Screen Time - How Cinema is Weathering the Digital Storm
So the award season is upon us and we’ll see a flurry of big releases hitting the Big Screen yet at the same time we continue to see many questioning the relevance of cinema in the Netflix era.
It is beyond dispute that subscription video on demand services are changing the way we consume long form content with box set bingeing now a regular part of our lives. The latest figures from OfCom show that the presence of subscription on demand services has risen from just 14% households in 2014 to 39% in 2018. However, this isn’t purely disruption in the access market - we’ve also seen both Amazon and Netflix become serious players as studios too, culminating in a Netflix production, Roma, receiving an Oscar nomination this year after widespread critical acclaim.
Looking forward, 2019 is forecast to see a crucial tipping point for the industry with Ampere predicting that streaming revenue will exceed cinema box office revenues for the first time this year. It’s easy to jump to the conclusion that streaming will kill cinema – I’m sure I’m not the only one who has had a teenager in qualitative research say that they don’t go to the cinema because they can’t use their phone for two hours! And with every bigger screens and surround sound now relatively common place, it could be argued there’s no need for the average Brit to venture out to watch a movie.
Yet on the other hand, it’s clear that the death knell has been sounded too early for the cinema industry. Figures announced this week showed that UK cinema attendances were at their highest level since 1970 with over 177m tickets sold in 2018 compared to 170.6m in 2017. And this isn’t just a UK phenomenon – figures from The Numbers showed that US cinema attendances were up from 1.225bn in 2017 to 1.342bn in 2018.
The top 10 grossing movies in 2018 show just how diverse our tastes are from the Marvel blockbusters of Black Panther, Deadpool and Avengers through to Mamma Mia and A Star is Born – the UK it seems definitely loves a musical.
So what’s behind this resurgence in our love for the silver screen?
Undoubtedly one of the biggest trends over the past few years has been the rise of premium experiences. Everyman started with a single screen in Hampstead but now boasts some 69 screens across the UK. We’re constantly told that, in the retail world, consumers would prefer to stay at home and shop from the convenience of their own sofa rather than venture out into the high street. With 4/10 households now subscribing to a VOD service, surely cinema should be hit by this phenomenon even harder?
It seems though that we’re falling back in love with our big screens. DCM’s research would say that 69% still believe the best place to watch a film is at the cinema. It’s not just niche players like Everyman that are building ever richer experiences. Odeon have opened their new Luxe proposition in Leicester Square (with social media imploding over £40 ticket prices!) and other chain operators are investing not only in the environment but also the on screen experience too.
A quick scan of the market shows the sheer variety of features available now – from reclining seats to VIP bars and from 3D and IMAX through to sofas and at seat service. Whatever your demographic or budget, it seems there is a cinema seat with your name on it!
There was a time where premium ticketing at UK Cinemas involved a different seat covering and slightly more legroom. In those days , the rest of the customer journey went pretty much unchanged and the experience felt as VIP as paying for an extra legroom seat on a Ryanair flight. However, the growth of these niche, premium operators has seen a response from across the industry and for that operators are to be applauded.
Subscription (and beyond)
It’s not just in the experience where the Cinema sector has seen significant innovation in recent years. The pricing model has evolved from a one size fits all model to tiered pricing both to target different market segments but also different needs.
Off peak discounted screenings have long been a feature of the cinema landscape but these are now augmented with a range of different pricing mechanics. Most operators are now offering a range of subscription packages and many are now offering additional packages e.g. family bundles
All the major operators are now offering annual subscription packages with many offering tiered packages. Cineworld and Odeon, for example, both offer unlimited membership but at nearly £18 per month, the economics only really make sense for the very frequent cinema goer. However, there are also now a wide range of loyalty mechanics on offer across the market to reward less frequent cinema -goers ; from MyCineworld Plus to the Showcase Insider programme, these offer discounted tickets and affiliate deals in return for registration or a small annual fee.
Finally, cinemas have been one of the few industries to successfully tap into our biggest societal trend – an ageing population. Whilst reaction from many sectors has been to nod sagely at this irrefutable demographic shift but then plough headlong into their next initiatives targeting millennials, cinemas have actually done something concrete. From dedicated screenings to changing the offer to bring a broader range of arts content (from ballet to opera) to those who are unable to travel to big cities to view first hand, there is much more to tempt an older customer to the cinema than there ever has been.
And it’s working. Whilst cinema still attracts a younger audience (Statista claim 47% of the audience is under 35), the biggest shift has come from older demographics. Those aged 45 and over accounted for just 18% of the audience in 2008 but this figure had risen to 22% by 2017. It’s not just the cinemas who have realised that this is a profitable market to tap into; there is now content to match as studios have realised that making movies targeting this demographic can be big business. BFI data shows that over 55’s can make up nearly 40% of the audience for releases such as The Danish Girl (compared to 11% of the audience for Top 20 movies in 2017)
Our retail landscape is currently littered with casualties – a graveyard of big brands who once held the mainstream mid market but have failed to adapt in either offering or experience to the changing world around them. Cinema though has been a different story; despite severe pressure on disposable incomes and an increasingly rich and compelling range of digital competitors in the home, they have continued to innovate and drive growth in the category.
At a time when the future looks increasingly challenging for our high streets, what's even more positive about this renewal of fortunes for UK Cinemas is how much of this growth is coming from town centres. According to the BFI, town centre and edge of centre locations have seen a 22% and 23% increase in screens respectively since 2008 (compared to 12% for out of town locations)
Standing still has never been an option and from what felt like an inexorable slide to a cinema landscape of large, soulless out of town multiplexes in the 90's, we now have a cinema landscape as diverse and thriving as the films that are shown within them.