With Consolidation — What is the Dealers Role? - ICTA With Consolidation — What is the Dealers Role? - ICTA

With Consolidation — What is the Dealers Role?

March 5, 2019

Alan Roe:  The moderator for our next panel needs no introduction but she certainly deserves one.  She’s been in the industry for over 25 years during which she’s been a huge asset to everyone from JBL to Sony, from QSC to Doremi – and now to Dolby Laboratories where she’s Senior Sales Manager for North America. Here is Beth Figge.

Beth Figge:  We’ve had a lot of changes in our industry, specifically from consolidation, and dealers have both influenced – and been affected by — that continuing evolution. So I’ve invited these distinguished dealers here to talk to us today. Let me introduce Frank Tees, Vice President of Technical Sales and Support for Moving Image Technologies; Kevin Eagle, CEO of Cinematronix; Kobe Bone, Tri State Digital Services; David Pflegl, Owner of Specter Cinema; and Alex Younger, Vice President of Sales and Service for CES+. Gentlemen, my first question is: over the last three to five years, what percentage of your business has gone from Sales to Service – and how have you had to change to stay current and relevant?

Eagle: Service is certainly a key component for what we do, but sales have opened in some new areas for us that we never saw before. For example, now, we’re routinely doing performing arts centers and mixed media venues in smaller communities that otherwise we’d never been able to do when they had a film-based projector. These are locations that want to be able to run movies one or two nights a week or occasionally on weekends, but at the same time they run live shows; that just was not a practical thing to do with film, where you needed a specialist who knew how to thread a projector and assemble a print. So digital has opened up new avenues for us — but service is still the big component.

Tees:  I think the early adopters and even the later adopters, just wanted to get digital in and continue with business as usual — but now they all are realizing the benefits and business revenues that come from having additional AV capabilities — and that helps us provide more value by getting into the AV space, providing microphones, extenders and video and so forth. It has taken us in different directions as people grow in comfort with their technology.

Figge:  So digital has changed your business, not only as a result of consolidation but in learning a whole new way to stay on top with your customers. Right?

Pflegl:  For us, we primarily do installations. So we’re looking forward to installing new technology and providing the service for that as it moves forward. There are so many new things in our industry now.

Younger: I think with the end of the VPFs, we’re on our own. There’s no more force-fed maintenance plans, so the growth that we’ve had – and will continue to have – comes from the service reputation we’ve built. Service is a big factor of our business moving forward and I think this is what really differentiates us from our competitors here and friends, but we’re focused on service and see it as a big part of our business.

Tees:  But I go back to the AV thing. With the new systems we’re putting in, we have to service a lot of components that are added on to an existing system. With projectors, we’re supporting gear that is meant to have a good long life; when that new projector smell kind of wears off and components start breaking we’ve been trained for that. But as we start integrating other components into the cinema systems, we’ve got to be trained for those components – for the inter-operability of things that were not necessarily conceived of – and that’s what we’re adding to our business.

Figge:  So do you see new services coming up in the next five years?  How do you see that area of your business changing in the next five years?

Younger:  I think the processes are going to be changing and evolving. There are new technologies out in the market that we’ve leveraged to provide the best service for the industry. We have the best partners in the world and there are processes that we’ve put in place to allow us to keep growing in this market. We changed the service model with the technologies that are on the market. I think visibility and metrics and data are going to keep driving growth in the service industry.

Tees:  We’ve had a lot of time to gather data and make use of that and get some good predictive analytics in place to support and get a good idea of how things are going to change going forward. What are going to be the major technology hurdles in service, failure modes, replacements, life cycles?  Manufacturers design a projector or a component to last ten years, but they don’t keep it in R&D for ten years, to make sure it will last 10 years; they put it out there. It’s all a big guess. We are finding out what’s making that grade and achieving that longevity and what’s not — what really needs to be replaced because it’s not reliable or whatever.

Figge:  So you are trying to predict and plan the next step before you might even know what it is?

Younger: The more predictive we get on this equipment, the easier we can catch these areas, before they become a problem. Again, we leverage the heck out of technology to catch that black screen before it happens on Friday night, on Star Wars night. But absolutely — predictability and leveraging metrics to do that is what we are driving.

Eagle:  I don’t see our core business changing from cinema — but what was a unique format with film is blending over with IT and network-based technology that overlap into other realms that we never were involved with before. We were highly specialized in what we did with film and now we’re also looking at competing in other markets — in pro AV and other areas that we would never have considered before. So it is opening new opportunities for us.

Bone:  As somebody who’s done nothing but service and installation his entire career, I think the service and installation will always be there. But as theaters are ever-changing and becoming entertainment complexes, we’re learning about bowling alleys and how to set up pins and fix machines also. Since I was born, we’ve been talking about computers taking over the world, but even as they do, we’ll still need people to replace those computers and to fix those projectors. For us, it’s just making sure that we have the best people that we can to put in place in case they need help.

Eagle:  There is still a very strong demand for the service end of our business. When digital came along, if you believed all the propaganda in the brochures, you’d have thought we’d be sitting around like the Maytag repairman when it was all done, but that certainly hasn’t been the case. It’s always been driven by service. I’ve always thought from day one that we have to service what we sell, so we are never going to sell anything unless we have that backup to go there and support it.  That’s where the business has been going.

Figge:  Now that we’re at the ten-year-plus mark for many of the VPFs, what are some of the biggest service challenges that you are experiencing?

Tees:  A lot of it is hesitation – on the part of our customers — to take a product that is still working for them, making money for them and pull it out before it goes out and actually costs them money.  It’s a gamble.  That is where we have to guide our customers through end-of-life of certain products. Some will make the sweeping decision to go ahead and replace everything and move all the equipment to other locations to be “parts stores” for equipment; some people don’t have that luxury, don’t have the other locations to do that.  There are certain thought processes behind the decisions.  Do you refresh early when there is still a market for the equipment that you have?  Do you make these changes based on the latest and greatest technologies? Do you have the funding for improved sound formats and immersive sound and high dynamic range, and everything else?  We – and our customers — are also getting pulled in several different directions.

Figge:  That’s interesting because your customers are turning to you for advice. They think you have all the answers. You’re putting your neck out there for your customers hoping you are making the right decision.  What are the big issues in this point of the dealer-customer conversation?

Bone:  I think from a dealer standpoint, education is important. We pride ourselves on knowing all the technologies and being agnostic — and we have to be. The technologies are changing so rapidly and they are going to change even faster as we continue moving forward into this digital era. As dealers, we are the consultants. We tell customers, “you guys come to us for information and we ty to provide the best package or the best product, for what your needs are – based on your budgets and your goals.”

Pflegl: But it’s more than recommending, installing and servicing cinema systems. I think we are simply going to do everything that we can for our customers, if that makes sense. We’re doing things I would not have thought of before now.

Figge:  So you are having to broaden that scope of what we’re doing. You mentioned bowling areas earlier. Are you servicing any of the kitchens or the bar areas in the theatres? Are they becoming part of your packages as well?

Bone: Not for us. We used to do the popcorn machines, but not anymore; we try to figure out what makes sense but we are not kitchen people, so we stay away. But the technology of the screens and the digital displays, we handle those. If we’ve already got people there in the bowling alleys, those systems are fairly simplistic, there are not a lot of intricate parts so we can add that on because we are already there, we’re local, that makes sense for us.

Figge:  We touched a little bit about keeping the complex up and running, but what do you leave to the manufacturer? Where do you guys draw your line as to what is under your umbrella and what you would prefer to defer.

Tees:  We do battery swaps. It’s one of those things we’re recommending: “I see your battery is getting a little long in the tooth, we need to recommend that for the next service cycle.” We’re starting to see errors in sectors in hard drives and customers need to consider replacing not just one but a full set of drives as they age. So there are certain things that we recommend, just on a preventative level.  As we continue to add other things to address, people start looking at their service bottom line. Parts are not going to be covered under a service contract necessarily and they say, “well I’m starting to spend, not just a couple of hundred dollars a year in parts, it’s maybe closer to a thousand.  We need to start considering the replacement cycle for these components…”

Eagle: Batteries for operating equipment are something new that we have to keep on our bench; we have to keep powered out. They’re something we never had to worry about or consider in the past.  And even at the beginning when a lot of the customers were all protected by the warranties, we took it upon ourselves to invest a few hundred thousand dollars in spare parts. We felt we had an obligation to our customers to have these on the shelf — so that they could be distributed anywhere in the country as needed.

Figge:  So you had to keep batteries charged and ready?

Tees:  And unless you put it in a projector, it’s not really going to tell you whether it’s good.  It’s a challenge to invest in stuff like that and keep it going. And really you have to invest in parts for the makes and models of projectors that you decide to support.

Figge:  There’s only so much space and money to keep all this in stock and that’s got to be a huge challenge.  Because you want to have what your customers need when they need it.

Tees:  NEC has been very supportive of us and that partnership. We replace those items as they go out and it’s a good arrangement.  You kind of have to have that arrangement with your OEM because to purchase all that spare stock is challenging. It’s a risky investment because you are going to take on all these boards that in ten years are going to be worthless.  And what do you do?

Younger:  Going back to visibility, it’s seeing what assets you have, getting a good count – and using data to predict what’s going to happen, when. We watch the run-time of the projector, run-time of the server — if they’re running for two- four- or ten-years – it’s having visibility, knowing what we have installed, and being proactive with the alerts we get from our system – the data tells us when to do the preventive service that we need. Avoiding a downed screen is always the goal.

Tees:  To add to that point, with all of our experience, we know where the problems are going to creep up first, based on the times since the initial rollout. We use our experience to help the customer in that respect.

Bone:  With us, we’ve taken on the warehouse function because we’ve got theaters that are closing down, and they are waiting to move equipment over to maybe a dollar house or a smaller house. So, it’s cool because we keep an inventory and that’s something we never did before. We keep an inventory for a client and they call us and say, “hey, I need this amp, will you ship it out?” and we do that.

Figge:  Something we would not have thought of 10 years ago.

Pfleg:  I think it’s something that’s expected of the dealer – that they’re going to service what they sell if they install it. We also install seats, for example, so we have various manufacturers’ parts on hand.

Figge: Dealers need to be so diverse these days.

Eagle:  With the distance involved, especially in Canada, we can’t just send one part that we think might be the problem; we often have to send several. There are real challenges there when our technician is in Turkey Gulch, Saskatchewan. It’s not on the road to anywhere. We are never going to get him anything in a hurry. The other big challenge that comes to mind is one of the frustrations I feel for our technical guys in the field — they show up on a Friday and the projector needs a software update and they have to say “I’m sorry, you are down for two or three days because the upgrade didn’t work.” It’s a very difficult situation.

Figge:  We get so used to just the US and how accessible everything is and everything is relatively close. But Canada seems a little different, it’s pretty vast, not as developed.

Eagle:  I tip my hat to some of our technicians who jump in the car in January and drive in a snowstorm to deliver something. Canada is a country that has very little history and too much geography.

Figge:  So not only diagnosing the problem over the phone, but also sending the right part. Alex, how about you guys in South America?

Younger:  Easy, very easy. I’m kidding.  Sending stuff in the US is godsend compared to what we do in South America.  Here, we’re used to two-day shipping from Amazon.  We’re used to quick service, we are spoiled here in the US. If we send a part — to let’s say to Columbia — we can get it there quickly, but then customs holds it back for two days for whatever reason.  But that means we can’t just send a part, we have to make sure that we know for certain that that part is the exact right one, and we have to test it in our lab before sending it out. Latin America has their own timeframes for shipping and services.  But we also have local stock in each country. We manage it from our accounting system, we have remote inventories around the region. If you are doing business there — we’ve been doing business in South America for thirty-plus years — you get used to it.  Actually, we’ve taken that process and we’ve used it here in the US as well. If a projector server fails, we know exactly what part it is, or if for whatever reason we don’t know, we send two parts. And use the same process — we test and make sure every “I” is dotted and every “t” is crossed. It’s almost like second nature.

Figge:  We talked a lot about the service aspects and how they’ve changed and what the challenges are. I think there’s also a partnership aspect where we as manufacturers rely on you — to represent our products to the customer, to help make our lives easier. But what are your biggest challenges with the manufacturers?

Tees: Some of the bigger challenges are knowing the alliances. The OEMs are getting in front of the sales process in a lot of cases these days and visiting customers directly and they have a competitive nature regardless of the dealer relationships. And in certain cases they may direct our customers to other dealerships that are more in favor of their alliance.  It also gets fragmented even further when we have a close relationship with our customer and then they start seeing one, two, three, four faces from OEMs for whatever product. And they get confused by the whole sales process.  So it’s something we have to navigate. We have to maintain trustworthiness to our customer and ensure them that we are making good choices on their behalf and not just saying, “this is your package; you need to go here.” We need to explain it, we need to go through all the aspects of the decisions as a package, not just for any one component. It’s very important. That is the value-added that the dealer brings.

Figge: Great. I agree.

Eagle: We are not in such a crowded marketplace in that regard. So that’s not so much a big issue. I think the support from the manufacturers, for the most part, has been really good. We are definitely at a point where warranties — and tracking of warranties — have become a big thing. We expend a lot of energy in our office tracking the parts, the warranties, things we never had to do in the past to make sure of the dates of the purchases, so the support from the manufacturer will be good. And some of the manufacturers have been quite forgiving with a known issue — even when it’s gone past the warranty, because ultimately they know we’re the ones who have to look at our customers. In the past our customers have maybe spent $1,000 a year for a bearing or a set of brushes for a motor on a film projector.  Nothing is that cheap anymore.  Anything that fails is a lot of money and we are ones who have to face them for that. Our relationship with the manufacturer is more to make sure that we satisfy them so they also support us when we need that.

Younger:  I would say education by manufacturers is important. They need to keep us in the loop with new products. It’s our job to be that consultant, we are thirsty for knowledge, we are thirsty for what is new and we keep striving to learn more. When manufacturers teach us, we can make their job easier.

Figge:  In the end these are partnerships and to have all of us succeed, they have to work well. When this happens, does that affect how you would promote that manufacturer, that OEM, in the future?

Bone:  In the old days — like seven or eight years ago – our competitors were other dealers — and we all knew that. But now some of my biggest competitors are my manufacturers and it’s hard because we have to still support them because we support our clients. We have all these relationships with our clients and we try to maintain them — and the manufacturers come in and they do the direct sale for whatever reason. That makes sense for them but then later on, all of a sudden, when the exhibitor decides to go in a different direction, the manufacturers are coming back to us and going, “hey, help out.” And when there’s a warranty involved and something fails, manufacturers send the part but the sometimes the part is not right – and we’re the ones who have to explain to the theater manager who has a sold out Marvel movie that we can’t get it back up and running because the manufacturer that they bought from direct, has sent the wrong part. It’s gotten a lot more difficult; it’s very very tough.

Tees:  And then you get ad hoc add-ons in terms of service and parts, and you start battling prior agreements; it adds up to a challenge. And we remember; we’re elephants. We never forget.  We all have to work with manufacturers. We have to work with our customers; we have to make sure they have the best product and if they also want to try something new we try to ensure that they’re comfortable with their decisions because, often, we’ve got to support those as well.

Bone:  At the end of the day, it’s about supporting the customers, whichever direction they go. We have to be Gumby in all aspects of trying to mold to what they need.

Figge: Manufacturers offer training courses. How difficult is it for you to take your people out of the field? Are there things you would like to see done differently with training?

Tees:  It’s a challenge to take a portion or all of your techs off the road for a period of time in order to maintain their knowledge. It’s a tough proposition. Or it’s rotating through and then it’s four classes for our full force instead of one. Or bring the training to us; travel to our sites and train us there.

Bone:  Or train the trainer. Train one key person who’s got a direct relationship who can keep up on all the technology to train the rest of the staff because they can move around within our industry and help out the techs that we have in the field.  We can’t just pull in our reps because they are supporting X number of screens.

Younger:  I’ve asked the manufacturers to make it easy and most of them have. I’ve said politely, “come get immersed in our culture, come see what we are doing and what we’re building.”  I think it’s a great way for the manufacturers to build this rapport and relationship with the dealers. We have a manufacturer come once a month to our facilities to train us and that’s how we stay knowledgeable.  That is how we stay on the cutting edge of what’s happening in the industry. Yeah, it would be nice to send everybody to San Francisco for Dolby but we’re in Miami, Florida, and it’s not easy all the time.

Figge: I think a balance has to be struck between us coming to you and you coming to us, simply because of the equipment.  There is some stuff we can take on the road, we can set it up, but it’s never going to be the same unless it is at the factory.

Tees: I think when some training is done on our sites, there can be some additional learning. We might be using a Barco projector, for example, that you at Dolby want to check for — or train us on –interoperability, so there may be opportunities there.

Figge:  We’re nearing the end. There is just a smattering of topics. This was just a first stab at doing this at ICTA. I hope it can become a standard, a mainstay. I think the dealers are a very integral part, not only to the entire process from the beginning to the end, but the overall health of our complexes. It really rests with the dealers and the manufacturers communicating with each other — as well as the exhibitor keeping in touch with their dealers and keeping them informed of things that are happening with your maintenance business and things like that.  All of that helps all of us to help each other. So on a final note, I just wanted to check in and see how your world is changing, what’s good, what could be fixed?.

Eagle:  I think it’s been a challenge to adapt to radical change in technology. I couldn’t be prouder of the team with what we’ve accomplished with this. It’s challenging, but we continue to work at it and it’s not always easy. Still, for the most part, I think we are looked upon and respected by most of our customers as a partner and as a source for help and support. There may be a few who consider us a necessary evil, but all in all, I think we are forging ahead very well.

Bone: Communication is very important. We pride ourselves in service – and we have partners because of the services that we provide. Life would be easier if manufacturers would work with us to set up goals with us in the beginning of the year. Manufacturers know how many new builds are coming down the pike. What do they want to attain? What can we do together? That would just make everything much easier. It would allow us to forecast together and set expectations all the way around.

Younger:  We have all our forecasts built for 2019. Any of the manufacturers we’ve been in touch with, they know that. They know what projects we have coming down the pike. If you set it up from the jump, it’s very easy and it allows you to plan properly for it.  It’s all execution and delivering a good service and a good product to our partners.

Tees:  I agree. Communication is good.  We certainly rely on the manufacturers to innovate and as they are innovating, we can’t just talk “forecast” – we need to talk about what our customers want to see and how those products could be evolved to support the customers’ needs so we can be used as a resource for manufacturers to help them understand that.

Figge: This has been a great start on what I hope is a continuing conversation. Gentlemen, thank you.

Roe: Thanks so much Beth. Thanks, also, to our dealers for being so open to sharing the challenges as well as the opportunities you – and we — are currently facing.

Upcoming Events


New ICTA Bundle Sponsorships

December 1 - 31 2023

New York


CinemaCon 2024

April 8 - 11 2024

Caesars Palace, Las Vegas


ICTA Fundamentals of Presentation Technology

April 8 2024

Caesars Palace, Las Vegas


Annual Membership Meeting & Reception

April 9 2024

Caesars Palace, Las Vegas


Kino Baden Baden

April 15 - 18 2024

Kino Baden Baden

Are you a member?

Get priority access to events

Join ICTA Today