Magazine article Marketing

The Big Screen Gets Bigger

Magazine article Marketing

The Big Screen Gets Bigger

Article excerpt

UK cinemas have been buoyed by the pulling power of 3D, but are still struggling to convince consumers that they offer good value, writes Jane Bainbridge.

When director James Cameron created a world inhabited by Na'vis and used the latest technology to push 3D effects to a new level, his movie proved to be the film fans had been waiting for.

His film, Avatar, more than 10 years in the making at an estimated cost of dollars 237m, broke box office records worldwide as audiences flocked to see whether the experience lived up to the hype - it has now grossed more than dollars 2.5bn globally, and is still pulling in cinema-goers for its extended special edition.

Blockbusters on this scale are what product-reliant cinema operators dream of: Avatar's appeal kept auditoriums full through the snowy winter of 2009 and into 2010.

Cinema is often heralded as a recession-proof industry, because it remains a relatively inexpensive night out for all generations. It is a safe and social leisure activity for teenagers and benefits from the fact that, aside from snacks and drinks, the price of entry is a fixed sum.

Overall, cinemas enjoyed record admissions and revenue in 2009, and analysts expect this trend to continue. Mintel predicts that turnover will reach pounds 1.4bn at the end of 2010 (a 25% increase on 2005) with admissions at 182.2m, up 10% over the same period.

The uptake of 3D has helped this growth. The format now has a 13% share of the market, with 3D screenings of films grossing, on average, four times more than 2D screenings of the same film, according to Rentrak/EDI.

Revenues grew faster than admissions because of the price premium associated with 3D (about 30%). Avatar took 79% of its box office in 3D screens and Disney-Pixar's children's film Up took 60%, according to Nielsen EDI. Importantly for the industry, brands are starting to create 3D commercials to be shown around these films. Brands including Sky, Wrigley, Panasonic and Sony are among those to have done so, according to screen advertising sales house Digital Cinema Media.

A further benefit of 3D for the industry has been that it stymies illegal videoing of films in auditoriums, a favourite method of those trying to produce pirate copies of films before their official DVD release. Film distributors have also been shortening the interval between the cinema and DVD release of films as a way of hitting back at the pirates, but this is not popular with the cinema chains.

While the recession did not dent people's enthusiasm for visiting cinemas, it appears to have curbed their appetite for buying snacks there. The important secondary revenue from the sale of food, drink and merchandise fell in 2009 and nine out of 10 visitors feel that cinemas' food and drink are overpriced.

GMI research shows a downside of the added value that 3D has brought to the market: almost two-thirds of consumers are starting to view cinemas as too expensive. Average ticket prices rose by more than 5% in 2009 to pounds 5.44, with some operators charging more still for 3D glasses. As a result, there can be a considerable price difference between seeing a film in 2D or 3D.

Cinema operators have been investing in their existing sites, primarily by upgrading their screens to digital. This trend was kick-started in 2006, when 240 digital screens were installed across 210 cinemas under a UK Film Council-funded scheme. Film distributors have helped to fund subsequent upgrades because of the consequent saving on not having to physically ship films. …

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