Cinema. The power of the big screen. Whether audiences are settling down to watch the latest Hollywood blockbuster in their local multiplex, or enjoying an arthouse film in a boutique environment, the quality of the films and the connection they have with their audiences continue to attract advertisers. Let's take a look at the figures and the developments in cinema.
First, sales houses. When it comes to the share of cinema advertising space, Digital Cinema Media and Pearl & Dean have the market firmly in their two hands. No major work will be up for grabs in 2012 and, as a result, share of audience will remain static. DCM will control 80 per cent (this is, of course, after its 2010 capture of the Vue ad sales contract), while Pearl & Dean has the remaining 20 per cent. The only changes will be as cinemas open and close across different chains and circuits, but that change will be negligible and nothing to really affect sales house inventories.
Second, ad revenues. Figures from January to the end of October 2011 show that the industry was down 4.5 per cent. If revenues remained flat for the last two months of 2011, it would mean that the industry was down 5.1 per cent for the year. However, the reality is that cinema revenue was probably down between 8 and 10 per cent. The prediction for 2012 is that revenues could be up around 3 per cent.
Third, admissions. Cinema is experiencing a decade of renaissance, with admissions growth of 19 per cent for the period. After a strong year last year, admissions are slightly up so far and we're expecting this to remain pretty flat over 2012, at approximately the 170 million mark.
Fourth, box office. While admissions stayed the same, the top ten 2011 films grossed significantly less than in 2010. With the 2012 line-up looking in similar health to 2011, the top ten will probably account for less of the total box office revenue and takings will be spread among a wider range of films.
Last, the films. With all these figures in mind, 2012 is set to be an interesting, if not groundbreaking, year. When looking ahead to 2012, it is the type of film that's on the schedule that is noteworthy. Now that the Harry Potter franchise has finally come to an end, the industry is looking to other blockbuster movies to deliver the box office takings. That's a hole of more than £71 million that needs filling, as the final instalment was one of the top-grossing films of all time in the UK, behind Toy Story 3 (£73 million) and Avatar (£94 million). That said, 2012 will see the release of Skyfall, Daniel Craig's next James Bond outing, and this is predicted to deliver mass audiences and a box office figure of around £50 million, compensating for the lack of Potter.
The last couple of years have seen a dramatic shift in terms of box office takings for kids' films. In contrast to 2010, when family movies accounted for nearly 40 per cent of the top ten box office revenues (Toy Story 3, Alice In Wonderland and Shrek Forever After), 2011 saw Tangled as this genre's only representative, taking £20 million. This is a big change in the industry and is because Hollywood is just not producing these types of films. With box office revenues still high, and overall 2011 admissions at roughly the same rate as 2010, it shows that the cinema consumer has changed. This pattern will be mirrored in 2012, as we predict children's films will account for only 19 per cent of total admissions, down from 27 per cent in 2011 and 33 per cent in 2010.
The early part of 2012 is dominated by films that form part of the Oscar and Bafta season. There are some great films, including The Iron Lady, War Horse and J Edgar just in January alone, and this will typically deliver an AB audience into the cinema. And there's always a surprise film, such as Slumdog Millionaire (2008) or The King's Speech (2011), which grossed an unexpected £46 million in the UK box office. Looking further into the year, The Avengers, Star Trek 2, The Amazing Spider-Man, The Dark Knight Rises, Skyfall and The Hobbit: An Unexpected Journey will all deliver younger audiences to the cinema.
As many of these films are prequels and sequels, it is almost a guarantee that the second film will hold its audience, and I predict the top ten box office movies of 2012 will be made up from the majority of these films.
So, what of 3D and digital? Around 16 per cent of the 2011 box office has been from 3D films. So far, the main 3D films have been for kids (with the exception of Avatar) and, although there have been some great 3D advertisements (the Audi Le Mans campaign, for example), the majority of advertisers have been less inclined to create 3D ads when the product has been family focused.
And the novelty has worn off. Just making a 3D film is no longer a guarantee of attracting high audiences. In 2010, of the 3D movies released, 74 per cent of viewers saw the 3D version. So far, for 2011, that has decreased to 58 per cent. This shows that high-quality 3D will result in high box office, but poor quality will no longer be accepted. Quality should improve in 2012 and beyond.
There have been notable positives from digital advances. For the consumer, improved picture clarity means a better experience. Digital also allows for global simultaneous releases as there is no longer the need to ship the 35mm reels around the world.
For advertisers, the benefit of this is the reduced production cost. With 90 per cent of screens predicted to be digital by the end of 2012, there will be considerable cost savings, although the full benefit of improved delivery has yet to be realised. Creative work must still be made three weeks in advance and the copy still goes out on a Friday night. There's no chance to change copy and the day of the week that the ad first airs is fixed in stone. This will change over the next couple of years, as DCM and Pearl & Dean develop adserving. As this grows, a later market will operate and this will drive revenue into the industry and pave the way for new categories and clients. Digital could deliver real advantages to advertisers from 2013 onwards.
The opportunity is there in 2012. While admissions are likely to remain static, digital, live events and a slate of great movies could see another positive year for cinema advertising.
Simon Willis is the head of AV at MEC and the head of Group M Cinema.