Last week, I had the opportunity to chat with Kaleidescape’s CEO Cheena Srinivasan about the current state of the movie industry and home entertainment. Among other things, with theater chains around the world being closed due to the pandemic, movies are being released in the home market far earlier than usual, and the studios have held the release of some major films and delayed production on others. Cheena shared his insights on Kaleidescape’s movie sales, the quality of streaming versus downloading, and day-and-date film releases.
We are in uncharted waters when it comes to traditional film distribution, with some studios releasing movies to the home market right after they were in theaters for only a short time. Are you seeing customers exploring catalog or older titles or are they primarily going for new releases?
Kaleidescape is interesting in that we cater to a movie-loving audience that has invested in a high-quality media room or home theater experience. These people are generally affluent and also tend to be very busy, so they are looking for great content to watch in the time they have. But when it comes to great content, it’s hard for the latest releases to make up for what a hundred years of movie-making has already contributed to people who love cinema, so there’s always good stuff to catch up on. Kaleidescape has a deep library of more than 11,000 titles, and historically we’ve always seen a 65/35 split between customers purchasing great catalog library titles and new releases.
We have agreements with 44 movie studios now, giving us a complete content offering. In general, the number of movie downloads increases each year, and for March we saw a 70% growth. New titles being released early certainly helped these
numbers, and we also had a nice injection from the recent 4K James Bond releases.
Besides movies, we also have a large selection of concerts, TV series, documentaries, and even operas. If you want to enjoy a nature series, there is nothing better than the rendition of Blue Planet II available in 4K HDR from BBC. No one else offers that with the level of
quality we do. Ditto with some of the Disney 4K HDR titles with full Dolby Atmos audio. We are very proud to have the kind of offerings we do for the cinema connoisseur, people who really care about that experience—because that’s what it’s all about, the experience.
We also offer a movie pre-download service enabling dealers to provide a turnkey solution for their clients. Clients can choose from the finest curated content that is important to them, which is then purchased and downloaded at the factory onto their new Kaleidescape system. When the system is configured in the client’s home cinema, all of their pre-purchased fantastic content is available to watch immediately.
Most other internet services rely on streaming for content delivery, but Kaleidescape employs a download-only model. Why is that?
To ensure that predictable, always-great experience we’re known for, content must be downloaded instead of streamed. This is something we have taken as an anchor for our brand. With Kaleidescape, you can schedule downloads to happen when everyone is asleep, and once downloaded, the content resides on a server in your home and you aren’t reliant on the
internet or delivery speeds to dictate the highest fidelity picture and sound playback.
With recent improvements to our system and a gigabit internet connection to your home, we’re able to deliver a full 4K movie with lossless audio soundtrack in 15 minutes or less. We can’t provide instant streaming playback without sacrificing what the brand stands for, which is the finest quality experience every time.
Increasingly, studios aren’t releasing 4K versions of movies on Blu-ray but instead sending them directly to the download and streaming services. The recent Kristen Stewart film, Underwater, is one example, as are the older, non-Daniel Craig James Bond films. Is this the next step in the demise of physical media?
Disc-based products have declined rapidly in the past couple of years, which makes total sense to me because there is more complexity with anything physical. You have to forecast how many quantities are needed for different markets, then edit, review, test, approve, and manufacture the discs. This is followed by working with retailers on the logistics of stocking the right amount, and, finally, working with the retailers to dispose of unsold inventory at a discount or loss. This is too much work, and you have none of this complexity or uncertainty with digital. Internet entertainment will be the way consumers will watch Hollywood’s greatest movies for years to come.
Universal tried something unprecedented with the release of the Trolls sequel as a $19.99 premium video-on-demand rental the same day it was scheduled to be released in theaters. Do you think we will see any long-term changes to traditional theatrical release windows after things open back up, and will this help ease the move to more widespread day & date releases at home?
We have not seen other studios following NBC Universal’s lead. Most studios, especially with big, blockbuster titles, have opted to push them out until later when theaters reopen. That’s because it’s very risky to release movies early. It all depends on how much money you put into producing the movie and what kind of confidence you have in terms of monetizing that content over a period of time to break even on the investment. There’s no proven model for doing early releases, and I think studios will embrace the age-old belief system: If it ain’t broken, don’t fix it. And if you’re going to fix it, you better have very high confidence it’s going to work. What is clear is that more mid-range and low-budget films will be hitting the home entertainment window, skipping theatrical releases.
If consumers get used to the in-home convenience of enjoying movies, especially as they come closer after the
theatrical release, they might decide to just wait and not go to the theater. But there is a case to be made that blockbusters and tentpole films are mutually beneficial for both content owners and theater chains. The big question no one can really answer is, “What can we expect in the future?” It doesn’t make sense to have a tentpole and require people to sit six feet apart from each other, because tentpoles are as much a social driver as the movie itself. And what if customers get frustrated that tickets are sold out because the theaters are operating at 50% capacity? This is why I think many studios have decided to push new releases out many months to when theater operation returns to normal.
Now that people are aware that they can find themselves at home for long periods, do you think they will start improving their entertainment systems and we will perhaps see a boom in media room installations?
The resurgence of interest in home theater and media rooms suggests that people are looking at it and saying, “It may not be a bad idea. We could enjoy it for many years to come.” And once they do that, that’s a psychological, mental preference change. But I think no matter what, content owners always win. It’s a mere matter of figuring out the economics, and the market will adapt and evolve.
It’s also very clear that the home entertainment experience is improving, and people are becoming more cognizant. Just look at the millions of soundbars and millions of 4K TVs, or even general consumer awareness of technologies like Dolby Atmos. The more that large-TV big-screen viewing happens, the more people will decide, “Hey, I’m going to find out if I could have somebody come and put a media room together!” We have always diverged from the general market in that our audience
tends to be pickier about how and with whom they spend their time—the emphasis is as much social, big-screen home cinema experience with the people you love. This is about quality entertainment time.
It’s been interesting to see the vibrancy of home entertainment in a very big way, and I’ve been happy
about recent reports discussing the shifting of content viewing and streaming services away from portable, mobile devices over to TVs. Kaleidescape has never offered any kind of mobile viewing experience because we don’t deem that to be cinematic. Anything cinematic is deserving of watching with family and friends, and we’re fortunate to be the purveyor of the highest fidelity content for home cinema owners.
I think there are going to be some major changes over the next couple of years that will make us look back and say, “You know, I’m glad I was on the side of internet home entertainment because this is a horse that’s destined to win!” Home entertainment has a lot of tailwind and that’s going to help it in the foreseeable future.
Probably the most experienced writer on custom installation in the industry, John Sciacca is
co-owner of Custom Theater & Audio in Murrells Inlet, South Carolina, & is known for his writing
for such publications as Residential Systems and Sound & Vision. Follow him on Twitter at
@SciaccaTweets and at johnsciacca.com.