In May of last year Economist magazine proclaimed that oil was no longer the world’s most valuable resource. The black gold so instrumental to the advances of the 20th Century had given way to data, a digital commodity they predicted would help fuel future economic growth. If the recent kerfuffle over Cambridge Analytica exploiting Facebook data for political campaigns is any indication, the Economist was absolutely correct.
Despite it’s growing importance, the film industry has always been slightly behind the curve when it comes to exploiting or even collecting consumer data. Sure, Hollywood studios and large distributors have been slicing and dicing the demographics of those attending their films for some time now, but only the largest exhibition chains had the resources to exploit or collect customer data.
Over the past five years however even small circuits have launched loyalty programs from which they can track customer habits or at the very least work with web ticketing companies who give them minimal sets of data. That point of sale systems have advanced to a degree where they can capture granular details about moviegoers has also raised the awareness and importance of customer data. Even mobile apps are able to collect user data that can be helpful to cinema operators looking to find new ways to reach their customers.
All of this has led to countless panel discussions and keynote addresses at trade shows and industry conferences in recent years imploring exhibitors to get into the data game. More often than not, headlining such events is Sarah Lewthwaite. As the Managing Director & Senior Vice President, EMEA of Movio there are few more qualified to talk about how data can be used to impact the motion picture business. For the past four years Lewthwaite has been helping studios get a hand one who exactly is watching their movies and working with cinema operators to implement data driven marketing strategies.
Lewthwaite will be quick to tell you that last point is incredibly important. While many exhibitors have been collecting as much data as possible over the past several years, they have been doing so without any real plan or idea how it can properly be used to increase revenue at their theatres.
A month before this year’s CinemaCon, we spoke with Lewthwaite to get her take on how data was reshaping the industry and what we cold expect to hear about it at this year’s show. The New York Times had just broken the Cambridge Analytica story and it was three weeks before Facebook CEO would testify before the United States Congress. Since then much of what she said during our conversation about the value and usage of data has become part of a wider public discourse on the topic.
As Europe gets ready to rollout the General Data Protection Regulation (GDPR) in May, we think you’ll find our discussion with Lewthwaite informative. The following interview has been edited solely for length.
Where does one even begin the discussion about data in the movie industry? I guess we could start with how have things changed since you’ve been at Movio?
I think, as an industry, we had been a bit behind others in terms of factoring data into any of our strategies. But I think we’ve certainly, in the last five years, caught up quite a bit and the talk is no longer about why do I need a strategy or what do I do, to more about how do I use the data I’ve got effectively and how do I use this as a competitive advantage, and how do I use it to improve that customer relationship and foster strong loyalty. Certainly the conversation has changed which is fantastic to see. Interestingly enough, in the last few months there has been this surge of interest in where data is going which I think has largely been fueled on a few of the things coming out of the U.S. around MoviePass and that monetization around customer data, those types of things we are seeing across the pond have certainly woken a lot of cinemas up to realizing they are sitting on a very valuable asset and they have to look at really finding some smart ways of using it and not just focus on amassing data, but looking at the quality of the data they have and honing in on how they can leverage it to improve their business. That’s definitely where the conversation has shifted to which for me is quite exciting because I feel it makes the jobs for companies like Movio a lot easier. We’re no longer trying to convince people why it’s important. It’s more about how do you develop the right strategy and find the right partners to make yourself successful?
Was there a tipping point? Something that actually helped propel exhibitors thinking about data? Maybe something on a technological level?
I would say that loyalty programs have been around for quite some time, and online ticketing has been continuing to grow as well. By embracing those kind of retail strategies we’ve realized we’ve got this data. Now some very forward thinking cinema chains very early on saw that as a data play, but I think a lot of people were kind of backed into realizing “Wow, this is actually a data play,” when at the time they were looking at how to improve the customer experience or how they would gain market share through something like a subscription scheme. I don’t think many of them were going out and saying this is all about data.
I would say a big catalyst of the conversations around data these last few years has been competitors like Netflix and people asking “Why is Netflix so successful?” and everyone talking about this algorithm, this mysterious algorithm which is suddenly predicting what people are interested in watching and how that’s so cool. This idea that Netflix is creating content and programming based on data combined with the fact that we’re sitting on all this data, have started to wake people up to the fact that we have what we need to maybe transform how we’re doing things as an industry, now we just have to figure out how to use it. The recent events, when you have someone like a MoviePass or an Atom Tickets coming in and disrupting a traditional way of thinking and saying not only are we coming out with a new value proposition for consumers, but we’re after the data, we’re clearly shouting about the value the data is going to have for us, I think that has been another market force that has pushed our industry to suddenly amplify, or surge ahead with our efforts of actually trying to figure out how to make the most of what we have ourselves.
I think the data the cinema chains are sitting on is quite valuable. It is an asset. It’s just like bricks and mortar are an asset to them. Their data is probably the biggest asset they have right now. They should value it. They should prize it and they should figure out how to leverage it. It’s that combination of there is technology that has advanced certainly with the digital connection that cinemas are forming with consumers and then there’s competitors and market forces that have emerged that have caused people to realize they now need to do something with it.
How could data be more valuable than hard assets? Can you talk about how you go about equating a hard asset with data, which is an intangible asset?
I don’t think it’s black and white. I’m not implying that the only value in data as an asset is the fact that you can monetize it or sell it. I think data as an asset can help these other strategies, can help what you just described as an investment in reclining seats. An example would be how do you use the data you have to better understand your consumers so you can tailer and improve the physical experience for them. Maybe when you’re designing your new cinemas you’re actually using the insight you have on your consumers to design them differently. From the amenities you put in the cinemas themselves to where you put your cinemas. How are you using data early on in your business strategy all the way through to… you’ve overhauled your auditorium with new amenities and new seats, how are you using that knowledge of your customers to fill those seats, to make sure they know about your new experience, to make sure you’re bringing out people more frequently, or who maybe have lost touch with you as a cinema and haven’t been in a while and reintroduce them to the experiences you’re offering? For me data has to interweave with everything you’re doing as an operation. It has to be embraced with every facet of the cinema organization. I think part of the challenge has been breaking out of the marketing silo to use data across the enterprise. The most leading edge cinemas are doing that. And that’s where you’re going to see the difference and the impact that a great data strategy could make in my opinion. So I think that’s how you have to look at it as an asset. It’s not just, you know, the CEO of MoviePass saying there is a dollar value to your data, certainly there is, but there is a value far beyond that which cinemas should be leveraging.
So much of what me and my team have been talking about lately is how do companies like ours and even the customer data our clients have start to help those future generations discover the magic of cinema and make sure it’s not lost. A key part in ensuring that happens is going to be that customer relationship you’re fostering through the data you have on your customers. That’s where I see it as a very valuable asset.
Not to get too political, but I would imagine over the last week or so people realized, at least in the United States, there really is something to this whole data thing. Just ask Facebook. This naturally begs the question of GDPR. Is this something exhibitors are concerned about? Are you concerned about this new regulation?
It’s so naturally connected to the point we were talking about data as an asset. So many times lately I have heard and read, who owns the customer relationship? Is it the cinema? Is it the credit card company? Is it MoviePass? Who owns it? There’s this big debate. When really the customer realizes they own their own data. They’re in control and they’re becoming increasingly savvy of that, particularly in Europe. So you have GDPR coming on May 25th and I think consumer awareness of the fact that they have a bit more control and rights related to their data is coming to the forefront with GDPR, combined with the Cambridge Analytica / Facebook situation. Consumer awareness is certainly high. However I see this personally as a great opportunity for cinemas to strengthen their relationship with consumers and to build trust. Because we’re talking about moviegoer data. We’re not talking about political data. We’re not talking about healthcare date.
If cinemas can see this as an opportunity to be very transparent and honest about how they want to continue to have a relationship with their customers, if they use this as an opportunity to get more granular and understanding the preferences of their customers – because one of the key pillars of GDPR is that you need to have very clear consent from consumers about what they are agreeing to be communicated about – so if you can use that as an opportunity to get more insight, get more ideas of what they want to hear from you on, their preferences, I think that’s a great opportunity for marketers to build a stronger loyalty because you’re going to have people who are really engaged with you because they have to explicitly consent to have a relationship with you, to hear from you and you’re going to have a quality data set. It will no longer be about quantity of data. You’re going to have a quality dataset of customers who want to build a relationship with you. I don’t necessarily see it as a negative, I see it as an opportunity for cinemas to relook at their data strategy overall and make sure they’re building it on the right foundation of transparency and trust.
How is Movio helping exhibitors and distributors deal with rolling out GDPR?
Certainly data is our forte. For us how do we help our clients in Europe understand the implications of GDPR to their business and also give them confidence that we are the right supplier to help them be compliant. Our role is as a data processor. Under GDPR cinemas are the data controller, they’re the ones that are responsible for that direct relationship with the customers and for the transparency around how they are going to use data on their customers. For suppliers such as Movio, our role is making sure we are processing that data in a secured fashion that’s compliant with what our clients, the cinema chains, have instructed us to do. We need to give them the confidence and the trust in Movio’s systems and that’s indeed happening. We have also brought on a new security engineer to our team in London who is focused on security. So we’ve definitely got everything in place. I’m really proud of what we’ve got in place considering we’re still a few months away. Now it’s just a matter of making sure our cinemas are along for the journey and helping guide them. Certainly we can’t give them any legal advice, but we can give them the confidence and the insight that we have on our own systems to make them feel reassured they are able to conduct business as usual after GDPR.
It just goes to show you how fast everything is changing around data. We’ve somewhat address the collection of the data from cinema patrons, but has the usage of the data changed since you’ve been with Movio?
I would say it’s now not just about exhibition, but distribution as well. I think people are looking beyond traditional demographic targeting, whch when I came into this role was still the tride and true method, was looking at the customer’s demographic and trying recommend a film for them that way. We see it in how film studios even do a lot of the marketing around four quadrants; male, female over/under 25. I would say what’s happened now is the targeting our cinemas are looking to do is a lot more sophisticated and they’re seeing that there’s weak links between demographics and movie consumption in place of someone’s past behavior and movie consumption. They’re looking at how to do behavioral targeting a lot more.
The most forward looking exhibitors are taking it one step further and looking at propensity and looking at, regardless of what films are playing that week, how they can use the likelihood of someone seeing that film to tailor their marketing accordingly. Our belief is there is a right movie for every moviegoer at any time. If we can start using data and using propensity modeling and some of the machine learning that is now available to help find that right movie for the right moviegoer at any given time, we can start hopefully filling more seats because we’re promoting more diverse content and not just promoting the top key release every Friday. We can start optimizing programming a lot further. So I think we’ve gone from demographics to behavioral targeting and now we’re moving really far forward into looking at algorithms and fueling propensity models and really sophisticated targeting based on someone’s likelihood to see a movie.
Machine learning has become such a buzz word. It’s essentially artificial intelligence. How does AI or machine learning help an exhibitor? Is it with ticket pricing?
We haven’t seen applications on ticket pricing yet on our side. Certainly I think the more we can understand about someone’s likelihood to see a film and perhaps when they will see a film in its lifecycle, that could potentially inform strategies like pricing or screen optimization. The industry is still very focused on an opening weekend’s results, but with machine learning and propensity algorithms you can help predict a film’s performance over time and the likelihood of someone seeing the film in its opening weekend versus maybe week two. What we’re seeing in the data is the audience evolves. The profile of the audience for Black Panther on opening weekend looks different in week two and week three. If you could start tailoring your marketing for a moviegoer based on their likelihood to see a film and when they’re likely to see that film we can hopefully change the way a whole industry is looking at marketing strategies and release strategies and begin filling more seats. We have our own proprietary propensity algorithm that was recently launched. It does allow film marketers to determine the likelihood of a moviegoer to see a particular film and on average we’re predicting the 10 to 15% of that audience that is most likely going to attend. The predications we’re doing are quite strong and we’re seeing huge box office uplift from that. It all goes back to how can we match that perfect film with the perfect moviegoer?
Can these algorithms, which can help market a film, as you’ve mentioned, also help determine which films actually get made?
I absolutely think so. I think the data on moviegoers themselves has the potential to transform all stages of film’s lifecycle and, to your point, at the very earliest stages when people are looking at scripts. The challenge has always been how do we bridge the gap between this data that exhibitors are in control of and what the studios then see. Because traditionally the studios don’t see a lot of what happens at the box office. They see numbers. They don’t see what the audience is. How do we bring that audience insight to the studios that’s going to benefit both sides of the industry. I do see that as a huge opportunity. Products like Movio Media, which has been running in the U.S. for three years, and was launched in the UK in February, how can we use products like that to bring the audience insight that distribution and film studios need in a positive way to help both sides of the industry? That is something that we’re focused on as a compan and we see ourselves playing a big role in that.
Are you getting any pushback from studios who think that the audience insight data actually belongs to them and they shouldn’t need to go through a third-party to get it?
I think that’s where companies like Movie can help. I think that the challenge has been that exhibitors, rightfully so, don’t want to hand over their data to the studios. We talked about data security and GDPR, so they can’t just hand over their data to the studios. So the question becomes what data do the studios really need and how can we remove the risk involved with sharing data. Where Movio sits in the middle, we basically take aggregated data for a territory, we anonymize it, we remove all personal data, aside from key demographics and someone’s movie watching behavior. So when a studio is able to look at the data they have no idea what cinema chain it’s attached to, because it’s aggregated by a territory, and they have no way of actually contacting a customer directly, they have no idea of a person’s name or email address. But if they want to know the audience profile for “Black Panther” in real time during the course of the release, they have that snapshot. The idea is we’re no longer reliant on someone sitting around a board room saying I think my film is going to perform like this because it’s like this other film that came out a few years ago. We now are actually using behavioral data and facts to inform a film studio’s strategy and because we’ve removed the risk of someone’s personal data and an exhibitor’s specific data being distributed, I think both sides of the industry can win. There is such good momentum around Movio Media in the U.S. that, as it’s rolling out, in other markets such the U.K. I only see similar success on the horizon.
Now that exhibitors have figured out data is important, they’ve hired staff to handle the data. There are now positions like data scientist at certain circuits. When such personnel gets hired on to an exhibitor you’re working with are you getting pushback from them? Are they upset that their company has signed a contract with Movio? How is it affecting your working relationship?
I dont’ see it as a problem. In fact I’m really happy when our cinema clients are building out their expertise on data. To me that’s a win/win. Because any time we see someone who really gets it come into an organization who understands the importance of data or has insight on a data strategy, it actually, in our case, strengthens the relationship we have with that cinema chain. Despite whatever expertise you have, the likelihood of you going and trying to build a system that’s bespoke to you is slim. You’d want to work with the best in class suppliers. I think very quickly when a new employee comes in to an organization, especially if they understand what they’re looking for in their strategy, they quickly see that Movio ticks all those boxes. We believe in what cinemas are doing and a lot of us are cinema professionals, coming from that sector. Our president Matthew Liebman comes out of cinema, myself, many members of our team come from the cinema space. I think that is what makes us distinct. So I’m not concerned when someone does come into the organization of that nature. In fact, I think it’s amazing and I think more cinemas should be considering roles like that in house.
What are some of the challenges you’re facing when approaching exhibitors? As well, what are the challenges you’re facing with those exhibitors you’re already working with?
It’s kind of one and the same. The challenge we have is cinemas who haven’t really thought through a strategy. They don’t really know what they should be doing with their data or they hear these buzz words in the media or they happen to subscribe to somethning from another retailer and feel they should be doing the same. So they latch onto these trends. A few years ago it was social media. All this talk around social media being the new future of direct marketing have not proven itself to be true. In fact the conversion rates to purchase tickets on social media are quite low. There’s always something out there that people are chasing as the shiny new thing. I think that is a risk, because if you don’t have a solid strategy to begin with and you just start chasing trends or buzz words, you’re not going to get the incremental gains you need by using your data effectively. That for me is often a challenge, that people get so hung up on the newest thing they often lose sight of what really does work.
With that in mind, what do you think people will be discussing at CinemaCon in regards to data? And… what should the conversation around data be focused on? Because what it should be focused on and what everyone is actually discussing might be two entirely different things.
I think it’s going to go back to one of my earliest comments about who owns the customer relationship. It’s going to be a debate over what a company like a MoviePass or a Netflix has versus cinemas versus who has the best database. It’s like an ego game. Who has the biggest database? Who has the best database? I think that’s going to be the conversation; my database is bigger than you’re database. I just have a feeling that’s kind of where it’s headed, which is the wrong conversation to have. I think the conversation has to be about what’s the quality of my data and how am I using it to improve the customer experience? That should be the conversation. I certainly hope it is.