Category Archives: Market Research

IHS: 72 PLF Brands Compete With Imax (But Only Two Are a Threat)

PLD Premium Large Format

IHS Technology recently published an Insight Report on “The market for Premium Large Format (PLF) cinema” as part of its Cinema Intelligence Service. Authored by Principal Analyst Charlotte Jones, the report does an excellent job of providing a comprehensive and data-focused overview of the PLF market.

With “Interstellar” shortly set to lift off in Imax, PLF and 70mm screens, it is thus worth shining a bright light on the biggest of all screens in the cinema business.

Premium large format (PLF) is a market that was practically invented by Imax but only took off when the large format (LF) operator switched from 40-50 minute documentaries in museums and institutions to showing first-run Hollywood films multiplexes.

Having survived the “Lie-MAX” backlash in 2009 of retrofitting Imax screens into too-small multiplex auditoriums, Imax has grown strongly on the back of the initial popularity of 3D films (think: “Avatar”) as well as major international expansion.

But Imax strict business terms and high licence fees, coupled with advances in digital cinema technology, has led many cinema chains to launch their own-brand PLF screens, often in competition or in parallel to Imax’s screens.

The PLF space has received a recent boost from the launch of the Dolby Atmos and Barco Auro 11.1 immersive audio (IA) formats that help distinguish PLF screens from non-premium screens, as well as the imminent launch of laser projection for high-brightness stereoscopic 3D on even the largest of screens. High frame rate (HFR) and 3D on the other hand are by themselves not sufficient enablers for PLF, as the report notes, even though they often command higher ticket prices.

It is the brand(ing) that has proven the key differentiator for Imax, with own-brand PLF screens struggling to match it in terms of cache and perceived value. (If you don’t believe us, we invite you to read on-line reviews of cinemas’ own-brand PLFs to see comments littered with ‘rip off’ and ‘pretend Imax’ vitriol). Yet though the report only hints at it, there are two operators/brand that post a significant threat to Imax at least in two key PLF cinema markets, which we will get to later.

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Dissecting Google’s Box Office Prediction Study

Google's Comparison of 2012 Box Office Index and Film-Related Search Index

Predicting box office receipts for a motion picture release, whether for opening weekend or an entire theatrical run, is anything but an exact science. Leave it to the good folks at Google, those lords of the algorithm, to rely on math rather than fuzzy logic when coming up with a better formula for “tracking”, as the practice of box office prognostication is often referred. Last Thursday Google released a white paper titled “Quantifying Movie Magic with Google Search” which claims it can predict box office grosses for movies four weeks before their release with 94% accuracy.

As a white paper, the document does its job rather effectively and can hardly be faulted; it favorably promotes Google’s products and services through the use of carefully chosen facts and statistics, all in the guise of a well researched report. Its publication served its promotional purpose with industry and technology publications regurgitating Google’s findings in their own reporting. Few, if any, media outlets took the time to read between the lines and highlight the facts being presented from a more circumspect position. That is my intention here.

Don’t get me wrong, adding the kind of user behavior data Google has at its finger tips should most certainly make predicting box office far more accurate. Rather, I would suggest that Google’s narrow study conveniently produced complimentary results that most industry professionals already know or would rightly assume. In Google’s defense, it is their job to continue reminding potential users and customers of its value, even if certain facts can be deduced via common sense and observing overall consumer trends.

For instance, Google states that searching online for information about movies has increased by 56% from 2011 to 2012. We have to take their percentage at face value, but frankly it doesn’t really matter. Of course more moviegoers are searching for info online; (1) newspapers and magazines are disappearing by the day as their subscribers flock to the Internet so there are fewer and fewer places to look up showtimes and reviews, (2) more-and-more people have become Internet users in the same time period, and (3) an influx of smartphones means that more consumers can search for movie information while on-the-go, even if they don’t have a computer at home. Put another way… it’s a big no duh.

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Stop Whining And Be Grateful For Those Cheap Cinema Tickets

Borat movie ticket The LA Time’s cinema columnist ‘Projector’ has a humorous op-ed piece echoing the NATO/MPAA song that going to the cinema is still the cheapest form of entertainment. Not just compared to going to a sporting event or visiting the opera, but even compared to trips to the picture palace of yesteryear. But he doesn’t fall for the popcorn merchants propaganda hook-line and sinker:

Of course, Projector is too savvy to entirely buy the exhibitors’ assertion that movies “remain the most affordable form of out-of-home entertainment.” They never considered a brisk 5K jog around the Rose Bowl, nor open-mike poetry night at many coffeehouses.

And movie popcorn and other snacks are notoriously pricey, which explains why theaters generate roughly 20% of their revenue but 40% of their profit at the concession stand.

Ironically, the high cost of goodies helps moviegoers, according to new research from Stanford University and UC Santa Cruz, because concession revenue enables theaters to keep ticket prices in check. Projector, who only went to a state school, can’t argue with that logic.

There is even some advice for the savvier cinema goer:

Frequent filmgoers can save several hundreds of dollars a year by selecting theaters and showtimes carefully. Sure, the Rolling Stones’ concert movie “Shine a Light” is worth $15 a ticket on a large Imax screen at the AMC CityWalk Stadium 19, but if cash is tight, consider a $5 matinee of whatever is playing at the pleasant-enough, single-screen Vista Theatre in Los Feliz. Some chains also offer bulk ticket discounts, but beware of any restrictions.

If your movie is showing at the mall, you can live dangerously by smuggling in a Mrs. Fields cookie or a packet of sour gummy worms, thereby supporting a broader swath of the economy. Projector, of course, can’t condone such a potentially flagrant violation of theater policy. He’s just sayin’.

Those interested in the Stanford University and UC Santa Cruz concession revenue report can find out more here. From the press release:

The findings empirically answer the age-old question of whether it’s better to charge more for a primary product (in this case, the movie ticket) or a secondary product (the popcorn). Putting the premium on the “frill” items, it turns out, indeed opens up the possibility for price-sensitive people to see films. That means more customers coming to theaters in general, and a nice profit from those who are willing to fork it over for the Gummy Bears.

Indeed, movie exhibition houses rely on concession sales to keep their businesses viable. Although concessions account for only about 20 percent of gross revenues, they represent some 40 percent of theaters’ profits. That’s because while ticket revenues must be shared with movie distributors, 100 percent of concessions go straight into an exhibitor’s coffers.

Although if distributors could decide they would get a share of that revenue and profit as well. Equally interesting is another finding:

In another study examining Spanish theaters, the researchers discovered: Moviegoers who purchase their tickets over the Internet also tend to buy more concession items than those who purchase them at the door, by phone, at kiosks, or at ATMs (the latter option has not yet hit the United States). More research is needed to figure out why, but for now this suggests that theaters may want to be sure to partner with an Internet service to make such ticketing available–or even take the function in-house.

People who come to the movies in groups also tend to buy more popcorn, soda, and candy, Hartmann and Gil found. While this, too, merits more investigation, it may be that such groups comprise families or teenagers. “If that turns out to be the case, it may be that theaters will want to run more family- or adolescent-oriented movies to attract a more concession-buying crowd,” Hartmann says.

No surprise there either that John Fithian is arguing for more PG films. He knows which side his popcorn are butter coated on. Those wishing to download the research paper can find it in PDF form here.

Photo credit: www.mobilnews.cz/blog