What Recession? Cinemas are booming!!

by John Sullivan
Cinema Next Ltd

The huge success of James Cameron’s latest release “Avatar” has accelerated the 3D digital revolution and is powering the UK box office to a new record year.

Significantly, even before the crowds lose their enthusiasm for “Avatar” another potential 3D blockbuster is lining up to hit the screens – Tim Burton’s “Alice in Wonderland” will be with us in the first week of March.

Cinemas throughout the UK and Europe have been stampeding to equip their screens with 3D enabled digital projection and are now facing the daunting reality that this effort is simply not enough.

More screens will go digital and far more quickly than anyone in the cinema industry predicted even twelve months ago.

The impact of this rapid engagement with digital will lead quickly to the obsolescence of traditional 35mm projection – and will revolutionize the cinema going experience in the same way that hand held digital cameras have changed domestic and commercial photography.

What does digital projection offer?

• Versatility – as quickly as we now change our TV station so too will cinemas be able to change the content in any auditorium. With 35mm an auditorium is largely “locked and loaded” to accommodate a single product. With digital the variety is virtually infinite and very easily changed.

• Clarity – a 35mm print with frequent use can become worn, stretched, scratched or damaged – a digital hard drive gives “crystal clear” images continuously.

• Live Broadcasts – cinemas equipped with digital projection and a simple satellite dish are beaming in live performances of Opera, Ballet, NFT, Concerts, Sporting events (rugby, football, Grand Prix, tennis etc) and even weddings and conferences.

• 3D – of course! It is the sensational imagery being achieved through digital that has woken the world to this new public medium – it is particularly satisfying to see the UK property community, many of whom are the arch sceptics of cinema going, waking up to the delights of RUGBY being screened in live 3D.

• Piracy protection – the state of the art digital projectors that are being installed must be what is known as DCI Compliant and have numerous built in safeguards to eliminate risks of piracy. Even a film pirated from a screen can now be identified by venue and time.

• Conferences and Private Events – a simple PowerPoint presentation or home video looks remarkable on the big screen and theatres across the country are cashing in on private hires.

• Community Access – finally local groups, schools, universities will be able to access venues across the country that can give life to their local production and be profitable to both the cinema operator and the producers to launch at local level – there have been recent examples of a local school production doing better “box office” for limited runs at their local multiplex than Hollywood releases.

It is believed that there are more than 150 3D films currently in various stages of production. This is no longer a trend – it is rapidly becoming a customer expectation.

Other Trends Affecting Cinemas

Parallel with the introduction of digital there has been a significant change in the culture of Cinema going that is changing the pattern of the experience.

Audiences are maturing. From the lowest point in 1985 and through multiplexing customers have been returning to the big screen – initially through 1985-1995 these were largely the 15-25 year age group – however, these audiences are still coming and now they are aged 40-50 and their younger brothers, sisters, sons and daughters are also coming!

What will this mean for the destination?

• Cinema is now no longer a single purpose trip. Audiences now require sophisticated and varied dining alternatives – other leisure and ideally a retail or town centre environment.

• The cinemas themselves require a significant “makeover” and moving from largely “popcorn and cola” dominated impersonal arrival experiences to more subtle and exciting destinations (the Cinema De Lux’s in Bristol, Derby and Leicester are perfect examples of “what can be”).

• Seating – often overlooked but after two to three hours the excellent seating concepts introduced over the last five years rapidly differentiate themselves from the cramped, indifferently upholstered and aging seats of the 80’s and 90’s.
Although often seats can be changed, what is difficult to alter is the all important seat “pitch”. Just as in airline seats, the distance between the back of your seat matters and ideally for cinemas the seat in front should be AT LEAST 1.2 metres away. Many older built cinemas only have 90cms – this gives great discomfort to the majority of us and even up to 1.1 metres the need to stand to allow other patrons to enter and exit is a necessity.

• Stadium Seating – a large proportion of cinemas – particularly in the UK and Germany – are configured with sloped floors. This is rapidly becoming unacceptable to the increasingly savvy cinema audiences – inspecting the latest hairdo of the person in front is no substitute for “Avatar” in 3D.

• Audio-visual – both surround sound and a truly immersive floor to ceiling wall to wall visual experience are now seen as fundamental and particularly for 3D.

The Future

As the population cuts back on new car purchases or that holiday overseas they are investing more time, and money, in activities in the home market.

The problem for existing cinema operators is that they have significant investment in old real estate and old technology.

Even plugging digital projection in to a sub standard multiplex will leave increasingly “switched on” and discerning audiences cold.

With cinemas brand matters very little – the quality of the experience, the location, the programming and staff quality are paramount and any cinema, whatever the masthead, that provides these fundamental qualities will be successful.

Experience shows that introducing say 1,000 quality seats to a market where an incumbent operator has say 2,000 inferior seats does not carve up the market 1/3rd to 2/3rds – if the new operator is offering true excellence across all fields they will both grow a market (those who would never have gone to this inferior older cinema) and also take the lion’s share of the competitor’s market. Only lack of capacity will leave an audience for the older cinema.

Discounting does not work – especially when the newer more sophisticated entry premium prices over the competitor.

The Opportunity For Shopping Centres

Over the last ten years there has been a strategic consolidation of cinema operators (there were 14 significant operators in the 1990’s) down to a core group of largely homogenized operators intent on driving rising cinema admissions through their existing estate.

Despite cinemas reporting great results there are almost no new cinemas opening this year and nothing of any note in the major players’ pipelines.

Savills have identified over one hundred retail schemes that include a cinema as a key anchor to their development. In addition there are many towns and cities across the UK and Europe that do not have modern, well located multiplex cinemas with all the key aforementioned ingredients.

The dam is no doubt about to burst – small shifts in rentals to developers at levels that are realistic and easily supported, with the current and what looks like an enduring box office bonanza, will no doubt release a cinema development frenzy not seen since the mid 1990’s.

This time all the principal interests are aligned: the local authorities, the property developers and the customers – no doubt either existing operators or new entrants will complete the circle – and new 21st century screens, fully digitally enabled and operated with a dedication and vision for excellent customer service together with imaginative programming.

Those operators who don’t meet the challenge will be swept aside in the wave of development to come. These new 21st century offers will not need to be the massive megaplexes of the 90’s – although in some strategic locations a large 2-3,000 seat multiplex will have significant advantages and admission potential of 1 million plus. There are many more locations where strategically located, smaller cinemas will capture audiences and erode admissions of larger neighbouring competitors that are not so well located, designed or operated.

The future for Cinema is indeed bright!

John Sullivan together with is partner Keith Pullinger offer a comprehensive Cinema Consultancy service through all stages of development as www.cinemanext.co.uk including a fully branded operational solution www.lightcinemas.de / www.lightcinemas.ro and www.lightcinemas.com.