that stimulate viewers’ senses in ways that would not be available in a home setting. None of them have established themselves so far. Aroma cinemas and 4D cinemas with rumble seating have been around since the turn of the millennium at the latest. But so far they have failed to find mass-market acceptance – the conventional cinema was enough for most. But now that consumers have brought the cinema to their living rooms, theater operators will need to persuade them with new concepts and real added value.
The development is taking a different course in Asia. For six years now, the company 4DX has been offering Seoul audiences the fourth dimension of cinema. As the film plays, small ducts in the seat arms release the appropriate scents, splashes of water fall from the ceiling when it rains on screen, and gusts of wind make the experience of the high seas practically authentic. The audience becomes an active part of the story and moves closer to the plot and characters. 4DX recently announced its entrance into the German market, but so far there are no real signs for the sudden success of this approach in Europe. The one exception here is amusement parts, which have long had 4D showings of short films as part of their repertoire.
The future of cinema is consumer-driven
Where does cinema’s big opportunity lie if not in water and wind? At first glance, the average home cinema can do everything a movie theater could do – only better. What’s more: Binge watching of popular series is passion for film in one of its purist forms. This is especially exciting when providers release entire seasons at the premiere. Here viewers no longer have to make do with one-off viewing experiences. Today’s movie buffs follow the epic Game of Thrones, pant for the next season of Vikings, and hold expert debates about Westworld’s latest shock in the forums.
Where is the place for movie theaters in this environment? The classic marketing logic of series producers has no plans for a detour to the local cinema. And yet it is precisely here where one of today’s most interesting starting points for theater operators lies – because this is what people want to see. The ability (willingness?) to flexibly react to customer needs will decide the future of cinema as well. The series cinema of the future will range free from prime time slots for Hollywood blockbusters, offering its guests a subscription to Breaking Bad breakfast to start off the day or a Game of Thrones lunch break. In three-month blocks, customers can book a regular seat among friends and fellow fans. Or, the theater offers spinoffs, subplots, and exclusive story threads for Walter White, Daryl Dixon and company as added value for series junkies.
Naturally this won’t be a solution for all target groups. Cinema is facing the same phenomenon as other industries: The digital revolution is radically restructuring customer segments. The transformation of customer needs in the digital economy is largely driven by technological progress.
Across industries, the classic paradigm of consumers with varying degrees of substantial purchasing power ranging from the economy to standard to premium segments is now becoming obsolete. First off, the standard segment is disappearing. Second, the remaining two segments are beginning to exhibit two contrary operating principles: Economy customers continue to base their purchase decisions on the cost-to-benefit ratio, whereby the amount of available capital is becoming a non-issue in this segment.
The premium segment operates according to a fundamentally different logic: Here consumers are primarily concerned with identity management, with expressing their individuality, inwardly and towards others, with a brand, a provider, a movement. My fair-trade coffee symbolizes my environmental comitment, my account at Berkshire Hathaway expresses my sound grasp (and supply!) of finances, my iPhone … you can fill in the rest.
In the future, movie theaters will still be able to attract the upper economy segment through special experiences and extraordinary additional offerings: The gastronomic selection suited to each film, with chocolate fondue for Bridget Jones and classic Breakfast at Tiffany’s served (in evening dress) to viewers in the comfort of their leather arm chair with elegant end table.
Premium customers will expect exclusivity and will use theater outings to express and underpin their own identities. The result will lead to heftier private labels in the cinema segment, to selective offerings also in terms of program, and to a clear distinction between theaters. Value-based cinemas will increasingly turn to partnerships: Addidas sponsors the Forrest Gump retelling, “The Martian 2” is brought to you by Mars Corporation, and the local zoo is proud to present the sneak preview for the new Madagascar film …
Community-oriented premium customers can be ideally addressed by offering them exclusive unique events tailored especially to them. A 4 p.m. teacher’s showing of that new school comedy, or the big Star Wars evening on Friday – admission in costume only! And on Saturday: the advance premier of the sequel to La La Land, exclusively for the local dancing academy. The core concept is the same in every case: This isn’t open to just anybody! And those who are admitted have a reason to feel special.
The business models of the future
Practically every cinema operator offers their auditoriums for private as well as public showings. This multipurpose usage is obviously sensible, even if cinema operators today shudder at the billing minutiae. More innovative theaters develop their own theme songs and ads or experiment with aroma technologies. Here a good deal of cutting-edge marketing is already taking place, creating many of the unique points of attractiveness that allow customer loyalty to form in the first place.
But does cinema really have to happen at the cinema? The mobile auditorium can be to cinema what the delivery service is to pizza and company. The theater operator of the future delivers – along with the film – the plush seat, the popcorn, the oversize screen and HD beamer, and the latest Dolby Surround system to your house. A home cinema truly worthy of the name! Cinema as a service, freely scalable from family use to the block party with professional equipment.
Let’s take a further step back from the stationary character of the cinema. Mobile viewing today still means watching a DVD on a tiny display with poor sound quality on the train to Stockholm or the bus back home from Sacramento. Cooperation between long-distance bus lines and cinema operators offers a potentially powerful differentiating factor: the shared film commute where the latest movies are shown with the best of modern technology, the HD cinema bus – as a regular route or on demand.
And should films really be the only things shown at the cinema? Opera, theater, and concerts have long been on the bill for premium cinemas. An even more mass-market friendly option is eSports. YouTube channel subscribers for a given pro gamer typically run in the millions. And the games themselves practically scream for big screens and impressive sound. The host cinema thus becomes a major venue, while the event can also be screened live at other cinemas across the world. League play included: Berlin vs. Singapore, Paris vs. San Diego.
What is most likely the greatest market potential – and one which so far has not been exploited – lies at the interface between cinema and dating. Thanks to intelligent personality analyses, generating a substantial psychological profile of an individual based on small samples of observed behavior is possible even today. If a theatergoer is wearing AR glasses it's even easier: At what points does she laugh? Where do her micro-gestures show disgust, joy, or fear? What causes her interest to peak? When does she look away? And after the film comes the SMS from the dating agency: "Please look at seat 34E – congratulations! Your profiles are a great match!" A partnership service many times more powerful than Tinder or Lovoo, obviously even more effective for those who often visit theaters of the same provider. The service for regular customers is a seat near people with the same sense of humor – algorithmically assigned, of course. And the real kicker is the email from the dating agency: Today a really good match for you is going to the cinema. We have reserved you a ticket. Meet your date in front of the main entrance at 8 p.m." Data protection concerns? Sure, the protests are predictable. But what is stronger in the long run: Concerns about privacy or the desire to find the love of your life?
What future does cinema have? As you have probably guessed, the question has no single answer. Instead, we can expect various possible scenarios the cinema of tomorrow can orient its business model towards. The cinema of the future can work without film. The cinema of the future can work as the greatest, most extraordinary shared experience for the senses. May the force be with it.