At this year’s CinemaCon, if the keynote addresses given on International Day were noteworthy for reporting on the health and well being of the industry as a whole, then the panel discussion on collaboration between exhibition and distribution may have been the most informative session in terms of providing a day-to-day perspective of what it’s like to manufacture, market and sell new product in the space.
Titled “Exhibition and Distribution – Collaborating and Partnering for the Greater Cause”, the panel was moderated by Ian Shepherd, Chief Commercial Officer for one of Europe’s largest exhibition chains Odeon & UCI. Mr. Shepherd began his career outside the industry working in retail and consumer businesses. He pointed out the task in any retail business is to convince branded partners that working more closely together will actually increase demand for their products and in turn make the market bigger for everybody. You can imagine what a relief it was to join the cinema industry where we’ve had a hundred years to sort all of that out,” said Shepherd. “And yet actually what I’ve found in nearly two years of talking to some amazing people from every corner of our industry, is that most of us think we haven’t nailed it yet.”
With that, Shepherd invited panel members hailing from leading exhibition chains and major studios onto the stage to participate in a discussion on the subject. These included, Paul Higginson, Executive Vice President of Twentieth Century Fox; Cameron Mitchell, CEO of Vox Cinemas; Bernardo Rugama, Commercial Vice President at Cinépolis; Amber Stepper, Vice President of Global Marketing at National Amusements; and Niels Swinkels, EVP of International Distribution, Universal Pictures International.
What follows is a transcript of the fascinating conversation which took place. Please note that at times some comments have been paraphrased or edited for the sake of space, especially when ideas were being repeated by the same individuals.
Ian Shepherd (Moderator): I wanted to ask everyone to introduce themselves and say a few words about their companies.
Bernardo Rugama: I am Bernardo Rugama. I am representing Cinépolis and its more than 60 million customers worldwide. Some of you know that we have locations in 13 countries, in three different contents. We try to find new ways to collaborate and above all our customers are at the center of all those partnerships and collaborations. We want our customers to be ambassadors of our brand and be advocates of the moviegoing experience. That’s basically our approach.
Cameron Mitchell: I’m Cameron Mitchell. I work with Vox cinemas in the middle east, which is, Vox cinemas is owned by Majid Al Futtaim Ventures which is the biggest retailer in the Middle East and we’re just expanding into Africa now. Our vision is to create direct alignments to everyone everyday, and that’s through our mall and our cinemas. So we are really focused on building amazing entertainment. And we spend a lot of time with our architects, trying to design complexes that appeal to everyone, not to just a specific genre and certainly not generic cinemas. Obviously, the most important element is the movie. In our opinion some distributors more than others really get the exhibitor distributor relationship. We’ve had a great relationship with Twentieth Century Fox for the last few years where we sit down at the start of each year and go over plans for the year ahead and say “What’s important for Twentieth Century Fox? What’s important to us?” And together we workshop that into a really great plan where we both really focus on how we can make these films better in our region. Fox has their own agent in the region. Some distributors still don’t get that by working really closely with exhibitors we can make our cinemas so much more entertaining.
Amber Stepper: My name is Amber Stepper and I’m with National Amusements. Our theatres are located here in the States, as well as in the UK and in South America we’re in Argentina and Brazil where we are operating under the Showcase Cinemas Brand. Our main focus is around innovating in the physical space itself and creating a customizable experience for our customers so that we’re giving them exactly the experience they’re looking for. Whether that’s from a comfort standpoint, from a technology standpoint, or how we’re showing and displaying the films. My background is on the digital agency side and technology. So the points that I’ll speak to about data and how it can be more effective in sharing that from a marketing standpoint. How we can do that better to really present people with the right content and the right messaging for the films that they want to see?
Paul Higginson: I’m Paul Higginson, the executive vice president for Fox in Europe, the Middle East and Africa. EMEA is now 25% of the worldwide box office. It’s over $10 billion in a growing market. In our region there are 2.3 billion people. Africa, the Middle East and central Asia and Russia and Eastern Europe, there’s huge opportunities for growth there and still opportunities for improving admissions in the mature markets. We set out, as a strategic priority, collaboration with exhibition two years ago. We always collaborate but we didn’t feel we were doing it well enough. And we embarked on a mission to collaborate and partner with exhibition much broader, much deeper. In terms of what partnership is, I think it’s like sex really. [Laughter from the audience]. The more you understand your partner, the more magical the experience and the more you can create. I’m not advocating that you get that close but… [More laughter from the crowd].
Niels Swinkels: I’m Niels Swinkels and I oversee international distribution for Universal Pictures. Collaboration and partnership with exhibition is very much a part of how we operate as a studio. My point of view of what a partnership should be is really very simple. I think it’s all about the common responsibility and goal that we share between distribution and exhibition. It’s making people come to the cinema a lot more often and making people that don’t come to the cinemas come to the cinemas. Distribution is figuring out how to keep making bigger and better movies, while optimizing new and existing data streams. Exhibition is figuring out new business models and monitizing their footprint in order to grow and improve it, and making the presentation of the movies bigger and better. But we should not lose of that core shared responsibility at the heart of which lies the consumer. I think the one thing we’re striving to get better at is listening to and to figure out their behavior and what they’re thinking. I think on the distributor side we’ve done a lot of research and investigation and become more sophisticated on marketing and targeting segmented audiences. I think we can work more closely with exhibition to sync up there. Obviously exhibition has a much more direct relationship with the consumer, as they are coming to their theatres. I think there is a real opportunity to mine the data that we should and can have access to as a collective in order to anticipate and set common goals and figure out really how we can survive and continue to grow and improve our businesses overall.
Ian Shepherd (Moderator): I wanted to read you a quote from an article in Variety from a couple of weeks ago which quoted the late great Steve Jobs talking about the movie business. He said what our industry collectively needed to do was, “Start embracing the front of the business. Start knowing who their customers are and start building mechanisms to communicate with them and tell them when a new product is coming out.” From an outsiders perspective what do you think the structural, institutional barriers that are in the way of that?
Paul Higginson: I’m not sure that the barriers are there. I’ve been in the business for 35 years despite looking very young. [Laughter once again]. And I’ve seen a move from the distribution side to the exhibition side. From the distribution side has moved to more of a sales business and on the exhibition side it is moving more into the marketing arena. Because they always seem to regard the marketing responsibility as falling upon the distributor. We are getting more marketeers coming into our business. I think we need to catch up. I think we need to trust more in each other. I think we need to be more open with what you’re learning and how that can benefit us, you’re assets and how that can benefit us, our assets and what we’re learning and how that can benefit you. Because it’s in our mutual best interests to do that. We should be intimate partners in everything except when the spoils are on the table we can then argue about who gets what. But let’s get as much as possible onto the table.
Amber Stepper: I think in terms of investment of resources we are behind as an industry. I’m new to the industry. I’ve only been in the industry for four years. You see the speed at which technology is developing in all other industries. Many aggressive industries that are now actually playing in our space are technology led, software led industries which means that for us, as an industry, moving slowly on a technology side is even more damaging. I think we really need to bring, both from a distribution side and an exhibition side, resources to the table in terms of investment and how we can look together at what’s working from a marketing standpoint and what’s not and get the tools in place that we need. Because without that kind of a team effort, time is just going too quickly. The tools that are available are not sufficient and every month that goes by is more exponentially damaging to us then it would be to another industry because of where we are.
Paul Higginson: You only find treasure when you explore. And I think if we explore together we will find opportunities that we haven’t even thought of.
Niels Swinkels: It’s appropriate to be quoting someone like Steve Jobs who was known for his vision and the foresight that he had. I think that’s one thing we are all guilty of not having had in the past. There is so much more opportunity now to change that. I think we’ve been quite reactive and optimistic. For example, I think we still don’t know enough about why 3D has been on such a decline. We weren’t listening to the consumers I think.
Bernardo Rugama: I think we put too much emphasis on transactional conversations. It is easy to get trapped in transactional, in talking about who gets what. I agree that we have to focus on delivering value to each other. Our conversations should be more strategic in how each of us bring value to each other in putting the consumer or customer in the center of those decisions.
Ian Shepherd (Moderator): That’s an interesting lead into another topic, which is, what do our customers want from us? How can we find out what they want?
Cameron Mitchell: I think data is really important. I think we need to evolve. Because we haven’t been evolving. If you look at a lot of cinemas it’s still a lot about are you going to do a 10 or 12. You’re not thinking about are you going to have a conversation about what’s the mix of cinemas. We’ve built some kids cinemas that have been a huge success for us. If you think a six year old wants to come to one of our cinemas, he’s not going to want to sit in a generic blue cinema. That kid wants come in and sit in an environment that is in tune with their habits. If that’s iPads, if it’s technology, if it’s something as simple as interacting with characters in the foyer before they see the film, I think we need to do more of that. It’s difficult, but you have to dedicate resources to it. We actually sit down and we meet, we spend a lot of time and a lot of resources, there’s costs associated with it. But it really pays off for us. By looking at consumers and looking at individual needs, look around this room here, everyone wants something different. Why do we build generic cinemas and hope that everyone enjoys a movie in one of our cinemas. We have to be really specific and really targeted. We’re evolving now but we have a lot of catching up to do.
Niels Swinkels: I think if you ask the customer why they come to the cinema, I think they will answer that it’s about the movie first and foremost. That’s what generates the interest. But then it’s about differentiating how to see that movie from any other activity. That’s the primary objective that we should all have. We should be making the biggest movies to enjoy and you guys present it in the best possible way. Which is a whole journey from booking the ticket to coming to the cinema and being entertained. But we found something that we see that’s been quite transformative for our marketing strategies is that a few years ago, we did some consumer research about why people come to see movies, at what point do they get interested in it. What it told us that actually where there is a lot of anticipation and a known IP, they make a decision very early, sometimes months in advance. That prompted us to experiment, and we started off in the UK, and this was very much a collaboration with exhibition, which is to make tickets available 6 weeks before release. The first movie we did that with was “Les Miserables” for fans of the theatre musical. We opened the box office on the first of December, we got a lot of exhibitors ultimately on board. Our marketing message was not “in cinemas on X date”, it was “book now, book now, make sure you secure ticket”. We started selling the first of December for a release mid-January and we sold 550,000 tickets before opening. And then we started doing it on films that we thought were more walkup type business movies. “Fast and Furious” and “Despicable Me 2” and again we saw several hundred thousand ticket sold before release. Then we started really pushing that message out to the other territories and it kind of culminated in “50 Shades of Grey” early last year where we saw over six million tickets in international presales. We thought that was a transformative thing. It required a lot of dialogue, a lot of convincing and discussion and was very much a team effort with exhibition to get there and we all know what’s happened with “Star Wars” since at the end of last year. I think we should push further on that. People make the decision when they see the trailer. In the past we used to kind of let it go and let them be distracted by other movies or other ways of spending their money until a week before release when you start telling them it’s coming and then you don’t start selling tickets until 24 hours before. You lose so many opportunities to transform that marketing message into a purchase.
Amber Stepper: From our perspective, from what we’re seeing, is customers are very content focused. So we want to be involved not just on our marketing message, but everything we’re putting forward for it be really compelling from a content perspective and get them, to your point, excited about seeing the film, But we need more than just the trailer. What else can we get in terms of all the amazing content that goes into the production of all of these films? Obviously not everything can be customized for every exhibitor, but to the extent that can be done, it gives the exhibitor something really powerful to go to market with and invest in that elevates both the exhibitor’s brand and the movie itself. I also think we need to be incorporating planning and creating a programmatic approach. We’re a very ad-hoc industry as a whole and there’s not a lot of efficiencies in the ad-hoc model. It’s like the first time, every time. If we can apply some kind of standardization to the way we go to market I think it would help.
Paul Higginson: I couldn’t agree more about the content point. We have to continually challenge ourselves about the quality of the content we’re putting out there to attract the consumer. Let’s innovate as much as we can; exclusive footage or special footage for particular exhibitors. We should be endeavoring to reach consumers through all these ideas that are tied into content. If you are aligning your content to the preferences of the consumer, then you’re going to get the result. We can only do that with our collaboration.
Cameron Mitchell: It’s obviously a two way street. Exhibitors realize that. Our relationship with distributors is the more we get the more we give. An example, with “X-Men”, Fox gave us some amazing footage and that went on every one of our screens in all countries for six or eight weeks before the last “X-Men” film launched. It had a demonstrable difference on our marketshare and I think the performance of the film. If you look at “Deadpool” it’s probably the best example. Fox could have said it’s just another super hero film. I’ve never seen a campaign like that. We spent so much time pushing it, because it was so easy to push because we had so much cool content. That helped so much to get people engaged and come and see that particular film.
Ian Shepherd (Moderator): For each of you, what’s your favorite example of collaboration in action?
Niels Swinkels: Ultimately I’m going to come back to the advance ticket example with the most success being probably “50 Shades of Grey”. On that film we didn’t need that much convincing to get tickets on sale early and it was in combination with the launch of the trailer. We’ve kind of made that a model since. I find that’s kind of been the most transformative collaboration in terms of how we got consumers to change their behavior.
Bernardo Rugama: With Diamond Films, a distributor in Latin America, we found one common goal; to promote a new Mexican film that nobody knew about; “Qué Culpa Tiene El Niño” It was not a blockbuster. We reached 14 million people in only 14 days was huge. What we did I think was we committed to doing a plan together and we decided there would be only one source for the trailer; our Facebook page. It wasn’t going to be on the fan page of the movie. It was only going to be through our Facebook channel. It is a very powerful one. Now we have a lot of conversations going on. Customers are really sharing (108K times). I think today we have 4.8 million views of this trailer. It has more views than even the “Star Wars” trailer we posted in December. I think when you put together minds working on one plan with a clear objective you get these kind of results.
Ian Shepherd (Moderator): How are you challenged by social media? How is it changing how you work Amber?
Amber Stepper: Because traditional advertising has had so much of an impact on this advertising for so many years, the actual data collection has only been happening for a relatively short period of time in terms of the scope of the industry as a whole. I think from our standpoint social media is an important piece of our digital strategy. But some of the best partnerships and collaborations that we’ve done almost feel grass roots because we’re really in this test and learn phase in terms of what tools we want to use to leverage our data and how effective they are and how quickly we can move. That’s what our organization is all about so that when distributors come to us with an opportunity we’re able to mobilize really quickly around that and get something to market and see the results very quickly and understand what’s working and then adjust along the way.
Paul Higginson: It’s not just about efficiency in targeting and the effectiveness of it. It’s also about driving an engagement. That’s something that we’ve never really had. We just put a trailer on a screen, we put on ad in the papers or a poster or a TV spot, but social media and digital media in general just really drive engagement. You target and retarget and people will interact with the content and in some instances create their own version of it, mashups. That engagement is an add-on. Since we are working with an emotional product there is no better way to promote movies.
Amber Stepper: But I think we have to be just a little bit cautious with things like social media and metrics and different numbers that we’re looking at. Because as more comes out we understand for instance what Facebook is gauging as an engagement or how these videos are being watched or what they’re registering. It could be just fragments of a second of the actual video. How do we actually measure if we are successful in our partnership or not is probably the most important question. Are these things working or are they not? We have to be able to track that fully and understand attribution of the sale whether its from what the distributors are doing. Whether it’s from what exhibition is doing. I think having an accurate understanding of that is the big piece that’s missing.
Ian Shepherd: What’s you favorite example of partnership in action Paul?
Paul Higginson: That’s like trying to choose amongst your children. I would say that one of the greatest examples of collaboration between exhibition and distribution on a broad scale is the whole digital conversion. It’s been incredible what has been achieved. To change the infrastructure across the world in such a short space of time was remarkable. What that shows is how capable we are of collaboration. I think that’s important for all of us to appreciate. And what it’s given us in terms of the operational efficiency, the programming flexibility, the benefits for distribution and exhibition, unfortunately maybe alternative content is getting to much space, but that’s a different matter. We don’t deny you the odd gift. [Laughter]
Audience Question: There has been a lot of discussion about The Screening Room, a company which plans to bring new releases into the home day-and-date. Is this a threat abroad? Is it part of the discussion internationally?
Paul Higginson: I think the whole discussion around the dark window or flexibility or The Screening Room concept, or in Norway now exhibition is looking at putting cinema online. It’s extremely sensitive because for exhibition you look at it and you think there is only risk for us. It’s the fear of the unknown. Do I know the answer? I don’t know the answer but what I do know is that China and Russia have grown at a remarkable pace developed a very sophisticated exhibition market and they’ve done that against a background of virtually 100% piracy. So, they have no window. Now, I’m not advocating that in developed markets you can do this, but I think we have to have an open mind as to what’s possible.
Audience Question: Paramount explored with shortening the window when films didn’t play as well in theatres. Would you be open to that?
Cameron Mitchell: I agree with all the debate that’s going around at the moment that as an industry we need to look at it and we need to come up with something that works for everyone. I think what’s not happening at the moment and needs to is that the industry needs to talk about it, rather than Paramount is doing this, and somebody else is doing that. I think the industry needs to be together. Pick six or seven studios and the top ten exhibitors in the world and put them in a room for the weekend and don’t let them leave until we’ve come up with something sensible. I think it’s dangerous to just do ad-hoc things but I get that there’s a frustration on the distribution front, that films are being pirated and revenue is being missed. I think it’s surprisingly rare that our industry doesn’t get together and talk about and find something that works because it’s a huge risk.
Ian Shepherd (Moderator): What one piece of advice would you give this audience on how we can do this partnership and collaboration topic better? What’s the one take-away you want people to walk off with from this session?
Paul Higginson: I don’t think I should give advice. I think I should put out an invitation. And that is an invitation to engage with us in distribution. Take some chances. Trust us. Be a little more transparent. Dedicate time and energy to the collaboration. We will find improvements that will be mutually beneficial.
Niels Swinkels: I think be more strategic and forward looking and less opportunistic and reactive. Put the consumer at the center of it all and listen to them and share the knowledge between distribution and exhibition. Secondly, be open minded about how we can improve the occupancy. We, as a studio, have been in event cinema and alternative content because there’s an opportunity. There is a business there. But if you listen to the consumer there might be many more ways outside the regular programming where we are currently screening films in front of empty auditoriums. Then, lastly, as exhibition is building all of these big and expensive halls and we’re making big and expensive movies, let’s just all embrace the quality of it and the value of it. I don’t think any of us are served by undervaluing the product by discounting and dropping the price to levels where we are putting ourselves on a very slippery slope. I think if you’ve got the quality of the experience in the cinema and you’ve got the right movie people will come and pay the right price.
Amber Stepper: One thing is communication. This industry is all about relationships and those relationships are very strong and they go back a long way but I think like any relationship it’s sometimes good to take a fresh look and understand what’s working from a communication standpoint and what’s just getting by as business as usual. As in any longstanding business model, business-as-usual… it just can’t continue on that way and I think from our perspective we just have to really demand more.
Bernardo Rugama: I agree with Amber. I think communication is a base of a relationship. We make business reviews with the studios and through that we can build empathy with each other. We set common goals and we build trust. When you drive a relationship you have to iterate. You have to make it stronger by better communication and hearing the other partner to be more empathetic. That’s what we, on our side, have done in the past three years.
Cameron Mitchell: We come from a smaller territory. The Middle East is growing really quickly, but compared to the more mature markets, it’s not generating the box office yet. We’re trying really hard to work through everything with studios to try and crack these sort of bespoke campaigns. We find we push really hard a lot of the time. We’re releasing 400 films per annum and we can’t do everything. So those studios that do devote the time and the resources and are really willing to try something different or directly with us will get the most of our attention.