You can always tell when a market is booming: Virgin usually shows up and wants some of the action. Look out for Virgin branded estate agents now the housing market is picking up.
The cinema industry had been booming for successive years before Virgin bought into it in 1995. Admissions had risen every year from a low in 1985 of 54m. Last year was even better – figures from consultants Dodona put admissions up 15 per cent (MW January 24) to 132 million. The Cinema Advertising Association, whose figures for 1996 are slightly lower, nevertheless claims admissions grew by 70 per cent in a decade.
The main cause of the change in cinema’s fortunes is the investment that has been made in modern multiplex cinemas with eight to 12 screens, surround sound, air conditioning, car parking and comfy seats. The success of this strategy has meant the big five chains – UCI, Virgin, Warner, Odeon and National Amusements – piling in with ever more investment in multiplexes. According to Dodona, there are 600 multiplex screens planned over the next few years, with planning permission applications made for even more.
This investment, and Virgin’s usual aggressive newcomer approach, is breaking down the tacit agreement that cinema chains must not compete too closely with each other.
Sheffield is just one example where all the main players have entered the field. The city will soon have 60 screens. Glasgow, Leeds and Bristol are likely to be similarly swamped with choice.
“There are not going to be 60 different movies,” says Karsten Grummitt, consultant at Dodona. “So for the first time the groups are going to have to compete.”
This maturing of the market is leading the cinema chains to take a fresh look at their marketing strategies. Traditionally most above-the-line advertising in the movie industry has been by the distributors on behalf of their films. For years the chains had no national coverage so they restricted themselves to the listings pages of local newspapers. This is being rapidly re-evaluated.
“The target market for multiplexes are 14- to 25-year-olds with a male bias,” says a source at one of the big five. “Now you do not have to be a media expert to work out that 14- to 25-years-olds are not big readers of local newspapers. It is an entirely inappropriate mechanism.”
Regardless of how regional newspapers might try to rebut that claim the main chains are starting to use local radio to promote themselves.
UCI launched a radio promotion on BRMB last year called Movie Meltdown, where the chain’s branding is mixed with film reviews and celebrity interviews.
“The idea is to catch people when they are thinking about their leisure time and prompt them to think about the cinema as an option,” says a UCI spokesman.
UCI can use such promotions nationally because it has a central booking and listings information number. Virgin Cinemas also plans an upgraded booking system.
The presence of Virgin has also caused the chains to sharpen their marketing efforts. Virgin is likely to harness all aspects of its empire to cross-promote its chain and UCI has anticipated this by signing a long-term joint promotion deal with music retailer HMV.
The first promotion acts as a loyalty scheme giving cinema-goers 1 off CDs. UCI obviously expects Virgin to use its connection with Virgin Megastores – now owned by WH Smith – for similar cross-marketing.
Joint marketing has always been a large part of cinema chain advertising – ten years ago chocolate bar wrappers with money-off vouchers were a mainstay of cinema chain marketing. But now the chains are also trying to tie up deals with film distributors so that their advertising exhorts the public to “see Batman at Warner West End”.
The cinema chains have identified two types of cinema-goer, those who are “film focused” who are just there for the movie, and those who are “social focused” who want a big evening out that includes spending on food and drink. Dodona’s research estimates that concession revenue was worth 116m in 1996, compared with box office revenue of 390m.
The chains see concessions not just as a revenue earner, but also as a way to create a point of difference. Virgin has a cinema where you can take meals into the auditorium. Wine bars, own-brand nachos and gourmet popcorn are popping up all over the country to appeal to the “social focused” audience.
However, as Grummitt says: “As competition increases within the same towns you have to question whether anyone will drive an extra five miles down the road for some gourmet popcorn.” He also points out that any innovation in concessions is easily imitated by other chains.
The multiplex building programme planned for the next three to four years should contribute to extra marketing effort by creating more direct competition.
It should also create the first truly national cinema chains. Once that happens, marketing will move to the next dimension – national media can be used, especially TV. To paraphrase Al Jolson: we ain’t seen nothing yet.