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DCIN Rapidly Transforms Analog Theatre Market with Digital

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MissionIR   Thursday, 05/09/13 12:32:14 PM
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DCIN Rapidly Transforms Analog Theatre Market with Digital Entertainment Centers

Digital Cinema Destinations has been strategically expanding their footprint through acquisition of solidly performing theatres, transforming the mundane into the modern as the venues are upgraded to a state-of-the-art digital platform that is not only much more efficient/cost effective, but also provides movie-goers with a much wider array of entertainment options, from dynamic/interactive content to live sports and just about any other event you can imagine.

By going beyond the analog theatre experience and offering customers all the fruits of a true digital entertainment center, DCIN has made some serious infrastructural progress since the company’s IPO back in April of 2012, growing from just 3 theatres with 19 screens, to a full 18 locations with 178 screens. The benefits of digital conversion go beyond audience immersion and are actually super friendly to the environment as well. The digital theatre model dispenses with 70-pound film cans, film couriers, and the difficult, expensive, as well as time consuming standard projection methods (literally hours to spool reels onto platters), replacing everything with digitally distributed and projected content.

This venue concept is ideal for other things you might not think of at first as well, like hosting big corporate conferences, putting on gaming events, or even doing auctions. The digital entertainment model is far more than just watching movies and the company truly embraces their target market, encouraging things like the performing of skits along with the program in certain cases and singing along, even tailgating parties outside for sporting events. DCIN has rapidly carved out considerable market share for itself from the standard market model and is doing business hand-over-fist as consumers flock to a platform that transcends their expectations of a traditional cinematic outing.

DCIN has their sights set on as many as 100 theatres and 1k screens in 75% of the nation’s prime designated marketing areas (DMAs), fully intent on reshaping what consumers expect in a night out at the movies. Investors have to love this concept because what you are doing here is taking an already functional model and adding feature-rich layers, as well as a broad new pipeline of content, while simultaneously lowering operational overhead (all in one fell swoop). More importantly, DCIN is a tight ship, even in today’s choppy waters, with a veteran management team headed up by Chairman and CEO, Dale “Bud” Mayo, an industry heavyweight and film exhibition guru who founded/led the pioneering digital cinema venue, Cinedigm Digital Cinema Corp., as well as leading domestic theater circuit, Clearview Cinema Group.

Offering traditional audiences a richer palette, with choices like ballet/opera, indie films, and cutting-edge documentaries (like Running the Sahara, Standing Silent, and The Standbys), alongside traditional movie fare, has even led to the creation of the Digiplex Destination offering known as DigiNext, a curated series of indie films hot out of the world’s film festival circuit with fresh new comedy, drama, and documentaries. By focusing on a wider range of alternative programming and social media customer interaction, as well as associated active-targeted marketing, DCIN is slowly building up its alternative programming foundation with around 20% of total box office receipts projected eventually in what is a choice profit category. DigiNext will bring special content (up to ten releases a year at the moment) forward through a JV with Nehst Studios, and DCIN gets 50% of all downstream revenues, from DVDs and digital downloads to the overseas market, all via an under $7.00/ticket range.

The big takeaway here is timing, taking advantage of the Monday to Thursday window when average cinemas operate at sub 10% capacity levels, jacking up attendance by easily/quickly replacing underperforming Hollywood titles with schedules featuring fresh new content. Combined with an attitude towards the customers that fosters meaningful interaction, easily tied-in pre-show ad revenue from National CineMedia (over 19k screens in the ad network, minimum guaranteed ad revenue of $0.17 per patron), and Virtual Print Fees from major studios (another amazing benefit to this digital platform technology over analog and renting film, greatly benefiting theatre-level cash flows), it’s no wonder DCIN saw a seven-fold jump in Q2 FY13 revenues to some $6.9M.

Something else that should grab investors right away about the potential of DCIN’s digital platform roll out is clearly evident in the company’s recent news that they will be offering showings of major Hollywood releases (Oblivion, Star Trek – Into Darkness, Iron Man 3, and the like), in both Spanish and English to accommodate audiences in their San Diego, San Bernardino, and Berks County markets. Bud Mayo even stated that the company would expand responsively to audience demand with additional titles, schedules, locations, and show times (with G to PG-13 titles initially focused on to grab the biggest crowds). This is a compelling aspect of digital transformation and the expansion potential for the model should be immediately apparent to anyone who has studied the market dynamics of language.

With a light-weight and easy to manage software back-end and a clear vision for growing their business model, DCIN is real mover with a proven strategy for transforming the analog theatre space into a landscape dominated by their digital entertainment centers.

For more information on Digital Cinema Destinations, visit www.DigiPlexDest.com

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