Aug 08, 2016

Elon Musk enters the Digital Cinema business

Cinema 4 min read

More than 15 years after the first digital cinema equipment was installed, the industry is preparing itself for what is generally called ‘the second wave’. An industry that converted and re-invented itself at an incredible pace – 10% to 90% conversion in less than five years – is now preparing itself for true digital maturity.

The initial conversion from 35mm to digital was somewhat unnatural: stimulated by VPF and 3D, cinemas around the world adopted digital equipment as a must-do. With some years of digital experience behind them, most exhibitors have optimized all operational aspects to the digital workflow (via integration, automation, flexibility, etc.). We see that the market is consolidating and is looking at investing in the second generation of digital equipment.  

Digitization ecosystem

The first wave was typical for any market confronted with new technology. End users, investors, and partners all asked the same questions about the new products: “What can it do?”; “How does it work?” etc. All very functional and performance-related questions. Aspects like quality, reliability, TCO were also important but less facts-driven as most stakeholders didn’t have a reference point, except for the previous generation 35mm equipment. 

With discussions about the renewal wave starting up we already see a shift in discussion topics and priority. Everyone is confident about the fact that the equipment does what it’s built for. Everyone has a good feeling and understanding about the quality and reliability levels that the different manufacturers achieve. The focus is now shifting to a next level of detail: “How can I improve my operational efficiency even more?”; “How can I optimally integrate?” etc. Digitization is no longer regarded as a collection of individual digital components, but as a true ecosystem that can be optimized to maximize value.

Similar evolution for electric cars

What does this have to do with Elon Musk? Or the electric car business in general? Despite some past efforts, this business is currently going through its first wave. People are buying an electric car for the first time in their life; most of those will never buy a car with a petrol engine anymore. Does this story sound familiar? The focus of the stakeholders is on functional and performance metrics. This is very visible in the marketing material: “The action radius is 500km”; “You can recharge your car in two hours” etc. 

The different building blocks are considered independently: the car, a charging station, a spare battery etc. Things like total cost of ownership, stability, and predictability are discussed and taken into account, but few end users have real hands-on experience with these elements. The market will educate itself on these metrics in the coming years and information will flow around as the position of the different stakeholders crystalizes. Add to the mix that many governments are granting subsidies and tax benefits to drive the adoption.

Now you understand how Elon Musk could learn something from the cinema business!

Cinema insights for the electric car industry

Mr. Musk, I’d like to conclude with some ‘lessons learned from the cinema business’ to help your car business. Here are some ambitions a technology provider serving a market going into a second wave should have:

  • In business, you always meet twice: the reputation you create in the first wave, will define your success in the second wave. Don’t compromise on performance quality for your first-generation product. The fact that it can do 120 is long forgotten when it breaks down on a Saturday night out with friends – this applies to cars and digital cinema projectors. The former 120mph, the latter 120fps.
  • Any system will make itself more efficient: I’m personally looking to invest in solar panels for my house. I over-dimensioned them for my current electric power consumption since I’m anticipating that my next car will be electric. I’ll probably also ask the installer to foresee a charging connection close to my carport. As you can see I’m no longer considering the electric car as a standalone piece of technology. I’m thinking about the total system instead: I want to optimize my system (is that the engineer in me?). Cinema is doing the same thing. From booking and planning, to scheduling, over ticketing and CRM, down to screening: the system is ready to be optimized. Customers will go into the second wave with clear ideas on optimization needs and clear supplier expectations to enable the efficiency gains.
  • Change is the only constant: the strange thing with stabilizing markets looking for efficiency gains is that there are always some disruptive forces that break the logic. Some guys that stand out of the crowd catch the attention and stimulate others to explore. In the cinema market, things like Premium Large Format (PLF) and High Dynamic Range (HDR) are currently shaking up the equilibrium. Exhibitors and end users expect something new, something fresh, something differentiating and innovative. From the viewpoint of a technology supplier, we should dare to let go of the assumption that product excellence does not go hand in hand with operational efficiency. Innovation can come from doing more, but also from doing things smarter – even more so in a second wave context. Self-driving cars are a nice example here. I’ll gladly learn from this concept to bring it to self-driving cinemas.

Mr. Musk, if you would like to discuss these topics in detail, you are welcome to visit our brand-new Barco headquarters. Yes, we have a charging station for your car.

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