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Inflection Point for Cinema Exhibition

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October 2020

The Cinema Business and specifically exhibition have been a challenging business model since their beginning.  It enjoyed a golden age, and while forever changed by the advent of television, it has remained a significant, stable, and profitable business.  It faced an onslaught of challenges that had many predicting its demise including VCR, Cable, DVD/Blu-Ray, and streaming.  The key reason that exhibition survived these challenges is focused and consistent re-invention and innovation.

All businesses rely upon partners to provide them products and/or services.  Exhibition takes that to another level by relying upon movie content to draw customers to their facilities.  In other words, studios have provided the content and exhibition provided the venue and the experience.  The business has always been cyclical based on popularity of content, but with long-term stable revenue growth as illustrated below:

Cinemas, along with most places of public gathering, have been shuttered since March by Covid-19.   Cinemas have been permitted to open with limited capacity in many locations, but the results have been less than optimal because there is hesitation from customers and little fresh content to draw them back. 

The changes that have happened in 2020 to the exhibition business model are troubling to long-term viability.  The three most impactful changes, from my viewpoint, are: 

  • Reversal of the US – Paramount Consent Decree
  • Studios changing theatrical release patterns – is this a short-term response to pandemic or a longer-term change?
  • Increased variety and availability of content, and broader acceptance of it from a variety of sources

These changes lead many to predict (again) the end of the movie theatre and moviegoing.  That is one possible outcome, though doubtful.  Another is that the resilient and creative exhibition community will once again rise to the challenge.  I believe they will and would like to talk about what that might be. 

First, it is important to consider what we have learned and will continue to learn from this pandemic in the weeks, and months ahead, including:

  • Safer, touchless ways to transact business, including new customers now more comfortable using digital platforms
  • We can survive in isolation with digital interaction and support, but
  • We crave real social interaction

This combination of exhibition business model changes and pandemic lessons learned create an inflection point, or time of significant change, for cinema exhibition. 

The question is growth or decline?  Let us dig a little deeper into the impactful changes.

The reversal of the Paramount Consent Decree, even with the two-year sunset period on block booking and circuit dealing, could be disastrous for independent and smaller market cinemas. Therefore, many in Hollywood pushed back on the removal of the decrees, including the National Association of Theater Owners, the Directors Guild and the Writers Guild of America, arguing that removing such restrictions could hurt independent films, among other things.

Among the rationales for the reversal was that the decree does not apply to all studios, to streamers or international competitors https://deadline.com/2020/08/paramount-consent-decrees-justice-department-2-1203007221/ 

Some speculated that large tech companies could be in the market to purchase exhibition companies as an outlet for their own content.  However, Reed Hastings co-CEO of Netflix told The Hollywood Reporter during a September 10th interview “I can’t see us doing a chain or expanding in theatrical,” https://www.hollywoodreporter.com/news/reed-hastings-says-netflix-wont-buy-a-theater-chain-but-thinks-moviegoing-will-return .   There are dozens more content providers that could have different views or objectives. I expect there to be further consolidation resulting from this ruling and the pandemic shutdown.  Someone will see this as an opportunity, whether currently in cinema exhibition or not. 

The change in studio theatrical release, is to me the biggest and most impactful change in the exhibition business model.  The theatrical release business model has been the glue of studio-exhibition partnership.  Even a short-term adjustment, during the pandemic, is controversial.  How this issue resolves long-term is the biggest driver of the direction of the inflection point. 

I also believe that the increased variety and availability of content can be considered a significant part of a new business model.   Content creators are engaged in different vehicles beyond the major Hollywood studios.   Outstanding content is being created in the international/global marketplace.  There is an opportunity for content that does not fit into the two-hour, formulaic standard. 

These combine to create a real threat to the cinema exhibition business model.  Unless you redefine the business model.  What do I mean?

Be a communal place for social interaction.  Diversify the offerings.  Focus on developing other sources of content including events, independent and (dare I say it) streaming. 

Cinema Entertainment Centers, featured in Box Office Pro in August https://www.boxofficepro.com/the-next-big-thing-the-risks-and-rewards-of-cinema-entertainment-centers-one-of-the-fastest-growing-trends-in-exhibition-today/ is one proven model.  Several exhibitors have redefined their business model to include other entertainment components, and some entertainment center businesses have added cinema to their business model. 

Challenge everything about your business.  Strive to be the place for people to socialize, eat, drink, play and have fun.  Cinema is a shared social experience and should remain a focus.  The studio/tentpole movie model works, will remain, and requires and deserves large premium auditoriums.  Other forms of content might be better served with non-traditional spaces.  Consider boutique/social bowling.  Games and gaming are a growing business.  Consider eSports, virtual/alternative reality components, including other active participation activities such as zipline, climbing and use of outdoor spaces.  Concentrate on food and beverage, the mixture and quality of offerings to optimize revenue and profitability. 

Find the right, new combination – the next big thing.  Be the place for people to socialize, eat, drink, play and have fun in the communities you serve, and it will lead to a better, more robust business model, and long-term stable revenue growth.

Founded in 1981, TK Architects is a full-service architectural firm that offers all professional design services in-house to simplify and streamline coordination, including: Architecture, Interior Design, Graphic Design, Structural Engineering, Mechanical, Electrical, and Plumbing Engineering. The firm’s focus is entertainment architecture and engineering, including cinema, bowling, bars/lounges, food service, and entertainment centers worldwide. TK Architects provides the right services at the right time to meet client’s specific needs, including: New Buildings, Tenant Interiors, Renovations, Facility Upgrades, and Maintenance.

For more information about TK Architects please visit www.tkarch.com or contact Jack C. Muffoletto, at jcmuffoletto@tkarch.com

Mike Cummings

Reimagining the Restaurant: Week 5

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COVID EDITION

OCTOBER 2020

Idea #6

While increasing table spacing can be simple, it leads to less capacity, a problem if you’re running a business.  Many restaurant owners have made creative use of their parking lots with temporary dining setups.  This concept imagines a purpose-built version of this.

Full disclosure, this concept borrows an idea from glamping. –whats Glamping? Glamping is “glamorous camping”, check it out!  There has been an explosion in services that will provide campers with an Instagram-able campsite, pre-prepared for people who like the idea of camping but also like brunch at the Ritz and sleeping well.

This concept uses repurposing the parking lot to create a network of private dining pavilions.  Customers make a reservation and pull up to their own dining environment, with patio seating, dining table, and wait-staff.

Fitting out the parking lot with this idea could be a way of increasing capacity while taking what may have seemed like a downgrade and turning it into an upgraded experience. An activated version of this might feel like a festival or block party.  At its core, this idea does not try to “return to the way things were” Instead it tries to create a new type of dining experience with the available real-estate.

Depending on parking availability and climate considerations, these deployable pods could be utilized in a multitude of ways. From an intimate dinner to a family gathering. From a warm summer day to a cool winter night.

At TK Architects we are always thinking of new and innovational designs.   Hopefully, this gets you thinking.  Is there a more practical way to reimagine this idea?  Let us know!

Founded in 1981, TK Architects is a full-service architectural firm that offers all professional design services in-house to simplify and streamline coordination, including: Architecture, Interior Design, Graphic Design, Structural Engineering, Mechanical, Electrical, and Plumbing Engineering. The firm’s focus is entertainment architecture and engineering, including cinema, bowling, bars/lounges, food service, and entertainment centers worldwide. TK Architects provides the right services at the right time to meet client’s specific needs, including: New Buildings, Tenant Interiors, Renovations, Facility Upgrades, and Maintenance.

For more information about TK Architects please visit www.tkarch.com or contact Jack C. Muffoletto, at jcmuffoletto@tkarch.com

Steven Dragan

Reimagining the Restaurant: Week 4

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COVID EDITION

SEPTEMBER 2020

Hello again! We’re in week 4 of our blog series, “Re-imagining the restaurant.” This series starts with the premise that changes in customer attitudes and habits have been accelerated by the pandemic. Then we ask our designers to imagine a facility around those future trends.

WHAT WILL THE FUTURE LOOK LIKE?

As we said last week, These are not necessarily ready-to-ship solutions but what-if scenarios meant to build a bridge between where we are now and what the future may hold.

Not only do people enjoy eating together, but the rise of cook-it-yourself subscriptions like Blue Apron and Hello Fresh also show there is a big market for those who want to cook together. That being said – hosting, picking up groceries, prepping the ingredients, and the cleanup – can make it a chore. Why not cut all the downsides out of the equation and focus on the fun?

This restaurant concept revolves around the idea of a cook-it-yourself dining experience. Consider the possibility of cooking with friends while adding in the social atmosphere and convenience of being in a restaurant setting. A classy full-service bar is surrounded by multiple “cooking islands” that are equipped with the tools and appliances to turn fresh, proportioned ingredients into the meal you order. After dinner, go to the bar or lounge to continue the evening while someone else takes care of the dishes and clean up.

It is hard to imagine a time where businesses and consumers have been so willing to experiment. Could this be a new trend to emerge in the post-COVID world? Click the link and let us know your thoughts.

Founded in 1981, TK Architects is a full-service architectural firm that offers all professional design services in-house to simplify and streamline coordination, including: Architecture, Interior Design, Graphic Design, Structural Engineering, Mechanical, Electrical, and Plumbing Engineering. The firm’s focus is entertainment architecture and engineering, including cinema, bowling, bars/lounges, food service, and entertainment centers worldwide. TK Architects provides the right services at the right time to meet client’s specific needs, including: New Buildings, Tenant Interiors, Renovations, Facility Upgrades, and Maintenance.

For more information about TK Architects please visit www.tkarch.com or contact Jack C. Muffoletto, at jcmuffoletto@tkarch.com

Steven Dragan

Reimagining the Restaurant Week: 3

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COVID Edition

September 2020

Hello Again! We’re in week three of our blog series “Re-imagining the Restaurant”. This series starts with the premise that changes in customer attitudes and habits have been accelerated by the pandemic. Then we ask our designers to imagine a facility around those future trends. This week imagines one way a facility could become more flexible.

What will the future look like?

As we said last week, These are not necessarily ready-to-ship solutions but what-if scenarios meant to build a bridge between where we are now and what the future may hold.

Idea #4

One Covid trend we’ve seen is people like going out, but prefer to have their own space.  Consider the dining tents in parking lots or recently the NFL games with separated groups of fans (Go Chiefs!) Combine that with the VIPification of entertainment spaces and the culinary rise of the open-show-kitchen…voila, you have a new idea.

This restaurant concept starts with the kitchen and plugs in different size dining suites.  The goal here is to flip the script on social distancing.  Instead of awkwardly spaced tables, this concept creates an upgrade: the VIP dining suite and gourmet open kitchen.

Each dining suite has it’s own entrance and dining pod.  Spaces are cozy and private but still within view of other diners and the kitchen. Server’s connect with customers directly from the kitchen.

This concept restaurant is a bit of an all-in scenario, but one thing is certain.  If you can find ways to frame the upcoming changes brought about by the pandemic as upgrades, you’re more likely to build loyalty and thrive.

Steven Dragan


Founded in 1981, TK Architects is a full-service architectural firm that offers all professional design services in-house to simplify and streamline coordination, including: Architecture, Interior Design, Graphic Design, Structural Engineering, Mechanical, Electrical, and Plumbing Engineering. The firm’s focus is entertainment architecture and engineering, including cinema, bowling, bars/lounges, food service, and entertainment centers worldwide. TK Architects provides the right services at the right time to meet client’s specific needs, including: New Buildings, Tenant Interiors, Renovations, Facility Upgrades, and Maintenance.


For more information about TK Architects please visit www.tkarch.com or contact Jack C. Muffoletto, at jcmuffoletto@tkarch.com

 

HVAC Best Practices: Explained

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HVAC Best Practices: Explained

COVID Edition

September 2020

The hottest amenities, in commercial building design, are indoor air quality and touchless design. Technologies and design approaches that were on the fringe are now being pushed to the forefront. Now, let’s talk about air quality and ASHRAE, the American Society of Heating, Refrigeration, and Air Conditioning Engineers:

ASHRAE leadership has approved the following TWO statements regarding the transmission of SARS-CoV-2 and the operation of HVAC systems during the COVID-19 pandemic

  1. Transmission of SARS-CoV-2 through the air is sufficiently likely or likely enough, that airborne exposure to the virus should be controlled. Changes to building operations, including the operation of heating, ventilating, and air-conditioning systems, can reduce airborne exposures.

  2. Ventilation and filtration provided by heating, ventilating, and air-conditioning systems can reduce the airborne concentration of SARS-CoV-2 and thus the risk of transmission through the air. Conversely, unconditioned spaces can cause thermal stress to people that may be directly life-threatening and that may also lower resistance to infection. In general, disabling of heating, ventilating, and air-conditioning systems is not a recommended measure to reduce the transmission of the virus.

On August 6, 2020, the NATO task force and Cinema Safe, published a resource for exhibitors that included FIVE HVAC topics:

  1. All HVAC Systems should be in working order with increased ventilation whenever possible.

  2. Upgrade the building’s air filters consistent with CDC, state, and local guidance to the extent possible.

  3. Whenever possible, increase the quantity of outside air.

  4. Consider the use of portable high-efficiency air cleaners.

  5. Consider hiring an HVAC expert, such as an industrial hygienist, to assess and optimize airflow and air exchange.

*REFERENCE: National Association of Theatre Owners (NATO) COVID-19 GUIDANCE 8.6.2020 (emphasis by TKA)

1. VENTILATION DISCUSSION

International Mechanical Code (IMC) definition, Ventilation is the natural or mechanical process of supplying conditioned or unconditioned air to a space or removing such air from any space. We understand this guideline to be referring to ‘total supply air’ from your HVAC equipment. To increase ventilation, the supply air fan speed must be increased which includes adjusting belts and, in some cases, increasing fan motor size. This work can generally be done by an HVAC contractor that has the ability to test and balance the system. Benefits and concerns include:

BENEFIT

  • An increase in total ventilation reduces the time to exchange the volume of air within a space, thus improving filtration rates.

CONCERN

  • Increasing fan speed will increase cooling coil velocity which can adversely affect the ability of the coil to remove moisture from the air, a concern in humid conditions. A typical Air Handling Unit will operate at between 350-425 CFM per Ton. (An existing 10 Ton unit is likely operating from 3,500 – 4,250 CFM.)
  • Increasing air volume in the auditorium space can increase noise (NC) from the existing duct and supply/return outlets. The minimal increase can usually be made with undetectable noise increase. Perhaps additional system balancing may help to remedy detectable sound.

2. FILTER DISCUSSION:

Air filtration is required by the International Mechanical Code (IMC Section 605).  Minimum filter efficiencies are not referenced in the Code, however, the referenced standards include:
  • UL 586 which refers to requirements that cover high-efficiency, particulate, air-filter units (HEPA filters) intended for the removal of very fine particulate matter (not less than 99.97 percent of 0.3 micron diameter particles) from the air of industrial and laboratory exhaust and ventilating systems.
  • UL 867 which refers to requirements that cover electrostatic air cleaners.
  • UL 900 which refers primarily to combustibility and smoke generation of filter media.

BENEFIT

  • An increase in room air filtration may decrease the airborne concentration of the virus and may reduce the risk of transmission through the air.  This is one of the primary goals as noted in ASHRAE Statements.

STATEMENT OF FACT

  • Pre Covid-19 minimum standards for filters is MERV 6. Typical commercial specifications are MERV 8, 2” pleated panel filters.
  • Current ASHRAE recommendations for School Reopening are MERV 13 or higher.
  • SARS-CoV-2 virus is reported by the CDC to be between .06 and .13 microns in size.
    • MERV 8 is rated at 20% efficient on particle size of 1.0-3.0 microns.
    • MERV 13 is rated at 50% efficient on particle size of 0.3-1.0 microns (85% on 1.0-3.0 microns).
  • While the filters cannot remove particles the size of the virus, the CDC states that the virus is thought to transmit on respiratory droplets, (aerosol) a size that is much larger. ASHRAE states these droplets can be collected on sub-HEPA filters such as MERV 13.
  • Choosing a filter rating will be limited by physical size and static pressure drop across the filter relative to the capacity of the existing fan motor.
  • Most filter media is susceptible to UVC damage. Avoid UVC lights from hitting filters.

3. OUTSIDE AIR DISCUSSION

In the International Mechanical Code, there is a definition, Ventilation Air is the portion of supply air that comes from the outside, plus any recirculated air that has been treated to maintain the desired quality of air within a designated space. There is a NATO/Cinema Safe guideline that proposes an increase to that portion of supply air from the outside. Typically, all auditorium air handling systems are designed to incorporate a minimum level of outdoor air. This rate of outside air is typically based on the occupant load. The adjustment can generally be done by an HVAC contractor that has the equipment and training to test and balance the system.  Benefits and concerns include:

BENEFIT

  • An increase in outdoor air will decrease the airborne concentration of the virus and may reduce the risk of transmission through the air.  This is one of the primary goals as noted in the ASHRAE Epidemic Task Force Statements.

CONCERN

  • For summertime (cooling) operation, an increase in outside air can overwhelm the capacity of the equipment to cool and/or remove moisture from the space.  In more humid climates, this could lead to a loss in room relative humidity affecting occupant comfort.
  • For wintertime (heating) operation, an increase in outside air can not only overwhelm the capacity of the heating unit, but excessively cold air can damage the heat exchanger.
  • Typically units are set to a ‘Night Time’ or ‘Unoccupied’ setting after hours. This setting typically shuts down the unit fan and outside air damper and therefore ASHRAE recommends expanding start and end times of building ‘Occupied’ mode of the HVAC systems by 2 hours.

4. PORTABLE EQUIPMENT DISCUSSION

Various high-volume high-efficiency portable equipment offerings are being introduced into the market.

  • Equipment tends to create quite a bit of noise.
  • Where UVC is employed it can be dangerous to occupants so it is recommended for non-occupied times.
  • Power requirements need to be considered.
  • Maintenance (cleaning) of contaminated filter media protocols are required.

5. ASSESSMENT DISCUSSION

Consider a building assessment that would include a team of an Engineer and Mechanical Contractor/Air Balance technician. For existing facilities, the first step might be to review available Mechanical Construction Drawings followed by existing systems testing.  Testing should include:
  • Verify thermostat settings and occupancy controls.
  • Document nameplate make and model data for the equipment.
  • Overall supply airflow (CFM)
  • Document motor nameplate amp data and current loading
  • Rate of total supply airflow and total static pressure.
  • Rate of outside airflow during normal operations
  • Outdoor air accessory summary including size (capacity) and control of outdoor air damper.  Damper control may include motorized damper or fixed damper.
  • Record type of filter currently installed including width capacity
  • Measure static pressure drop across the existing filter.

Industrial hygienists are described by OSHA as dedicated engineers whose job is to analyze, identify, and measure workplace hazards or stresses that can cause sickness, impaired health, or significant discomfort in workers through chemical, physical, ergonomic, or biological exposures.  The TKA discussion does not address recommendations that may come from this profession.

SUMMARY POINT

Decreased Occupant load will automatically increase room ventilation and outside air based on a ‘per occupant’ rate.  Where Recliner Seating Retrofits have been installed, maximum occupancy has already been reduced so original outdoor ventilation rates likely exceed Code minimum.  Since outdoor air is known to be a large portion of the unit load, outdoor air dampers may have been adjusted down, below design minimums to save on operating costs.

Germicidal Ultraviolet Light and Ionization Remedies
ASHRAE is recommending the installation of UV-C lights and/or ionization in air handling equipment for General School Design Guidelines.  We are continuing our research in these areas and will provide follow up.

Mechanical/Architectural Engineers will be very familiar with the ASHRAE Fundamentals Handbook that contains the principals that are the basics of design for the Air Conditioning Industry.

Please note published ASHRAE guidelines and building codes should be referenced for any recommended changes to existing building HVAC systems.

On July 17, 2020, ASHRAE Epidemic Task Force released a Reopening guide to Schools and Universities:
https://www.ashrae.org/file%20library/technical%20resources/covid-19/ashrae-reopening-schools-and-universities-c19-guidance.pdf

Brad Reynolds, PE


Founded in 1981, TK Architects is a full-service architectural firm that offers all professional design services in-house to simplify and streamline coordination, including: Architecture, Interior Design, Graphic Design, Structural Engineering, Mechanical, Electrical, and Plumbing Engineering. The firm’s focus is entertainment architecture and engineering, including cinema, bowling, bars/lounges, food service, and entertainment centers worldwide. TK Architects provides the right services at the right time to meet client’s specific needs, including: New Buildings, Tenant Interiors, Renovations, Facility Upgrades, and Maintenance.


For more information about TK Architects please visit www.tkarch.com or contact Jack C. Muffoletto, at jcmuffoletto@tkarch.com