How Cinemas Can Address 21st Century Challenges

SAP C/4HANA

The twenty-first century has an abundance of choices and opportunities with increasing access to content. With this plethora of choices, how consumers choose to spend their leisure time depends on a lot of things including convenience and the quality of experience.

In this century, cinemas are hardly the prime source of entertainment for consumers and that can be because of a variety of reasons ranging from video-on-demand models to better picture quality elsewhere.

In this blog, we will dive into the challenges that the cinema industry faces today and how leveraging latest technologies can lead them onto a digital transformation journey where their consumer is at the center of the complete experience.

Challenges before cinemas today

1. Increasing popularity of video on demand

Digital distribution channels raise many new challenges for the movie industry. The problem is compounded with highly anticipated movies pirated and available online illegally before they hit the screens. It can be a no brainer for most people when it comes to the choice of going to the movies or streaming the same film at home. Video on demand wins primarily because of comfort and convenience. On an average, pre-release piracy causes a 19.1% decrease in revenue compared to piracy that occurs post-release.

Today’s consumers watch the latest shows and movies on HD quality at home, free of disruptions, at the pace they want. All that is required is an internet connection and an app. With a simple tap on our screens, they are given hundreds of choices. This also gives way to another trend today: binging. Why watch just a single episode when you can catch up on the last four seasons over the weekend?

Binge watching changes the way you experience a movie or series. The duration between episodes or movies is non-existent allowing for a more immersive, intense experience giving a psychological high. This allows for viewers to relate strongly to characters and the plotline and become more invested in the same. Series are creating a new kind of Cinema.

With a wide range of content on Netflix and Prime, it is the biggest competition to cinema. It’s not just the number of shows/documentaries that draw people away, it is also the quality. Netflix invested 6 billion dollars in 2017 and showed a 36% growth. With tech giants like Apple and Facebook also considering launching their own video content site, theatres need to keep up.

2. Better televisions than theatres

The UHD television standard is equivalent to 4K resolution in theatres, but most screens are 2K at present. Televisions have higher dynamic range capability and frame rates than theatres, and it’s a lot easier to get true black values in a darkened living room than it is in a movie theatre.

There is a vast difference in watching The Dark Knight on a 52 inch TV and a movie theatre screen, but the difference is even greater on IMAX, and that difference is well worth the
hike in ticket prices. While watching a movie in a theatre is a community experience, that is often made better through IMAX, at its core, theatres need new image technology to retain an audience.

3. Dropping movie attendance

Can you recall a movie watching experience in the early 21st century, maybe from a decade ago? You stand in a queue that winds quite a bit, debate over which of the movies you want to watch, optimistically approach the counter, get your tickets, enter the hall and be enclosed in magic for the next two hours. That experience is completely changed today. There is an automated kiosk that makes the whole experience not unlike getting a ticket on the subway.

Over the years, cinema attendance has been in a steady decline with 2017 being the first time since 2006 that the summer box office didn’t clear $4 billion in the US (16 percent over 2016, the steepest decline in modern times and eclipsing the 14.6 percent dip in 2014).

Movies are a chance for the family to have some fun together, outside of home. But very often, the prices are the biggest deterrent. The window between theatrical and online release is shrinking rapidly, with studios pushing to make it weeks instead of months.

Apart from this, other reasons include a lack of innovation, aesthetics, with many theatres not offering much through way of the experience of coming to the cinema.

How the cinema experience can be improved

The modifications for the movie industry should come from business and marketing
perspective so as to encourage more people to go to the movies.

1. Strategize

With only 30% – 40% of the price of every ticket staying with the theatre owners, while the rest goes to taxes, royalties, and distributors, strategic rethinking is needed, as opposed to decreasing ticket prices. Customer loyalty programs or variable prices according to time and location are an excellent way to combat this. Theaters can no longer rely only on external support — they know their locations and have local community engagement. It means they need their own CRM, analytics, e-commerce, and customer support to develop a profitable strategy.

2. Innovate

Theatres must be able to add more than just 3D to the movie experience. Addition of a more physical experience with a variety of motion simulation that ranges from subtle to more intense sensations will virtually transport the audience from their theatre seats into the big-screen action and adventure. If they are going to have to keep coming back to the same movie halls from a decade back, they might prefer the comfort of their home and the quality of their TV instead.

3. CRM

Movies that do exceptionally well at the box-office often have exceptional marketing and advertising teams behind them, in addition to the storyboarding team. Making the public aware of the movie through emotional anecdotes or well placed information on social media is critical to attendance. To manage this, the movie industry needs an efficient CRM to deal with market demands and react in real time.

4. Data Analytics

Enabling data analytics with intelligent ERPs such as SAP S/4HANA can help cinemas connect all their back-end processes with the front-desk functions, creating a seamless experience and satisfying customers while expanding the company’s reach. Modern cinemas know that to keep up with customers, they need to personalize the experience and provide them with value they can’t access on a tap on their phone. Personalization can only be enabled with actionable data analytics which is why it’s imperative that cinemas connect all of their different data sources and processes.

Films are one of the best mediums for storytelling. Movie theatres must change in how they interact and adapt to reach their customers in the way they expect to be reached.

How ArcLight Cinemas transformed their customer experience

ArcLight Cinemas is an upscale theatre based out of Western California with several screens in Chicago and DC with aggressive plans to expand to several new locations. As ArcLight ran primarily on a PC based system, Savantis LLP proposed a hand‐held solution running on phones or tablets as the most logical and economic choice.

Savantis offered a hosted model of S/4 HANA, the latest version of SAP software, to set them up with a suite of mobile apps to better track and control their inventory directly on the theatre floor. With the strict timeline due to their fiscal year‐end, ArcLight  followed Savantis’ Rapid Implementation Methodology, which allowed them to fully implement SAP in just 12 weeks, and on a budget.

In 4 months, there have been over 38 million transactions with a payback on the SAP project of approximately 5 months. David Bent, VP, Decurion Financing says that these systems allow to act on real data in the moment, and give a better experience to customers, which entices them to want to come back.

Post this successful S/4HANA implementation, ArcLight is now working with Savantis to execute the 4th generation CRM — SAP C/4HANA so that they can build a truly customer-centric experience with omnichannel engagement, boosting the return rates for their cinemas.

Get started

At Savantis, we work closely with industries such as hospitality and entertainment to identify opportunities of improvement in operations and customer experience. Understanding the nuances specific to your organization, we help you implement and adopt latest technological solutions to meet your business goals.

Feel free to get in touch with one of our experts to learn more or if you have any questions.

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