Amid the global shift to streaming video, are exhibitors (aka movie theater companies) doomed?
Let’s step back: what role do exhibitors play in the market? 1) They curate and host Hollywood’s new releases so mass audiences know what to see; 2) they provide social, in-person media experiences for the family, for dates, for fun; 3) they deliver digital ads to captive, in-person audiences.
I look to Toronto-based Cineplex as a hint at how an exhibitor can continue to play this role in an evolving industry. (It’s more than just offering 3D glasses, recliner seats, and beer.)
Cineplex is the largest exhibitor in Canada, with 163 cinemas. Its box office revenue and concessions revenue are roughly equal (as is normal) and like competitors, they’ve added non-traditional programming like live streams of the opera and boxing matches plus films/livestreams for large immigrant populations. But that’s just the start. Cineplex is seizing opportunities that fit the broader definition above.
- Decide you want to stay in for the night? Cineplex offers TVOD films to stream right there on their website, continuing to guide you to new(er) releases from Hollywood.
- Want to go out but not to the movies? Cineplex has The Rec Room, Playdium, upcoming TopGolf venues, and other physical restaurant-and-entertainment experiences.
- More of a gamer than a cinephile? Cineplex now owns an esports tournament organizer (online and offline), WGN. And it recently opened VR experiences in two of its Toronto and Ottawa theaters.
- Regularly do any of these? The SCENE rewards program has you covered with discounts and other membership perks. It has 9M members in a country of 36M people.
- Want to sell digital ads to in-person audiences? Cineplex has that covered too. They handle the ads not only in their theatres but in most of their competitors, reaching 94% of Canadian movie-goers. And they’re leveraging their expertise to expand digital ad units in malls, banks, quick service restaurants, and other public locations around North America.
In the short term, most exhibitors are enhancing the cinema experience in incremental ways so the corresponding increase in ticket prices for a luxurious experience makes up for the decline in attendees. But ultimately the opportunity is in evolving the whole business like Cineplex is doing. (Many exhibitors won’t stay ahead of the curve, of course, but that’s an opportunity for entrepreneurs and activist investors.)
Over the next 5 years, expect social AR and VR experiences to be particularly transformational for exhibitors smart enough to recognize the market that will arise there (already visible with VR arcades in China).
(This is an abstract from today’s MediaDeals newsletter.)