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Cinemas - UK - June 2010

ISSUES IN THE MARKET
Main issues
Definition
Abbreviations
FUTURE OPPORTUNITIES
Standing room only
A need for differentiation?
MARKET IN BRIEF
Cinema buoyant on back of strong admissions and revenue growth
Product quality drives admissions
3D provides box office boost
Secondary revenues subdued by recessionary pressures
Digital development opens up possibilities
3D helps to counter piracy
Exhibitors under pressure to reduce theatrical window
Big three maintain their dominance
Little differentiation between main brands
Film distributors shoulder bulk of responsibility for promotion
Regular visitors most likely to go with partners
Food and drink prices lead many to bring their own
Ticket prices becoming a concern?
Most support for improvements to hot drinks offer
INTERNAL MARKET ENVIRONMENT
Key points
Product drives the market
Figure 1: Box office results for the top 20 films released in the UK and Republic of Ireland, 2008
Figure 2: Top 20 films released in the UK and Republic of Ireland, 2009
Figure 3: Top 20 films at the UK box office, 1998-2009
Digital develops rapidly…
Figure 4: Number of high-end digital screens in the UK, 2005-09
… at a cost but with benefits…
VPF the solution for some operators…
… as 3D finally breaks through in 2009
Figure 5: 3D digital screens in the UK, 2006-09
Figure 6: Top ten 3D releases, 2009
Piracy still a problem but 3D may help
Figure 7: FACT seizure figures and analysis, 2000-07
Theatrical window issue raises hackles
Every cloud has a silver lining
Figure 8: UK weather trends, 2002-09
BROADER MARKET ENVIRONMENT
Key points
Focus shifts to debt reduction, governmentally and personally
Figure 9: GDP, PDI, consumer expenditure and savings, at constant 2005 prices, 2005-15
Recession increases focus on value
Figure 10: Agreement with statements about impact of recession on leisure behaviour, July 2009
Child population growth good for animated/family films
Figure 11: Trends in the age structure of the UK population, 2005-15
More affluent population offers potential for secondary spend growth?
Figure 12: Forecast adult population trends, by socio-economic group, 2005-15
Trends point to opportunities for content aimed at older age groups
Figure 13: Forecast adult population trends, by lifestage, 2005-15
Singles rise set to continue
Figure 14: UK households, by size, 2005-15
Internet growth: old news but still has implications for operators
Figure 15: British internet penetration at home/work/place of study or elsewhere, by gender, socio-economic group, age, region and working status, 2002-09
Immigration presents opportunities for operators
Figure 16: Long-term international migration, by age and gender, 1991-2008
Figure 17: Top five foreign languages at the UK and Republic of Ireland box office, 2008
COMPETITIVE CONTEXT
Key points
Cinema outstrips the leisure market
Figure 18: Consumer expenditure on selected leisure activities, 2005-09
Nearly a quarter visit cinema every month but TV dominates leisure time
Figure 19: Participation in leisure activities, 2009
Multi-channel and cinema thrive alongside one another…
Figure 20: UK multichannel TV households, by platform, 2005-08
… while growing broadband penetration opens up further possibilities
Figure 21: Trends in british internet penetration, April 2008-Jan 2010
Pre-recorded video and DVD sales dwarf cinema
Figure 22: Pre-recorded video and DVD industry key metrics, UK, 2004-08
Cinema-goers big on in-home technology
Figure 23: Electronic equipment owned, by most popular ways of watching movies by regular film watchers, July 2009
STRENGTHS AND WEAKNESSES IN THE MARKET
Strengths
Weaknesses
WHO’S INNOVATING?
Key points
HMV: Coming to a store near you
Kissing in the back row…?
Mixing it up to keep the offer fresh
Modifying for mobile users
Making payments easier
MARKET SIZE AND FORECAST
Key points
Revenue and admissions growth drive market forwards
Figure 24: UK cinema market, 2005-15
Market reaches a new five-year high in 2009
The future’s bright...
MARKET SEGMENTATION
Key points
3D provides box office boost
Figure 25: Breakdown of UK cinema turnover, 2005-09
Cinema adspend levels out
Figure 26: Cinema advertising revenue*, 2005-09
... but wind of change blows through the sector
Admissions closely linked to school holiday times
Figure 27: UK cinema monthly admissions, 2005-09
Multiplexes continue to drive screens growth
Figure 28: Trends in UK cinema site and screen numbers, 2005-09
Multiplexes march on
Figure 29: UK multiplex development, 1985-2009
London is cinema capital
Figure 30: Trends in UK cinema screens by region, 2005-09
MARKET SHARE
Key points
Big three dominate in terms of share of screens
Figure 31: Cinema operators in the UK, by number of sites and screens, December 2009
Figure 32: Cinema operators in the UK, by number of multiplex sites and screens, December 2009
COMPANIES AND PRODUCTS
Key points
 MAJOR CIRCUITS
Odeon
Figure 33: Odeon and UCI Cinemas Group, key financials, 2007-08*
Cineworld Group plc
Figure 34: Cineworld Group Plc, key financials 2009
Figure 35: Cineworld Group plc, revenue by source, 2008-09
Vue
Figure 36: Vue Entertainment Holding UK Ltd, key financials 2009
 CIRCUITS (50+ SCREENS)
Showcase
Figure 37: National Amusements UK, key financials, 2008-09
City Screen
Figure 38: City Screen Ltd, key financials, 2007-08
Reel Cinemas
Empire
Apollo
Figure 39: Apollo Cinemas, key financials, 2008-09
Ward Anderson
BRAND ELEMENTS
Key points
 BRAND MAP
Figure 40: Attitudes towards and visits to cinema brands, January 2010
 BRAND QUALITIES OF CINEMA BRANDS
Vue has the edge
Figure 41: Personalities of various cinema brands, January 2010
Experience of cinema brands
Odeon most visited, Picturehouse lacks awareness
Figure 42: Consumer usage of various cinema brands, January 2010
Brand consideration for cinema brands
Odeon most considered
Figure 43: Consideration of various cinema brands, January 2010
Brand satisfaction for cinema brands
Vue best all-round
Figure 44: Satisfaction with various cinema brands, January 2010
Brand commitment to cinema brands
Cineworld and Vue battle for customer loyalty
Figure 45: Commitment to various cinema brands, January 2010
Brand intentions for cinema brands
Vue and Cineworld have best retention
Figure 46: Future usage intentions for various cinema brands, January 2010
Brand recommendation for cinema brands
Cineworld and Vue most recommended, small players less pleasing
Figure 47: Recommendation of various cinema brands, January 2010
 CINEWORLD
What the consumer thinks
Figure 48: Attitudes towards the Cineworld brand, January 2010
 PICTUREHOUSE
What the consumer thinks
Figure 49: Attitudes towards the Picturehouse brand, January 2010
 VUE
What the consumer thinks
Figure 50: Attitudes towards the Vue brand, January 2010
 ODEON
What the consumer thinks
Figure 51: Attitudes towards the Odeon brand, January 2010
BRAND COMMUNICATION AND PROMOTION
Key points
Distributors drive demand with promotional clout
Figure 52: Main media expenditure, by UK film distributors and cinema exhibitors, 2005-09
UK film distributors
Figure 53: UK film distributors’ media expenditure, by channel, 2005-09
Universal and Sony spend big for small returns
Figure 54: UK film distributors – top ten advertisers, 2005-09
Figure 55: UK film distributors – top ten advertisers, by channel, 2009
UK cinemas
Figure 56: UK cinemas’ media expenditure, by channel, 2005-09
Cineworld dominates cinema spending
Figure 57: UK cinemas – top ten advertisers, 2005-09
Cineworld treads a different path
Figure 58: UK cinemas – top ten advertisers, by channel, 2009
Promotions
CINEMA VISITING HABITS
Key points
Figure 59: Frequency of visiting the cinema and with whom, March 2010
ATTITUDES TOWARDS CINEMA AND FILM
Key points
Figure 60: Attitudes towards going to cinema, March 2010
Food and drink prices grate…
… and drive many to bring their own
Three quarters ‘wing it’
Has the ticket price tipping point been reached?
Movies at home boost interest in film?
Many would like to go more often
Weekday trade strong
Reviews carry weight
Rebalancing required to take needs of adult market into account?
Short theatrical window leads to a quarter waiting
Popcorn tugs parents’ heartstrings
ATTITUDES TOWARDS IMPROVING THE CINEMA EXPERIENCE
Key points
Figure 61: Attitudes towards improving the cinema experience, March 2010
Cinemas need to keep pace with consumer expectations
Not for kids
Alcohol hits the spot
Making a night of it
‘Filmathons’ capture the imagination
CINEMA TARGET GROUPS
Key points
Savvy Screenies
Perfectionists
Ambivalent
Figure 62: Cinema target groups, March 2010
Savvy Screenies heaviest cinema-goers
Figure 63: Frequency of visiting cinema, by target groups, March 2010
Perfectionists head quest for better hot drinks
Figure 64: Cinema improvements or innovations, by target groups, March 2010
APPENDIX – CINEMA VISITING HABITS
Figure 65: Frequency of visiting the cinema with a partner, by demographics, March 2010
Figure 66: Frequency of visiting the cinema with the family, by demographics, March 2010
Figure 67: Frequency of visiting the cinema with friends, by demographics, March 2010
APPENDIX – ATTITUDES TOWARDS CINEMA AND FILM
Figure 68: Most popular attitudes towards going to cinema, by demographics, March 2010
Figure 69: Next most popular attitudes towards going to cinema, by demographics, March 2010
Figure 70: Popular attitudes towards going to cinema, by demographics, March 2010
Figure 71: Other attitudes towards going to cinema, by demographics, March 2010
Figure 72: Least popular attitudes towards going to cinema, by demographics, March 2010
Figure 73: Attitudes towards going to cinema, by most popular frequency of visiting with a partner, March 2010
Figure 74: Attitudes towards going to cinema, by least popular frequency of visiting with a partner, March 2010
Figure 75: Attitudes towards going to cinema, by most popular frequency of visiting the cinema with the family, March 2010
Figure 76: Attitudes towards going to cinema, by least popular frequency of visiting the cinema with the family, March 2010
Figure 77: Attitudes towards going to cinema, by most popular frequency of visiting the cinema with friends, March 2010
Figure 78: Attitudes towards going to cinema, by least popular frequency of visiting the cinema with friends, March 2010
Figure 79: Attitudes towards going to cinema, by most popular attitudes towards going to cinema, March 2010
Figure 80: Attitudes towards going to cinema, by next most popular attitudes towards going to cinema, March 2010
Figure 81: Attitudes towards going to cinema, by popular attitudes towards going to cinema, March 2010
Figure 82: Attitudes towards going to cinema, by other attitudes towards going to cinema, March 2010
Figure 83: Attitudes towards going to cinema, by least popular attitudes towards going to cinema, March 2010
APPENDIX – ATTITUDES TOWARDS IMPROVING THE CINEMA EXPERIENCE
Figure 84: Most popular cinema improvements or innovations, by demographics, March 2010
Figure 85: Next most popular cinema improvements or innovations, by demographics, March 2010
Figure 86: Other cinema improvements or innovations, by demographics, March 2010
Figure 87: Cinema improvements, by most popular frequency of visiting the cinema with a partner, March 2010
Figure 88: Cinema improvements, by least popular frequency of visiting the cinema with a partner, March 2010
Figure 89: Cinema improvements, by most popular frequency of visiting the cinema with the family, March 2010
Figure 90: Cinema improvements, by least popular frequency of visiting the cinema with the family, March 2010
Figure 91: Cinema improvements, by most popular frequency of visiting the cinema with friends, March 2010
Figure 92: Cinema improvements, by least popular frequency of visiting the cinema with friends, March 2010
Figure 93: Cinema improvements or innovations, by most popular attitudes towards going to cinema, March 2010
Figure 94: Cinema improvements or innovations, by next most popular attitudes towards going to cinema, March 2010
Figure 95: Cinema improvements or innovations, by popular attitudes towards going to cinema, March 2010
Figure 96: Cinema improvements or innovations, by other attitudes towards going to cinema, March 2010
Figure 97: Cinema improvements or innovations, by least popular attitudes towards going to cinema, March 2010
APPENDIX – CINEMA TARGET GROUPS
Figure 98: Attitudes towards going to cinema, by target groups, March 2010
Figure 99: Cinema target groups, by demographics, March 2010

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