The UK cinema advertising industry is pinning its hopes on Harry Potter weaving some of his famous magic in his latest movie to rescue what has proved to be a disappointing year for the medium.
Despite having a strong start, with cinema advertising revenue increasing by 8.9% in the first seven months of 2005, year-on-year box-office admissions are down and ad revenue is now expected to be, at best, on par with last year. The biggest-grossing film so far this year has been Star Wars: Episode III - Revenge of the Sith, which took $39.2m (拢22.8m), well below the $48.1m Shrek 2 grossed in 2004.
It is a far cry from 2002, when cinemas enjoyed their highest admissions since the 60s, with films such as Ocean's Eleven and The Lord of the Rings: The Two Towers boosting attendance. The Cinema Advertising Association (CAA) is unwilling to speculate on exact numbers, but by the end of this year admissions are likely to total about 170m. In 2002, they stood at 176m.
Stalled growth
Why, after a period of consistent and rapid growth, has UK cinema attendance suddenly hit such an impasse? One argument is that the films on offer have not been up to the highest standard. The year's biggest blockbuster, Star Wars: Episode III, which was released in May, did not perform as well as previous installments of the George Lucas franchise, while Ocean's Twelve proved to be a disappointment and the big summer releases, such as the long-awaited Batman Begins and Disney's Herbie: Fully Loaded, failed to draw the expected audiences.
But this is only part of the picture. While the box office is at the mercy of the film producers and distributors, other factors are also at play when it comes to admissions. The type of films on general release this year has not been as varied as it was in 2004 - Bridget Jones: The Edge of Reason, which opened at the end of last year, attracted unusually high numbers of women, for example, broadening the audience's demographic.
This year's biggest releases have been more mainstream and this has attracted the corresponding traditional cinema-going audience - families with young children, and young men. The latest adaptation of JK Rowling's wizard novels, Harry Potter and the Goblet of Fire, which went on general release last Friday, is one of a number of family films scheduled for release over the Christmas period. The first of a planned series of Chronicles of Narnia films, The Lion, the Witch and the Wardrobe, is out on 8 December, with Peter Jackson's King Kong due to hit cinemas a week later. While the CAA is optimistic that these releases could help shore up the year's box-office figures, they will not be bringing new audiences to cinemas.
The spread of multiplexes - cinemas with five screens or more - has also slowed, with only Vue, formerly Warner Village Cinemas, announcing plans to open new screens. Part of the reason for this is that UK cinema ownership has been undergoing a period of consolidation. This has also resulted in a change in cinema advertising sales contracts.
Market divisions
Following the acquisition of the UK's two biggest theatrical exhibitors, Odeon and UCI, by private equity group Terra Firma, ITV division Carlton Screen Advertising (CSA) has risen to primacy, with a 75% share of the cinema ad sales market. Industry stalwart Pearl & Dean accounts for the remaining 25%.
This process of consolidation has led to some concern that CSA is in an anti-competitive position, but in fact it is still not as strong as it was at the beginning of the 90s when it held 88% of screens, leaving just 12% for Pearl & Dean. The latter also represents a large number of independent cinemas and in order to achieve national coverage, advertisers are still required to use a combination of the two sales houses.
Despite the disappointing year, cinema remains an attractive medium for advertisers. CSA and Pearl & Dean have striven to provide sales and promotional activity beyond the on-screen advertising spot, such as sampling, branded tickets and popcorn containers.
Live ads, where actors are hired to sit in the audience, promoting or interacting with the on-screen ad, are also starting to be used.
Strong potential
Mobile phone companies, motor and alcohol brands continue to be the biggest supporters of cinema advertising, but other categories are starting to use the medium. Surf has spent 92% of its ad budget on cinema this year, for example, while furniture company DFS, with a 拢2.1m spend, has entered the top 10 cinema spenders.
Now that the consolidation process appears to have been completed there is still room for growth. In the UK, the average home is 18 minutes away from the nearest cinema screen and UK screens per capita still fall well short of the US.
With more screens and a better movie product - the new adaptation of the James Bond film Casino Royale, the first featuring Daniel Craig in the lead role, is due to be released in late-2006 - there is no reason why cinema cannot put in a stronger performance next year and continue to attract a growing share of advertising budgets.
UK BOX OFFICE TOP 10s 2004 films Gross (pounds m) 1 Shrek 2 48.1 2 Harry Potter and the 46.0 Prisoner Of Azkaban 3 Bridget Jones: The 35.0 Edge of Reason 4 Lord of the Rings: The 27.3 Return of the King* 5 The Incredibles 27.1 6 Spider-Man 2 27.0 7 The Day After Tomorrow 25.2 8 Shark Tale 22.7 9 Troy 18.0 10 I, Robot 17.9 Source: Nielsen EDI 1 Jan 04-31 Dec 04 *excludes revenue taken before 1 Jan 04 2005 films Gross (pounds m) 1 Star Wars: Episode III 39.2 - Revenge of the Sith 2 Charlie and the 37.2 Chocolate Factory 3 Wallace & Gromit: The 30.4 Curse of the Were-rabbit 4 War of the Worlds 30.3 5 Meet the Fockers 28.5 6 Madagascar 22.3 7 Hitch 17.4 8 Batman Begins 16.1 9 Nanny McPhee 14.4 10 Pride & Prejudice 14.2 Source: Nielsen EDI 1 Jan 05-13 Nov 05