Reeling in the digital cinema audience

Digital technology looks set to revolutionise the UK cinema industry. Good news for audiences and marketers alike, says Dominic Dudley.

Already one of the largest and fastest growing sectors for online advertising, the film industry could find itself spending even more on the Web, thanks to the advent of digital cinema.

Having successfully tested a pilot programme on 50 screens over the past six months, the UK Film Council has now launched a multi-million-pound push to expand its digital network to 210 cinemas across the UK. The roll-out should be complete by May next year.

The replacement of 35mm reels with a digital file on a hard drive might sound rather techie, but it holds potential benefits for everyone. Distributors will be able to afford to supply their films to more cinemas for the same release date at a lower cost; cinemas will be able to easily switch the films they are showing. And for the cinema-going public, there is the promise of a far wider range of films and a better-quality picture.

The effect of all this is potentially more advertising to capitalise on the expected boost to audience numbers and improved distribution of films.

“It’s very early days but when these [digital] films have been shown, the audiences do come out. Digital changes the economy of cinema,” says Steve Perrin of the Film Council.

“It might incentivise us to increase advertising and marketing spend,” says Matt Smith, head of sales at film distributor Lionsgate.

Releasing internet potential

Despite growing audiences, cinema advertising has suffered in recent years. Last year &£300m was spent on the distribution and marketing of films in the UK, but the amount has since fallen. Orange has been perhaps the most notable brand to get involved in recent years, but few others have followed its lead.

One of the main beneficiaries of any increase in ad spend should be the internet. According to the Internet Advertising Bureau (IAB), the entertainment sector – the majority of which comprises films – is now the fifth-highest spending sector. In the most recent figures from the IAB it was the fastest growing sector and accounted for more than 10% of online ad spend.

Most distributors are already heavily involved in new media. Lionsgate directs fans to MySpace pages for many of its new releases, for instance, while UIP offers iPod- – and PSP-ready trailers.

These companies are looking forward to a new era when such new releases can be put on a digital file costing no more than &£100 that can be sent to many cinemas, compared to the &£2,500 it costs to produce a traditional 35mm film reel that can only be shown in one cinema at a time.

This should mean even small independent films can afford national distribution, and nationwide marketing campaigns.

While the Film Council’s remit is to promote small independent films, whether made in the UK or abroad, Hollywood should take advantage of the switch to digital too. Already, Monster House, Cars and Pirates of the Caribbean 2 have had the digital treatment.

Cinema’s coming home

The same economies should also apply to advertising in cinemas. According to the Film Distributor’s Association, the roll-out of digital technology should enable its members to deliver trailers to cinemas at very short notice, capitalising on developments such as awards nominations or favourable reviews. The same is true for in-cinema advertising, which should become less expensive and quicker to produce.

Cinemas need to improve their offering if they are to compete with the developments in home cinema systems and the increasing availability of downloadable movies. In the past week, Amazon has become the latest major online company to be linked to downloadable movies, with reports that it will offer a service called either Unbox Video or Lumiere.

However, the UK Film Council appears confident it can meet the challenges. There were 165 million visits to the cinema last year but if the council’s predictions are accurate, this number will rise over the next few years, thanks to its digital initiative.

“If we haven’t increased our cinema audience numbers in four years time, then we’ll have failed,” says Film Council chief executive John Woodward. The same ought to be true of advertising spend too.

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