M+E Connections

Virtual reality (VR) presents opportunities for IMAX, Take-Two Interactive and Warner Bros., executives from those companies all said at the Credit Suisse Technology, Media & Telecom Conference Nov. 29 in Scottsdale, Ariz. But not all of them are expecting VR to represent a major business for their companies in the near-term.

VR and augmented reality (AR) are “going to be a big opportunity and we’ve been investing in that,” Warner Bros. CEO and chairman Kevin Tsujihara said. Games represent the first medium that will “take advantage of this immersive kind of opportunity,” so the company’s Warner Bros. Interactive Entertainment division created the game “Batman: Arkham VR” for Sony’s PlayStation (PS) VR system that recently launched for the PS4 console, he said, telling the conference he thought it was the best-selling PS VR title so far.

But that game is “just scratching the service of where we think this is going to go,” he said, adding: “We think that [VR] will be something that, from a linear story-telling perspective, you’re going to want to add as an element – especially for younger generations. It may not be the right thing for me and you… . I’m not a huge fan personally. But I know that my son is. He’s 17 years old. And so we’re looking at what linear opportunities exist in television, movies or even out-of-home kind of opportunities that exist because we do think that there’s a big segment of the market that’s looking for different ways to look at immersive technologies that will give you a different experience. And so we do think it is a big opportunity.”

IMAX Entertainment CEO Greg Foster cited the strong VR investments that his company is making with IMAX VR centers inside existing theaters that have an IMAX screen, as well as standalone IMAX VR centers. Many of the centers will be in multiplexes and the content will often be 6-10 minute stories related to movies that are playing on IMAX screens, he told the conference. But there will also be content not related to feature-length movies playing on the IMAX screens, he said.

IMAX is working to have capacity for 2-5 people in each VR pod at those centers, so that multiple people can take part in a game or other VR experience, he said, adding: “We’re going to learn from our pilot sites,” and changes will be made as needed.

Google and IMAX are also collaborating to design a camera to shoot VR content, but it probably won’t be ready in the next 12 months, he said.

Take-Two, meanwhile, is “very intrigued” by VR, and it’s “very compelling in certain experiences,” President Karl Slatoff said. “We’ve always been excited about it,” he said, but added: “That doesn’t mean that we have no sense of skepticism. But it’s really not up to us. It’s really about what the consumer wants.”

Take-Two already released two VR titles: “Carnival Games VR” in late October that’s available globally via digital download for HTC Vive and PS VR, and “NBA 2KVR Experience” Nov. 21 for Vive, PS VR and Samsung Gear VR. Both titles are from Take-Two’s 2K publishing label and the company also planned to release versions of the games for Oculus Rift, it said.

“We’re going to continue to make those investments in VR across all the platforms, and I think you’re going to see us do it prudently because we don’t want to get out ahead of the market,” Slatoff told the conference. “I think what we want to do is we want to be in the position to take advantage of a burgeoning market should it actually occur,” he said.

Slatoff told investors Nov. 2, in its second-quarter earnings call, that VR and AR are “exciting emerging platforms that have the potential to enhance the way interactive entertainment is created and experienced, and we will continue to invest in this space.” The company, however, hasn’t announced any AR titles yet and hasn’t said what its third VR title will be.

The three executives at the Nov. 29 conference detailed several other areas of opportunity for their companies as well. For instance, IMAX recently signed a deal with Disney’s ABC network under which the first two episodes of the Marvel-produced TV series “The Inhumans” will debut exclusively on more than 1,000 IMAX theater screens before the show airs on ABC. Foster told the conference that Marvel is using IMAX cameras for the pilot episodes and his company is looking for a second TV series to sign a similar deal with. It’s another “opportunity to fill in gaps” between movie releases on the IMAX screens, he said. But he added: “We’re not betting the farm on this.”

There are, meanwhile, video game, consumer product and Universal theme park attraction opportunities for Warner in the series of J.K. Rowling “Wizarding World” movies that are planned, Tsujihara said. The film series kicked off with the recent release of “Fantastic Beasts and Where To Find Them” that just went over the $500 million mark in global box office, he said.

Warner also initially saw DC Comics-based content as only a movie opportunity, but it’s now become a significant TV opportunity as well, with one show growing to about 10 this year, he said. There is also a “huge” games business behind DC titles including the “Arkham” Batman titles, he said. Games in general represent a “big opportunity” for Warner and it’s “been able to execute on it” so far, he said. Last year, Warner took in more than $1.5 billion in revenue from games and it was the No. 3 game publisher in North America and Europe, he said. Warner will continue to be able to take advantage of the company’s “big franchises” for its games business and the Lego games have been a “real big source of growth” for the company already and it will continue to take advantage of that, he said. Mobile games in the U.S. and Asia represent a “huge opportunity” for Warner and that “can be turbo-charged with the help of AT&T,” he said, referring to AT&T’s planned $85.4 billion acquisition of Warner Bros. parent Time Warner.

IMAX and Warner each see major opportunities for their businesses in China also. The China box office is expected to reach about $7 billion this year, clearly making it the second-biggest film market behind the U.S., Tsujihara said. Warner already has a Flagship Entertainment joint venture with China Media Capital and Hong Kong broadcasting company TVB and Warner’s SVOD joint venture with Tencent represents another opportunity, he said.

Warner is also “having very constructive conversations” with exhibitors for the first time in a long time about the current 90-day theatrical window, he said. Regardless of the outcome of those talks, he said: “We have to offer consumers more choices earlier. We think it’s an imperative. We’re going to do it and we’re very focused on it.” He added that it’s during the traditional theatrical window “where all the pirating is occurring … and so we have to meet that demand with a legal solution.”

He also predicted that the DVD business will continue to decline, but electronic sell-through (EST) growth is helping the bottom line in home entertainment and should offset that as digital delivery of content continues to make up a larger percentage of business.