Digital Cinemas Suggest New Way to View Markets

(MoneyWatch)  Hollywood studios are starting to line up to help finance the rollout of digital technology in movie theaters. While an interesting story, particularly if you're a motion picture technology buff at all, it's an important reminder that there are non-digitized markets out there that might present important new revenue opportunities.

The money involved is big -- over $1 billion for 20,000 movie screens in the U.S. and Canada. But the need is great because the audiences aren't. Only about 9 percent of the population regularly attends movies in theaters. Sixty years ago the number was closer to two-thirds.

Many factors are involved in the attendee malaise, but you could sum it up simply: most consumers have no pressing reason to attend the cinema. They can rent movies, even download them, and the combination of high definition television and surround sound can give a far better experience than many of the multiplexes.

What makes the movie industry interesting is that it has been largely an analog affair. Most screens make use of projectors that pull actual film through, one frame at a time. To make a leap that causes people to feel a need to attend, movie theaters must offer something that cannot be easily duplicated at home. That's where digital comes in. From 3D to live simulcasts of events, theaters can provide an experience that you couldn't reproduce at home.

So high tech can find an opportunity in a non-digital industry. It's a lesson to remember, because it's not the first example, nor will it be the last. The auto industry is another one. Between on-board computers, telematics, power devices, and sensors, many hundreds of dollars worth of silicon sit in each vehicle. Then there's the printing market, which still does a big amount of its work in old-fashioned printers but has been moving into digital ?€" just look at the e-ink flashing cover on a recent issue of Esquire.

Anyone in high tech runs the risk of thinking that everyone is as involved with gadgets as they. That means losing track of what real people -- that is to say, customers -- actually do. But the shortsightedness is also the source of new markets. All you have to do is turn around and see them.

Movie theater image via Flickr user Capra Royale, CC 2.0.