this week we take you inside the business of movie theaters. from expensive popcorn to new features designed to bring in adults and keep the rowdy teenagers out. plus, 5g, what does it all mean, and what will it cost and how many gs do we need? our reporters, heather summerville of reuters, and martin giles of m.i.t. everyone. i'm scott mcgrew. i really like to go to the movies. i also really like popcorn, particularly when you can put the butter on yourself. now, my children call my popcorn

death corn. and they're probably right. these days, there is a lot to like about movie theaters, beyond extra butter. the seats recline. there's often a bar, and in some cases even people to bring you your snacks. this is video from a brand new theater in silicon valley, showplace icon at valley fair. you may have heard people say the theater business is in trouble and that's why we're seei seeing so many extras and amenities. in fact, some of the latest data show last year was a banner year, helped for sure by blockbusters like "black panther." the movies did very well in 2018. tony is ceo of icon movie theaters, a position he's held since 1985. in other words, he's been the head of the chain since the theaters debuted that future." "rambo ii" came in second. he's been working since sting" hit theaters.

he's also the past head of nato, the national association of theater owners. joined by heather summerville of reuters this morning, martin giles of mit technology review. you've been at that company for a good long time, but in fact, it was your grandfather that started it in, what, 1909? >> 1909. he started with nickelodeon in springfield, illinois. >> we're talking no sound. did it have the piano? >> no, nothing. it was just folding chairs and he was upstairs cranking. >> boy, if your grandfather could see all of this now. you've been in the movie business yourself for 46 years. what is the biggest change, the single biggest change you've seen in the movie theater business? >> it's hard to say one thing because the whole technology goes together, the picture and the sound, just light years ahead of where it used to be. we have dolby sound and laser projection. so things aren't even close to what they used to be.

>> the overall experience. >> yes, it's the overall technological experience. >> what about my point that theaters are trying to draw us in because they're desperate? >> no. we want to be competitive with other forms of entertainment. to keep the public coming, you always have to improve. >> i was looking at your menu. you have like this menu, there's drinks, food. it's kind of like a luxury experience. but it's kind of adults, right. it's not really targeted at kids. isn't that what movie theaters are supposed to be about, the kids? >> at certain times of the day. >> i feel i'm going to be with tony on this. go ahead. >> i have kids. >> let me back upus a le bit. one reason we got into this concept of a more adult-oriented experience is we used to run a hundred theaters, a thousand convenien screens all over the midwest. the standards of public behavior

got so poor that it was hard for adults to enjoy a picture. i'm sure you've never experienced that, right? >> yeah, we may have. >> so in our theaters, we don't let anybody under 18 in, in the evening, past 7:00 unless they have an adult with them the entire time. >> so you are talking about two high school juniors out on a date don't come to your movie theater because neither one is old enough to accompany the other. >> that's probably correct. well, they can go, but they got to go before -- >> the worst date ever. >> with the parents. >> they have to go in the afternoon. >> okay, fair point. >> so two of them are probably okay. a few more, you can have problems. >> to that po qte upset when you opened yo you charge nearly adulthood prices for small children as well. >> yeah, 2 and under, i believe, is what we do. >> andit's, what, $19 for an

evening show? it's not cheap. >> it can be as much as thatt's. >> i canthe ckback that ley, this is not fair. these sort of theaters strike me this is ridiculous, et cetera. almost like the admiral's club for american airlines. not that kids aren't in the admiral's club, although, thank goodness they're not. there are theaters in which, you know, you have a 10-year-old's birthday party. that's not your theater. >> no, that's not our theater at all. i've always thought it's kind of rude of people to bring small children who always sit there and cry. i've had kids. they cry. they fuss. it really destroys the enjoyment of all the other people in the room. >> and tony, you opened a theater in san ry nice, high-eny shops, that kind of thing. how much have you had to upscale business, bring more luxury items to your own business to fit into these sorts of malls, given that other run of the mill malls in suburbia

are really deteriorating, shutting down? >> it kind of happened the other way around. we had opened our first icon theater in chicago. scott valley, no relation, who runs the valley fair mall here was looking for an operator and wanted something that wasn't one of the ordinary big circuits. so he kind of fell in love with our concept. that's how we got sbointo the m. >> but you really only work in certain geographies and certain socioeconomic communities. >> these kind of facilities are meant for that. they'rot tilted more toward an adult, more sophisticated, more educated crowd. which is why we've targeted markets like mountain view, where we opened last fall. san jose, santa clara.

>> tony, talk to me about the movie theater industry, which i have no idea how that works. do you get paid for the movies that you -- the tickets you sell? or is that $10 buck of popcorn where you're making money? >> we share the box office rchb with t -- revenue with the distributor. the popcorn revenue is ours. but people always say, well, you're making money on the popcorn, not on the movies. you can't have a concession stand in the middle of nowhere with no movie theater around it and expect anybody to show up. so it all depends how you want to conceive of the accounting and how you allocate the cost toward this end or that end of the business. >> people have written off movie theaters multiple times. you go way back when radio during the great depression, everyone switched to radio. movie theater attendance fell. the 1950s and television, movie

theater attendance fell. we've had imax. we've had the dolby surround sound. what's next? is it vr? what excites you about the next ten years? >> well, they haven't figured out to make vr more of a game. if it's ever going to be important in our business, it's going to have to be incorporated into like a movie. but i don't look for that to be a big issue because with vr you can probably do in your home. >> i also don't like vr for movies in the sense i want to sit down in a really comfy seat with the gigantic tub of death corn and the soda and just have it wash over me as opposed to i missed a plot point because i didn't look behind me. that's a different interaction. >> that's your immersive experience. you immerse yourself in the popcorn. i immerse myself in this -- i'm actually really in it. it's almost like -- i mean, we tried this with big screens that sort of wrap around.

they're amazing. isn't that the kind of super immersion? >> yeah, they're called plfs, or premium enlarged formats. most exhibitors have their version of it. we call it i concon x. we have a 70-foot screen, dolby sound with 64 speakers and a thousand watts of power. >> i'm going to squeeze in one last question. that is movie pass. will it ever w >> that particu why? times more than they took in. >> fair enough. >> because they paid out ten welcome to silicon valley. we've made that work for quite some time. i've got to get to a commercial break. thanks for being with us this morning. up next, 5g is rolling out nationwide. what it means for consumers and for silicon valley.

welcome back to "press:here." cell phone companies are rolling out 5g. the "g" stands for generation. it's obviously a generation beyond the current standard of 4 4g. but what does that mean? verizon claims 5g is the fourth

industrial revolution, putting it up there with the invention of the steam engine and electric lightbulb. we needed a neutral expert to sort this out. dave, thank you for being with us this morning. where are we on this? when does 5g come? when are we on5g? >> it's starting to roll out now. the first application is called fixed wireless, where they're using it to essentially provide high-speed bandwidth i your technologically, your house doesn't drive down the highway, so it's a bit of an easier problem to solve. then later in '19 and really rolling into 2020 is when the mobile devices will hit in large numbers. >> let's keep talking. i want to go back to fixed. let's talk about mobile devices. 2020? >> uh-huh. >> all right. so what does it mean? >> so 5g brings a whole collection of tremendous technologies that enable not only the consumer with mobile but the whole iot world, the use

of industrial applications, automated cars, things like that. specific to mobile, it's really going to be kind of more faster, you know, cheaper, better. the real power of 5g comes with the fact that it can handle far more devices. it can provide much higher bandwidth so you can start doing the virtual reality type environments, things like that. there's a whole set of then a tremendousies and enterprise. >> you said the "c" word, which is always a good word for me, cheaper. are we absolutely sure it's going to be cheaper? moving generation to generation of wireless is it hasn't really got cheaper. the bill has gone up. i do have two teenagers who have phones surgically attached to their hands. >> well, i think what you see happening is services that you're used to as they mature, they get cheaper and cheaper. but what's happening is there's

much more powerful, more immersive, more valuable services that come out. you know, just like any product, when it's new, it's a bit more expensive. then it declines over time. i don't think moving from 4g to 5g you'll see the services you're used to do anything but get less expensive. but what you will see is, you know, if your kids want to play a streaming, fully immersive 360-degree video game, that's using 100 times the network bandwidth. >> and they can do it. >> they will do it. >> now, private industry, of course, is working on this. at&t, verizon, t-mobile. there's also been some talk from the government, last year especially, from a retired air force general about a national government 5g network. this all gets back to security, ch concerns about china. what do you see about possibilities between private/public partnership in building a 5g network? is some kind of national 5g

network that the white house and dod and homeland security use a possibility? what are the security concerns here? >> i mean, obviously i don't influence the government significantly, but i think as an entrepreneur, you know, i very much believe in more capitalism and the private sector. i do believe in making sure there's sufficient competition, which i think the government is doing a very good job and watching very carefully ifccurn much. i get too involved, the efficiency tends to go down. >> to heather's point about out, i know huawei is a big concern to the u.s. government. can we do national 5g without huawei? >> absolutely. there are traditional other vendors like nokia who have been in the mobile space forever. now because huawei is getting backed out of a lot of parts of the world, there's vendors like samsung that are essentially stepping up and filling that gap. >> my understanding is you can

sort of stream, as you said, far more data across these networks much faster. stuff happens really quickly. you turn that around, and if i'm a hacker, the unit to use that speed, use that capacity to bombard sites with traffic to knock them offline, with connecting all these other things like cars and industrial machines, it's kind of isn't it? we're sort of creating this massive attack opportunity for all these online hackers. >> aspects of 5g called network slicing. essentially in a 4g network, everyone is sharing the same highway. so therefore, you know, one rogue car can cause a lot of chaos. in 5g, the operator can actually create these virtual networks which are completely isolated from each other. so if you have a slice that's helping automated cars stay on the highway, there's much less opportunity for a hacker to

penetrate that because they're most likely entering the network on a very different access. >> is there enough incentive for private industry? i mean, it seems like there probably isn't. then you get into issues where 5g is a dual-use technology, meaning it's not only for industry and consumers, it's for the military. >> well, the military, i think, section of the network. the network slicing is built absolutely into the core. you think about it as concrete walls between each lane of the highway, except they're not actually concrete. they can be moved. in terms of the incentive to make things safe, i've been in the mobile industry for 26 years. those mobile core networks are actually tremendously protected, completely encrypted, massive access control because of the data that's flowing over them. >> dave, i get this now. 5g does not necessarily mean a better netflix experience on my

phone. it means that lots of different devices could be placed all over the city that would normally not be attached to the internet that can suddenly be attached. traffic lights and cars and things. that's going to change things. you mentioned fixed based wireless off the top, which is the home. what does it snemean? i will remind the viewer we are owned by comcast cable. what does it mean for fixed based cable companies if you can st my house at low cost? >> essentially, as an entrepreneur, i believe in free competition and fundamentally this will just bring increased competition for that bandwidth to your house. >> one more problem, quick last question. 5g, to my understanding, the distance isn't quite as far as the 4g, right? this means fmore cell towers. >> 5g, the way it gets higher bandwidth is you're using higher

frequency signals. they don't travel as well. they don't penetrate walls as well, et cetera. what you end up with is smaller antennas, but more of them. >> do you expect any pushback on that sort of thing? people don't like cell towers, except when they can't get one. >> exactly, yeah. no, i think what you'll see is there's a lot of cell sites now that are actually just about this big on the tops of buildings. >> they won't even know they're there. >> that's what's happening. it's not the giant a.m. radio style antenna anymore. >> one last question in because it's my show and i can do whatever i want. you're both the ceo an cto of matrix software. is that because you haven't found somebody as smart as you are to be your cto? >> we have lots of employees as >> is it hard to be ceo and cto? >> i actually love it. the two things i enjoy in my career are being involved in the inventing. my father was a physicist. i got those genes in me. but i also love building the team. i've got a bunch of people at matrix that have worked together, many of us, for over

20 years. it's just, you know, there's nothing more exciting than seeing us conquer problems and make progress together. >> fair enough. dave, ceo and cto of matrix software. thanks for being with us this morning. >> thank you. >> back in a moment.

welcome back to "press:here." late last year a fellow named gerald cotton passed away. cotton was one of those bitcoin true believers and operated a coin exchange sort of like a bank for cryptocurrency owners. as you know, those coins are just computer code and can be protected by a password. no password, no coin. and when cotton died, the passwords to all the customers' cryptocurrency died with him, $190 million worth. the bank, if we can call it that, in a masterpiece of understatement said, we are sure you have many questions. we do not have all the answers right now. what we can tell you is there is an attempt to maximize the funds available for the company's shareholders. i know all three of us have been quite suspicious of this is whole bitcoin sort of thing. and this is not the blockchain's fault. it's not bitcoin's fault or any of those things. it's one of those, i think, where you've got a situation

which somebody is being allowed to save and take in other people's money without being a bank. is that a fair assessment? >> i think so. i mean, as you said, this isn't actual cash. it's code. these guys are sitting on this code, but the code is the access to the money. therefore, you are effectively, in my view, acting as a banker. they call themselves an exchange, but you're hogging someone's money. you have a fiduciary responsibility to do certain things, like have really good security and back-upisidn't hap. it just shows you this is still kind of the wild west out there. >> yeah, and back when there was that disaster years ago -- >> another exchange. >> all the money went poof. there has been a lot of talk since then about this industry being, you know, much more walking a straight line, being much more up front with consumers, having better protections, being a legitimate business. and this just goes to show how far they really have to go.

you know, maybe regulations would actually be helpful. >> and isn't that funny because the whole point was to keep government out of it, right? it's this libertarian idea of the government doesn't know what it's doing. it's sticking its nose in the business. but there has got to be some sort of framework. it's very sad he it was the only person who knew the password, the combination to the safe. it's ludicrous. it's insane. >> if people hadn't lost so much money, it would be comic calal. >> it would be. >> it gets to this libertarian tendency. you distribute this code all over the internet and no one person centralizes it. that's the driving mentality. you take it to an extreme. i don't want anyone to control it exempt me. there was one person with one password. >> apparently on one laptop. the whole thing is stored on one

laptop. >> it's incredible. >> there's this overall feeling, and i know he died in india. india has confirmed he died in a hospital, apparently of sep sis from crohn's disease, which is tragic. when $190 million goes missing, there's that suspicion something else is going on. i'm not claiming there but any time somebody, you know, kind of disappears, more or less, with $190 milli son yethi going on. >> yeah, i think so. you've got to ask all those questions. and pretty sophisticated password. so whatever was there was a but then you say to yourself, that's a really odd thing that one person, just one person had everything. i mean, why? >> it was clearly set up to fail. it could have been anything else. >> and what's so interesting is despite, you know, one disaster after another in this space, the interest by investors, venture

capitalists, private equity, to continue to back these exchanges, these crypto companies is huge. u.s. investors, a very well-known venture capital firm in silicon valley, chinese investors, they continue to dump money into this space, undeterred. >> coin base is one of those they invested in. >> that is correct. >> that one sounds legit, run by grown-ups, et cetera. >> well respected, yes. >> but there's no way of us knowing that. there's no fdic, nothing else like that. >> when i opened marty, exchange, give me all your money and i'll look after it. and trust me, the password is going to be amazing. >> 12345. martin, heather, thanks for being with us. we'll be back in a minute. ver

new podcast "sand hill road." it's akifou like this show, i'm you will like "sand hill road." listen on apple podcast and google play or wherever you get your podcasts. new episodes on tuesday. this week we talk about taking three companies public and the leadership lessons learned from his dad. this coming tuesday, we'll upload my talk with angel investor elad gill. in the meantime, my thanks to our guests today and thank you for making us part of your sunday.

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