Cinema still has some distance to go to establish itself as a strong media channel, but a flurry of ownership changes, generic marketing initiatives and the involvement of serial entrepreneur Stelios Haji-Ioannou could see a strengthened sector moving up media buyers’ schedules.
This year is likely to see a surge of investment in the cinema industry as leading chains change hands and the new owners refurbish sites with an eye to changing trends. Leading the pack is Vue, a newly created venture capital-backed company, which is in the process of rebranding the Warner Village and SBC sites it bought last May for &£250m (MW May 15, 2003). Other chains up for grabs include Odeon, for which WestLB paid &£431m last year. It is now up for sale again following the departure from WestLB of former star banker Robin Saunders, who, according to observers, paid over the odds for the business. UCI, jointly owned by Viacom and Vivendi Universal, is also up for sale, as Vivendi Universal tries to offload non-core operations to solve its own financial problems.
Industry experts say that the disposals do not indicate underlying problems in the sector, despite a fall in admissions last year, but have more to do with the owners’ business strategies. The fact that a number of sites across all major brands are now due for major overhauls could also be helping to hurry exit strategies. Vue is believed to be looking at both Odeon and UCI, while Iranian property investor Robert Tchenguiz, who already has a stake in Odeon, is thought to be deciding whether to buy out his partners or take UCI.
One recent entrant into the market, easyGroup chairman Haji- Ioannou, is planning his own activity for the sector, boosting sales of tickets for independent cinema owners, in the face of stiff competition from the national chains. He is still toiling away at his Milton Keynes easyCinema, which operates under a new business model whereby it pays a flat fee for a film instead of sharing revenue from the box office – although not all film distributors have so far agreed to its terms. EasyCinema yield-manages seat sales on its website, with bookings starting at 20p if made far enough in advance.
Haji-Iaonnou hopes to champion the underdog once again by offering other independent cinemas the chance to sell bookings on the easyCinema website for a “modest commission”, with tickets distributed by SMS.
Cinemas as a whole have benefited from a general rise in popularity – 2002 saw the highest number of admissions in 30 years, although last year they fell back 4.9 per cent, to 167.3 million. Experts blame the unusually hot summer and the lack of a blockbusting Harry Potter film should be noted – the boy wizard is due to return to cinemas this June.
But there is also the issue of changing demographics. While the core cinema-going group remains 16- to 24-year-olds, both studios and cinemas are having to adapt to an ageing population.
John Wilkinson, chief executive of the Cinema Exhibitors’ Association, says the industry has been responding to this gradual trend over the past five years, with a widened choice of programming and the introduction of premium packages focused on seating and refreshments.
Vue, the first new mass-market cinema brand since the launch of Virgin Cinemas in 1995, is also paying heed to this trend with its rebranding, which began last week in Doncaster. Sales and marketing director Marc De Quervan says the strategy is to be more inclusive – which means keeping hold of the younger audience while making venues attractive to older cinema-goers.
To this end, Vue is ditching the showy glitz associated with the Warner Village sites. The arcade games and overhead gantry TV monitors are being removed to create a less brash and noisy environment while seating, bar areas and a revamped food range in cafeterias are being introduced.
But like all other picture palaces, Vue will face problems in trying to keep its auditoriums full on a daily basis – demand across the industry falls off mid-week, and just nine per cent of 2002’s total ticket admissions were for Wednesday screenings. In a bid to tackle the midweek slump, the Cinema Marketing Agency has negotiated a three-year deal with mobile phone operator Orange to create a two-for-one ticket offer for the network’s subscribers. The “Orange Wednesday” promotion begins next month and will see the sector benefit from an integrated marketing campaign.
Haji-Ioannou is also promising a generic marketing campaign for local cinemas to back his seat-brokering scheme. He says: “People in the UK are being deprived of a local cinema because of the prohibitive cost of marketing a single-screen business and the high up-front cost of developing online sales.”
Despite the recent fall in admissions, cinema is still increasing its share of media spend, taking 1.8 per cent of total expenditure in 2003 – up from 1.1 per cent in 2002 and 0.8 per cent in 1996. But there is still opportunity for improvement. Buyers are candid about why cinema’s share of advertising spend is so low. Zenith Optimedia deputy managing director Mark Waugh says that cinema is badly sold both to agencies and clients. He adds that the cost-per-thousand impacts is prohibitive and that research on cinema advertising is now very dated.
The Cinema Advertising Association also comes in for flak for its low profile compared with, for instance, the Radio Advertising Bureau or the fledgling Newspaper Marketing Association.
In reality, the CAA comprises the only two sales points in cinema – Carlton Screen Advertising (CSA) and Pearl & Dean. A spokesman says: “We are aware of what people think of us and are being more forward.” For the first time, the two companies will this year hold a joint screening of forthcoming product for potential clients.
CSA commercial director Geraint Thomas says that clients are waking up to cinema’s advantages – it can provide a highly targeted, captive and receptive audience and there are opportunities for integrated campaigns within cinemas, which can include sampling, posters and cross-promotions. Pearl & Dean managing director Howard Warren adds that cinema is an “aspirational medium” and that the rate of client retention from one year to the next has shot up from 40 per cent to 60 per cent, with sectors such as car marques coming on board in large numbers.
Kathryn Jacob, managing director of SMG Access, which cross-sells across SMG’s media interests, including Pearl & Dean, says: “Cinema is the only place I have seen people applaud the ads – that’s what it does for you as a communication channel.”
If more clients can also be persuaded to applaud the medium and more film-lovers encouraged to visit cinemas throughout the week, the venerable silver screen might yet have a golden future.