Upgrading Technologies:
Creates a Real-Life Movie Going Experience

May 8, 2012

Abstract
AMC Theatres began upgrades in their theatre technologies in 2009. Their project objective was to gain status as the number one movie exhibition industry in the world. The scope of the project would upgrade all of their facilities to incorporate 3D technologies, premium viewing, and state-of-the-art sound systems. This project would immerse the movie viewer into a real-life experience, thereby enticing the viewer to return satisfied, and become a steady patron of the company. Their estimated timeline for completion on technology upgrades for its remaining theatres is 2014.

AMC Theatres, which stands for American Multi-Cinema was founded in 1920 when a father and his two sons purchased the Regent theatre in Kansas City, Missouri. AMC is second only to Regal Theatres, as a leading global movie theatre chain. The company gives credit to one particular son named Stanley Durwood. He believed that playing a multiple selection of movies in one movie house would in-turn lead to more guests, and more profits. This simple idea revolutionized the movie exhibition industry and became a blueprint for the industry. The concept for the movie theatre was born.
It is this kind of inspiration that has encouraged the AMC Corporation to introduce more industry firsts. AMC was looking for a way to bring in new customers and refresh old patron relationships. Movie sales had begun to slump in the early 90’s as new competitors in the movie industry flooded the market. People began watching movies at home on VHS’s and DVD’s. Problems with retaining profits became even worse as bootleg movies and electronic computer based home rentals became available around the early 2000’s.
Their transformation began in 2009 as the theatre chain was looking for new technologies and a way to increase profits. AMC found a kinship in IMAX’s slogan, “Think Big.”, and a strategy was born. AMC was no stranger to incorporating cutting edge ideas. They immediately started designing the scope of the project to get IMAX, RealD technology, stadium seating, and Sonic Sound Systems into AMC’s theatres. With the implementation of these technological upgrades, AMC hoped to gain recognition as the number one theatre chain globally.
AMC found what it was looking for when they made a choice to incorporate IMAX, RealD, and Sonic Sound technologies into the movie going experience. Although sold on the idea; AMC needed to incorporate several upgrades to their current theatre technology in order to test the profitability of the new systems. The upgrades would cost the company millions of dollars to implement and cut into already struggling profits.
To date, AMC is projecting that the new IMAX technology is profitable. The company is still in the process of completing its estimated timeline. It is currently expanding the number of locations that the 3D technology is available in. They are now incorporating the use of RealD technology into the smaller urban areas globally, and they are slowly incorporating the more expensive IMAX technology into larger cities. They expect the entire system to be in place and operational by 2014.
The company-wide change, in state-of-the-art technology creates a real-life experience for movie-goers. The technology upgrades starts with improving on the film size for a traditional movie. A traditional roll of theatre film measures at 35 millimeters wide. IMAX and RealD film measures at 70 millimeters wide. The size difference in the film is important to the technology because it provides extreme clarity in the picture being displayed on the screen. Just as important as the film is the projector that processes the film. The RealD projectors are more economical at 1.5 million dollars each, and considered a lighter weight digital system at about one ton. The IMAX projectors, estimated at 2.5 million dollars, are much heavier and more complex. IMAX projectors use a pressure accelerated film process, contain two high voltage short-arc lamps, and weigh up to two tons.
In order to view the films on an IMAX and RealD systems, AMC needed to implement complimentary internal theatre upgrades. Movie screens, incorporating auditorium seating, and supplying customers with special polarized glasses are needed to complete the real-life experience.
A traditional movie screen is 22 feet tall and 52 feet wide. RealD movie screens are comparable in height and width. A special silver background is needed in order to project the 3D effects for the movie. The screens are purchased at a comparable price to traditional movie theatre screen. However, an IMAX screen dwarfs a traditional movie screen. The height is typically 72 feet tall and 52 feet wide, but can be much larger if desired. The largest recorded screen to date is 117 feet tall by 96 feet wide and is located in the AMC IMAX in Wichita, Kansas. The IMAX screens are considerably more expensive due to that fact, that they always a special order and extremely large.
Auditorium seating creates an important aspect of the movie-viewing experience for both IMAX and RealD technology. The seats are built in a stadium-style loveseat design. They are installed at a 30 degree angle in order to keep the customers view unobstructed while watching the movie. Another important factor of stadium-style seating is to keep the audience at an even eye level with the movie screen. Specific dimensions are adhered to so that all movie watchers are within appropriate distances and heights as to perceive the full effect of a 3D movie.
Polarized glasses finish the 3D effect. AMC distributes the glasses to its customers depending on the 3D technology they choose to experience. When viewing an IMAX movie, customers are loaned a pair of expensive and specialized polarized glasses. These glasses allow the viewer to see the see the movie in a linear manner. Linear viewing creates the illusion of images popping out from the screen and into the audience. When viewing a RealD movies, customers are given a less expensive or recyclable pair of polarized glasses. These glasses are designed for circular movie watching. The circular viewing experience creates perceived depth within the movie screen. Images do not protrude from the screen, but rather give the illusion of reaching inside the screen.
IMAX and RealD theatres require a sound system that is able to produce believable effects, and operate reliably at unusually high power levels. The multiple channel playback units were originally developed for film studios where banks of them were used to mix sound tracks. The six channels with sub bass are manufactured by Sonics Associates Incorporated of Birmingham, Alabama. Sonics is a world leader in sound systems and installations, and have been working with AMC theatres for seven years.
In 1988, AMC began planning unstructured decisions with Sonics Associates Incorporated to build their sound systems. Now that the plan is routine and getting put in all the theatres around the world AMC Corporation is making structured decisions. The Sonics proportional-point-source-loud-speaker system eliminates variations in volume and sound quality over the entire theatre.
IMAX and RealD sound systems provide the audience with a listening system that’s all about power, not volume. This gives the audience a life-like sound that is released from six speaker clusters and one sub-bass unit. Sub bass units consist of eight, eighteen inch diameter woofers, which are fully enclosed in a fiberglass insulated cabinet. Sounds can be as soft as a breeze, or can be as hard and loud as a crashing wave. Remarkably, any sound heard will be in a true-to-form surround sound environment. The sound system consists of 16 amplifiers of low, mid, and high frequencies. This feature provides over 12,000 watts of power to the one and a half tons of speakers in the theatre. Low frequency sounds are so deep they are literally felt more than they are heard. Now IMAX and RealD films use Digital sound DDP (Digital Disc Playback) designed by Sonics as well.
The Sonics sound system is great when you are watching a movie in 3D. Lynn McCroskey, president and CEO of Sonics Associates, said while doing an interview with Millimeter magazine, “The typical IMAX screen is close to a conventional 4:3 aspect ratio but is much bigger. So, you have a great deal of vertical, which gives the opportunity to install a ‘voice-of-God’ loudspeaker”. AMC further tries to out shine their competition with the Sonics sound system by the use of no digital auto data compression.
AMC Theatres has been a partners with IMAX since December of 2007. The movie giant employed a revenue sharing with IMAX in order to increase their competitive advantage and offer customers the best movie going experience possible. The two companies are expanding with 10 more theatres built by the end of 2012 to increase their total theatres to 115 in the US. There are currently 105 in operation.
AMC CEO Gerry Lopez said their partnership with IMAX has generated consistent bottom line profits since the opening in 2007. Where this might be great news going forward, AMC has backed away a third time from offering an IPO. The company has now made three attempts at trying to go public. Each time, AMC has shelved the idea. Currently, they are looking to raise $450 million in stock options to pay down debt. The company took a loss of $82.7 million in 2011 compared to the same weeks of 2010. AMC executives cite the loss due to higher interest rates, the acquisition of Chicago-based Kerasotes Showplace Theatres, and an investment loss in the RealD, a Beverly-Hills based 3-D technology company.
IMAX as a vendor works closely with each exhibitor to maximize revenue sharing and customer experience. Every time IMAX works with an exhibitor, they follow a process that only changes because of the market they are entering. IMAX people work with the client from the very beginning during planning sessions, all the way to the development of annual marketing campaigns. They even hold regular refresher courses on best practices so their clients can continue to offer the best movie experience. IMAX is a vendor that cares about their clients because they realize the client’s success is also their success.

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