Talk About Digital Cinema

Eric McCarthy
Vice President of Sales 
Screenvision

Veteran of the Pre-Show

Eric McCarthy

Eric McCarthy is Vice President of Sales for Screenvision, a leading supplier of branded pre-show programming to more than 14,000 US cinema screens.  As Screenvision has continually increased the quality and sophistication of their work, they have turned to Kodak to help handle the preparation and distribution of their pre-show programs.  On a regular basis, Kodak’s LaserPacific Media technicians in Hollywood assemble and send MPEG2 and JPEG 2000 ad content and playlists to more than 130 locations with 1422 screens nationwide, refreshing Screenvision’s pre-show for movie-goers.  McCarthy has a history of involvement with Kodak; in a previous position as Manager of Business Development at Harkins Theatres, he recommended the selection of Kodak Digital Cinema Pre-Show systems in a circuit that is Kodak’s second-largest digital systems customer today.

On getting started in the cinema business

My family’s always been in the theatre business.  My mother’s father – my grandfather -- was one of the people who started the projectionist union in Albany, New York.  My father was also a union projectionist.  So I grew up in the business, never really paid for a movie ticket, and used to go to the movies all the time, but I never intended to go in this business.  I preferred architecture and was planning to do that in college, but that was the late 80’s and architecture was in a kind of recession, so I changed to a business major.  And, as I was doing that, I got a call from Hoyt’s Cinemas and they were looking for Manager-Operators.  They gave me a schedule that let me work around my classes, so that’s how I originally got started working for the theatres.

On getting into the pre-show side of the business

In that job, one of the things I did was to sell sponsorships – where advertisers could buy rolling stock (film) ads on screen.  From there, I went to work for Edwards Theatres in California where I became the Director of Concessions; we had partnerships with Coca Cola and other suppliers and we offered media campaigns as part of those agreements.  We were about to test digital – enhanced Powerpoint really – when the company was sold and I moved to Regal and from there to Harkins where, as part of my role as Director of Business Development, I also headed up their on-screen program.  They let me spend a year learning everything I could about on-screen programs, the systems, the providers – and then lead their transition into a digital world.  And we chose Kodak systems – and their partner, Cinema Screen Media – to help us do that.

On working with the Kodak system

I say it to this day – Kodak is the ‘Cadillac’ for pre-shows.  There is no question that Kodak did a lot of homework before launching their system.  Kodak looked at the opportunity and said:  ‘…before we build something, let’s make sure it’s going to meet all the criteria our exhibitor partners are going to require – and then let’s also make sure it provides what their advertising partners are going to need…’  There were lots of people who didn’t have the foresight to see into the future, to recognize that the pre-show would be a living piece, growing and expanding and changing.  It’s evolving, even today -- and it will continue to evolve into whatever becomes advantageous for the advertiser and entertaining for the audience.  And Kodak saw that from the beginning and built a system that would enable that.

On the health of the pre-show market.

Screenvision is a leading player in what is now the fastest growing part of advertising which is the out-of-home market.  In mid-June, the Cinema Advertising Council released data showing that cinema ad spending in the US was up about 19-percent last year -- to $540 million -- and the president of the CAC predicted double-digital growth for at least the next several years.  In the past, an advertiser purchased television, newspaper/radio, or phonebook.  Now, cinema ads let companies capture people outside the home, in an unobtrusive way, in a relaxed atmosphere -- which gives people a lot better opportunity to accept the ads without feeling they are ‘in their face’.  When cinema ads are done well, most movie-goers enjoy them more than looking at a blank screen.

On what Screenvision does

We produce a 20 minute cinema pre-show hosted by Bradford Howe.  The hosted part changes once a month, but the content in between can change every two weeks where new advertisers are uploaded and others are changed out.  On average, about 55- to 60-percent of the show is typically ‘entertainment’ with 40- to 45-percent ads.  Another thing we’ve done is to ‘brand’ our months, to produce a show on a particular ‘theme’ each month. So, for example, April was the ‘green month’ where everything we showed was very ‘eco-friendly’ that month.  So it gives us an opportunity, from a selling point, to concentrate on particular advertisers that are very ‘green’ and it gives advertisers a program that is most closely related to what they do.

On the flexibility Screenvision offers.

Most cinema circuits in the major US markets are handled by the major pre-show providers – either Screenvision or NCM.  Together, we have about a 90-percent market share.  We sell the ads, but we can also make the ads.  We can do a sort of ‘create your own spot’ – where we can take elements the advertiser has made for other purposes -- picture, artwork, whatever -- and create a cinema commercial out of them.  Back in the day, you only had a couple of options – you either had a television commercial you could put on film stock -- or you sent us a business card that we made into a slide – and we put it up on screen.  Digital technology has allowed us to be so much more flexible and to offer so many more ‘products’ – everything from a 30-second commercial, to animated ads, to picture-in-picture, to voice-over static ads.  We can do pretty much anything because of the digital elements.

On how pre-show has changed through the years

The early days were pretty awful.  I think so many people were just ecstatic at having the ability to have a show running on screen that was separate from anything that Hollywood had produced – and then be able to integrate advertising into it.  Unfortunately, there wasn’t any ‘balance’ between advertising and entertainment – and there were no transitions, it was just slapping a whole bunch of different elements together and letting them run back to back.  So, we all needed to find that ‘balance’, that ‘fine line’ of what was going to be acceptable, what was going to be tolerated, and what was going to be wanted.  Having a sense of balance, having a host, having someone who segues well, someone who segues relevantly – all of those things were missing, early on.  But now, pre-show suppliers are realizing it’s actually a ‘show’.  Now, if you were to go into a typical theatre, you would find people upset when there is nothing on screen because they have become so used to it.

On how studios now view pre-shows

Many studios are still more interested in trailers than in the pre-show because they believe that trailers promote their movies more effectively than anything else.  But studios also know there is limited space available for trailers and so some studios are beginning to recognize the benefits that two or three minutes in a pre-show can bring them, especially when they use that time to show ‘making of’ pieces.  Studios are learning there is value in participating in a pre-show; the question is – what is that value?  And then, what should they put behind it? 

On how major advertisers now view pre-shows

It’s been five or six years from when the digital pre-show was first launched and, at that point, nobody gave us too much credit on what we could deliver.  Now, with so many more screens that are digital, so many more advertisers who have tried it and been successful -- we don’t have to do as much of the educational process as we had to do originally.  Cinema advertising sells lot easier, especially on a national scale with national advertisers.  We are now part of the ‘buying mix’ of national advertisers -- rather than having to ‘sell ourselves’ to get some of that media money away from television or radio, as we’ve had to do in the past.  In the past, we weren’t really considered as major media.  And now we are. 

On how exhibitors view the pre-show

For exhibitors, the pre-show is a source of money -- it helps to pay for their expensive buildings.  But the money they get from that advertising is a little bit different for each exhibitor; each one we work with is a little bit unique.  Some get minimum guarantees; we offer others a revenue split – where we pick up the cost of the equipment, sell the ads, and give the exhibitor some percent of what we sell.  And typically, we don’t sign anything less than a 7- to 10-year contract.  That’s not an unusual time frame.  Most exhibitors have contracts of that length with their ‘pour’ suppliers, Coke or Pepsi.

On how cinema audiences view the pre-show

I think the audiences like it a lot more than they did in the beginning and, they say, “…we’re glad we put some entertainment in there because when it wasn’t entertaining, it wasn’t any fun to watch.  And we can tolerate the commercials because of the entertainment...”  Back when we didn’t have that – or when the entertainment we did have wasn’t any good -- that’s when people were frustrated.  In all the surveys we’ve done, we see a growing trend of people liking the pre-show vs. none at all – or versus the pre-show produced by our competition.

On the crowded cinema pre-show market

We have a much higher renewal rate than we ever used to.  Advertisers like the ability to reach movie-goers, who tend to be more affluent consumers.  There are very few companies – on either a local or regional basis – who have walked away dissatisfied from doing cinema advertising.  If they did, it was either because they had a poor ad, or their product or service just wasn’t right for the customer who was in the seat.  But now, unfortunately, as cinema advertising moves ‘up market’, some of the smaller advertisers are going to get bumped out.  It’s our challenge to get the big regional advertisers to see us as a great outlet for their media expenditures, but as we do that, we’re also going to price out some of those mom and pops.

On working with Kodak to prepare content

Actually, Kodak has done some great content prep work for us.  They’ve been able to manipulate some 4:3 (television-format) commercials into 16:9 (cinema-format).   They’ve been able to utilize some of the resources they have to make our ads appear much better on screen.  Kodak has also done some tags for us and has done some splicing of content – and some transitional pieces.  All of it has been very well done.

On using digital pre-show systems for other purposes

I don’t think on-screen video gaming will be as effective as some have predicted, but I can certainly see towns where they would have Bingo, or something like that.  The interactive pre-show is the next logical step.  I absolutely can see audiences using their cell phones to gain coupons or other discounts from advertisers.  We should encourage that because it’s all before the show.  Many of the exhibitors don’t understand what they actually have and therefore they’re scared.  But text messaging doesn’t hurt anyone and it doesn’t hurt anyone inside a cinema before the movie begins.  

On the use of the big digital projector to show all content

We have sites that use smaller digital projectors to show the pre-show – because they show features on film -- and we have sites like Carmike that are all-digital for features and we use their 2K projectors to show our pre-show.  When we have the ability to transition to using the big projectors to show our program everywhere, we’ll be able to fill the screen in every location, which will increase our presentation quality.  And, as advertisers see their work in the best possible light, I think we’ll see even more advertisers become even more interested.  So, I do see us going down to one piece of equipment and I think as the current systems reach the end of their useful life – and digital feature projectors are available – I think there will be a negotiation between the exhibitor and their advertising partner to determine whether the exhibitor gets a larger share of the pie because they are now bringing the equipment to the equation.

On opportunities for improvements in the movie experience

That’s the question:  Is it just going to be the movie experience?  Movies now are really a ‘Friday through Sunday event’ and so four days a week, the cinema may be something else.  With digital systems, there are so many more things we’ll be able to do in terms of alternative content, making that interactive as well.  But I think that the theatres themselves are going to have to become more than ‘popcorn and soda’ environments.  When you see what Santikos theatres are doing, for example, where they have a gelato stand, a full-service restaurant, a whole bar for adults – I think those things all change the environment:  the theatre becomes something much more targeted and that also helps us – from an advertising standpoint – to target those movie-goers.  So, I think the theatre is going to continue to introduce products and services aimed at specific audience segments; it’s beginning to recognize that movie-goers are not one homogeneous group, but a number of different groups -- and there are ways to better serve each group.  But for everyone, I think it’s a more enjoyable experience now with a pre-show than it ever was without one.

On the choice he made – to go into theatres instead of architecture

Was that a good decision?   I do believe it was.  The theatre business is certainly a lot more exciting.  With architecture, once you’ve built a building, you have something there and it’s great to look at, but once you’re done, you’re done.  But in my job now, I’m helping to build the architecture of the pre-show for the future – and it’s a building that continues to evolve.