Cinema attendance could be boosted by innovation

The cinema industry has seen a decline in audiences and revenues but its fortunes could be turned around with dynamic pricing, better-targeted deals and technology innovations, according to a new study by Mintel.

The silver screen has lost some of its shine in recent years. Cinema admissions dropped by 8.3% between 2012 and 2014, according to a new study by research agency Mintel, with a weak schedule of new releases partly to blame. Box office revenues from the top 20 grossing UK films took an even bigger hit, dropping by 15% in 2013 compared with the previous year.

Yet pre-Christmas releases such as Paddington and the latest instalments of The Hunger Games and The Hobbit franchises offer hope to marketers of film companies, as well as those seeking to reach audiences with advertising on the big screen. Jurassic World, Fifty Shades of Grey and the next Hunger Games film are a few of the planned major releases in 2015.

“Cinemas are dependent on film content, which is an inevitability of the industry,” says Rebecca McGrath, research analyst at Mintel. “Brands should not be overly concerned by the recent drop in admissions as they look set to increase again due to the strong upcoming film slate.”

Discounts and deals

However, Mintel’s report predicts the need to adopt innovative approaches such as variable pricing and deals delivered by beacon technology in foyers, in order to reverse the long-term slump in attendance.

Consumer attitudes in the study suggest that they are not put off by the idea of paying different prices for the same film in different circumstances – for example, paying less for an advance booking and more as a walk-in – as 
61% of those surveyed agree that cinemas should offer variable pricing, while only one in 10 disagree with the idea.

Support for variable pricing is felt most strongly among those who book tickets in advance via a website or an app on their mobile or tablet, with 72% expressing a favourable opinion of the idea and 21% strongly agreeing. Those who book via mobile devices are also more likely to agree with the idea of having adverts during films in order to reduce the price.

“Live event cinema offers increased advertising opportunities…and appeals to different demographics, notably the older demographics that cinema may struggle to reach”

Rebecca McGrath, Mintel

Variable pricing offers a further evolution from the dynamic pricing strategy of Odeon, which charges £1 more for big releases such as Interstellar and The Hunger Games: Mockingjay Part 1. Marketing Week columnist Mark Ritson recently described Odeon’s dynamic pricing strategy as “blockbuster thinking that should have happened years ago.”

This strategy has the potential to lean the other way too, offering lower prices for films in lower demand, as 47% of respondents agree with the idea of independent films having lower prices than blockbusters.

However, McGrath warns: “The possibility of having different prices for different films is complicated due to contracts with distributors and the problem of adequate enforcement in terms of making sure people attend the screening they paid for.”

Variable pricing structures could also be applied more strategically to other cinema experiences, Mintel suggests. For example, almost a fifth of people are willing to pay more to have access to a bar.

Deals are particularly sought after by consumers, and the recent adoption of Apple’s iBeacon technology by Odeon is an example of a move towards satisfying this demand. Sensors in the foyer alert cinema-goers on their smartphones of relevant discounts, as well as providing further content.

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Live event cinema

One area that cinemas are getting right is the adoption of event cinema, which includes live concert viewings, theatre and comedy shows.

By September 2014, event cinema had grossed more than £23m in the UK, according to Mintel. The interest levels are apparent – although only 8% of people have been to watch a live pop or rock concert at the cinema, a further 45% have an interest in doing so. More than two-fifths (44%) have an interest in seeing a live theatre performance at the cinema but have not so far.

Event cinema is proving popular with consumers of varying demographics, therefore extending the medium’s potential reach.

“Live event cinema offers increased advertising opportunities, with live television show broadcasts containing breaks and theatre show intermissions,” says McGrath. “Event cinema, such as theatre performances, also appeals to different demographics, notably older demographics that cinemas may typically struggle to reach.”

It offers a potential antidote to one of the key competitive pressures on cinema: having a quality home entertainment set-up is a major reason for the decline in admissions, according to Mintel. Its data shows that a third of respondents say their home technology is one reason why they do not feel the need to go to the cinema as much as they used to. This attitude is felt most strongly by the valuable demographic of 25- to 34-year-olds, with 42% agreeing or strongly agreeing with the sentiment.

To recover from its flops of the past two years, cinema needs to give people more reasons to make a trip to their move theatre and not make do with big TV screens they increasingly have at home.

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Comments
  • Saveed Saeed 1 Jan 2015 at 10:36 pm

    True points however when you think of giving people great experiences in cinema to make them want to visit companies should also invest in better quality food and drink. The current fare is too common denominator stuff and at odds with snacking trends, differentiating in this such as Odeons Lounge will create value added entertainment.

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