Cinema: Apocalypse Now or It’s a Wonderful Life?

Dean Wilson, UK MD at Active International, says if cinema is to become bigger than a 2% medium, Digital Cinema Media and Pearl & Dean need to make sure the digital strategy meets advertiser’s requirements…

1946 – the year that started with the Emperor Hirohito announcing he wasn’t a god after all, and ended with President Truman officially proclaiming the end of World War 2 – was indeed a wonderful year for cinema in the UK. Admissions peaked at 1.64 billion a year, an average of 36 visits per year per person. In terms of popularity and bringing people together you might say cinema may have been the original social media.

Fast forward 64 years to 2010, and cinema admissions totalled just 169.2 million. Whilst we now watch an incredible 81 films per person per year, cinema is just one platform among many including DVD, free to air and paid television, online and mobile where we can do so. Therefore what is cinema’s secret weapon in the new world order? Their answer is digital. Good old ‘digital’, the answer to seemingly everything in the media world, but what can it do for this much loved industry?

It is hoped that digital will be the second coming for cinema, the first witnessed in Milton Keynes in 1984 with the opening of the UK’s first multiplex. What indeed does that ‘second coming’ look like? Firstly, as a cinema-goer, it means less strobing and more pixels for your popcorn, plus 3D and live sport such as the Ashes on the big screen. For advertisers it means the death of 35mm and the beginning of the flexibility they have been calling for in order to fully exploit the power of the medium.

So sitting here in the summer of 2011 the number of digital screens in the UK has exploded (not literally!) to be 50% of all screens, with an aspiration of a near 70% conversion by the end of 2011. The driver for the digital switchover is clearly consumer demand, fuelled by higher expectations due to huge improvement of the in-home viewing experience, and from an insatiable appetite for digital box office successes.

For example Toy Story 3 was the number one film in 2010 with over 72% of all box office takings from the 3D screenings. It seems even the spectacle of being made to look like Austin Powers by the glasses can’t keep people away! If Toy Story wasn’t your thing there were another 27 3D films to choose from. While this accounts for only 5% of the 557 releases across the year, it equated to a staggering 24% of total UK box office takings. Compare this to just 0.4% two years earlier and you can see there maybe some truth to the rumour that Hollywood is shutting shop for 35mm by the end of 2012. With a whole backlog of films at the ready, 2012 looks set to be an Olympic (tenuous link) year for cinema with the big guns George Lucas and James Cameron giving Star Wars Episode 1 and Titanic the 3D treatment.

However, it is important not to see digital as just a 3D experience. A recent but rapidly growing area that digital enables is ‘alternative content’, such as sport, music, theatre and even gaming. In 2010 revenues from the 54 ‘Alternative Content’ screenings totalled £7.9 million in comparison to just £200,000 in 2004. This is a 39 fold increase in seven years, which is not a bad return in this current climate. For sports fans like myself watching the Ashes or the rugby at a cinema may not be my first choice – or maybe it is if a rerun of Morse is the alternative at home – but not a bad second, and often cheaper as a single event.

So, the benefits to the consumer are clear: more choice, more often and more formats; but what about the advertisers?

For advertisers cinema’s place on the media plan is secured by the impact and engagement it delivers, plus the desirability of the audience it attracts. For fickle and elusive 15-24 year olds cinema is still the most popular way to consume films. Despite a multi-platform offering cinema is still the ultimate appointment to view, planned in advance, anticipated, and paid for. Even in the age of emerging platforms and a digital savvy youth almost 50% of 15-24 year olds visit the cinema once a month or more. This was something Orange recognised early on with their hugely successful Orange Wednesdays, which now accounts for 13.2% of total weekly box office takings.

If digital is to be cinema’s second coming, then not only is the role of the content and the releases very important – and they seem to be stepping up to the mark – but equally how well the sales houses commercialise these opportunities. In the paid, owned and earned communications world we live in this commercial success will determine whether digital will future proof cinema. From my point of view the key to this commercial success must be flexibility. Cinema revenue grew to £207 million in 2010, but its historic analogue inflexibility has shown in its slowdown in revenue growth in the face of the new world order.

With margins being squeezed in all entertainment industries, the advertising revenue for cinema owners such as Odeon, Vue and Cineworld is more important than ever. If cinema is to become bigger than a 2% medium, Digital Cinema Media and Pearl & Dean need to make sure the digital strategy meets advertiser’s requirements. This means offering flexibility such as short term packages, day parts, multi-copy propositions and easier cheaper production.

If the sales teams get the sell right along with the content creators use of digital, then cinema has the potential to go to infinity and beyond.

Sources: BFI/CAA Rentrak, BFI Statistical yearbook, Rentrak EDI, CAA Film Monitor, UK Film Council, Harris Interactive and CAA Forecasts