Movie Seats That Rock and Roll

By Simon Avery Globe and Mail Update

For moviegoers who are just getting used to the idea of 3-D experiences, there is another technology that is trying - quite literally - to shake up the theatre industry again.

It's called motion entertainment, and through some sophisticated software and robotics developed by a Canadian firm, it's delivering an even more realistic experience to audiences across North America.

D-Box Technologies Inc. has created a system that tilts, jolts and sways a cinema seat to the sounds and images coming from the big screen.

Several events have boosted the Montreal-based company's credibility in the past 24 months. D-Box has reduced the cost of making its equipment and improved the performance, making the technology more attractive to theatre owners. Since beginning commercial rollout a year ago, the firm has signed on 26 theatres in North America and one in Japan. Each cinema adds a small number of robotic seats equipped with D-Box technology, normally in the middle of their theatre. The rollout to date translates into more than 600 seats.

But winning over cinema owners is only part of the challenge, says Claude McMaster, president and chief executive officer. D-Box has also partnered with almost all the major production studios, giving the company access to action blockbusters in advance of their releases so that engineers can program D-Box motion technology into the movies. Eight of the top nine production studios are working with the company, and D-Box continues to try to win over the holdout, Paramount Studios, he says.

How does a small firm of about 50 people in Quebec go about persuading Hollywood's power elite to adopt its unproven technology? Mr. McMaster credits the experience the product itself delivers.

"You feel like you are the actor in the movie," he says. "It's really important to understand that this is not a ride. We are trying to replicate the action in the movie."

Embedding D-Box's motion signals into a movie is a laborious process, requiring up to 400 hours of encoding for each movie. The signals are then sent from an electromechanical unit underneath each cinema seat, which sits atop a piston-like device, orchestrating a series of complicated, co-ordinated movements.

D-Box has eight patents for its technology and another 53 pending. The motion signals are meant to draw the viewer into the movie with subtle movements synchronized with onscreen action, adding a new dimension to the experience, Mr. McMaster says. The seats include an intensity control so the viewer can adjust the motion.

Films coded over the past year include: The Fast and the Furious, Harry Potter and the Half-Blood Prince, Sherlock Holmes, Clash of the Titans and A Nightmare on Elm Street.

Moviegoers are paying a premium of about $8 a ticket to use one of the D-Box seats. That revenue is split between the movie studio, the theatre and D-Box.

D-Box management has set a goal of being in 1,000 of the world's approximately 150,000 theatres within five years. Kris Thompson, an analyst with National Bank Financial, thinks the company should be able to generate sales of more than $50-million a year if and when it hits this goal.

Relationships with the studios are critical, he says. They allow D-Box to participate in the launch of movie premieres and act as a barrier to rivals, who use a variety of vibration and shaker systems to create seat motion.

"Clearly the movie production studios see the potential of this technology to drive box-office revenues higher," Mr. Thompson says.

Movie theatre revenue in North America has been growing at about 5 per cent annually, hitting $10.6-billion last year. "The premium associated with D-Box ticket sales has the potential to be a major growth catalyst for box office sales," he says, similar to the arrival of 3-D movies.

There were only two movies in 3-D when the latest generation of the technology emerged in 2005. The figure rose to five the next year and 16 in 2009. Last year became the "breakout year" for 3-D as it generated more than $41-billion in North American box office revenue, Mr. Thompson says.

"The industry has realized that adding new technology and a better experience can bring back the moviegoers to the theatre," Mr. McMaster adds.

D-Box has been public since 2000 and trades on the TSX Venture Exchange for about 43 cents. The stock has the potential to hit $1 within 12 months, Mr. Thompson says. "D-Box is at the cusp of what we expect to be a very rapid revenue growth profile as it gains traction with its commercial theatre deployments," he wrote in a research report published last week.

In a disclosure, National Bank said it has not acted as a financial adviser, underwriter or lender to D-Box in the past year, but it held a position in the company of less than 1 per cent of outstanding shares.

D-Box was founded 18 years ago to make home stereo equipment. It began developing its motion technology in 1997 and came out with a home theatre product for about $30,000 in 2001. Today, the home product is more realistic, more widely available and significantly cheaper, running about $4,000 in high-end consumer electronics stores. There are about 100 Blu-ray DVDs movies coded for the home technology and nearly 1,000 titles that include video games.

There are at least a dozen other players in the motion entertainment market, including Force Dynamics and InMotion Simulation in the U.S. For the moment, it appears that D-Box is the leader, thanks largely to lower costs and key relationships with the studios. Additionally, the company's model of financing installations in return for royalties from ticket sales is very attractive for theatre operators, Mr. Thompson says.