2022 marks a year of new beginnings for Cinemark, the third-largest movie chain in North America. Last summer the circuit announced that Mark Zoradi, CEO since 2015, would officially retire from his position at the end of 2021, leaving the company in the capable hands of former CFO and COO Sean Gamble.
A 40-plus-year veteran of the entertainment business, Zoradi came up on the distribution side—serving as president of the Walt Disney Motion Pictures Group, among other roles—before shifting over to exhibition. His tenure at Cinemark has been marked by a period of growth, with 2019 representing the fifth consecutive year of record grosses for the chain. Then, of course, came Covid. Though Cinemark suffered along with the rest of the industry, many of the innovations put in place during Zoradi’s time as CEO—including an aggressive conversion to recliner seating, expansion of food and beverage, the introduction of North America’s first exhibitor-driven subscription program, and the adoption of a dynamic theatrical exclusivity window—left Cinemark in a position to weather the storm.
Below, Zoradi speaks with Boxoffice Pro about his time at Cinemark, his thoughts on the future of the industry, and his plans for his post-Cinemark life.
Hear from Mark Zoradi—as well as a look forward at the potential breakout films of 2022—in this week’s episode of the Boxoffice Podcast.
You’re leaving Cinemark with a lot of interesting initiatives on the table for Sean [Gamble, incoming CEO] and the rest of the team to really sink their teeth into. I’m excited to talk to you about what the future holds.
It’s nice to be leaving at the end of this year, when I really feel like we’re on an upswing. The fourth quarter is going to be a strong quarter. The month of December, especially with Spider-Man opening up, is going to be very strong. Then the strong lineup into ’22. So I feel like we’re clearly on the upswing and in a recovery mode.
The news about Spider-Man being Cinemark’s second-largest single-day pre-sale was certainly hopeful.
What’s interesting: it wasn’t just in the U.S., either. We do business in 15 Latin American countries. It was the biggest pre-sale of all time for us in Latin America. The sales in Latin America have even been, on a relative basis, larger [than in the U.S.]. This movie’s going to be a worldwide success.
Speaking of Cinemark’s operations in Latin America: As of the end of Q3 2021, all your screens were open, albeit with some restrictions in different markets. What’s the state of recovery for Cinemark in Latin America?
I would put it this way. We are open in all of our theaters. We’re somewhere in a 60- to 90-day lag to the recovery in the U.S., depending on the country itself. The primary reason for that isn’t because of the number of vaccines today, because actually the major countries of Argentina, Brazil, and Chile have percentages of vaccine equal to and above the United States. But they were slower getting there. The vaccine didn’t come as quickly to Latin America. But once it came, the adoption rate was very, very strong. So I would put them somewhere from 60 to 90 days behind the U.S. in terms of actual recovery. But [I’m] highly encouraged with the pre-sales on Spider-Man. As I said, they’re the biggest pre-sales that we have ever had, in the history of Cinemark, in Latin America.
Of the many, many changes this industry has seen over the last two years, certainly near the top is the shifting of theatrical windows. Cinemark was relatively early to see the writing on the wall there, with your dynamic theatrical-window model. Given that everything during the Covid era has been a bit of an experiment, now, at the end of 2021, what’s your assessment of how the dynamic window has worked for Cinemark?
We announced several months ago that we did new licensing agreements with all the studios and major content providers that take us all the way in through ’22. The only exception to that is that Disney wanted to do it at a little bit of a slower pace. We have a deal that takes us through the calendar year of ’21 with Disney, and we expect that ’22 will be a year in which Disney will continue to have exclusive windows. With all the movies since Free Guy, they’ve been having an exclusive window.
The windows are going to probably map out somewhere from 30 to 45 days for the big movies, and potentially slightly less than that for the smaller movies. But I think that the studios and content providers have realized that having an exclusive theatrical window helps eventize movies, helps increase the ancillary market benefit to them, and also significantly reduces piracy. When movies that went day-and-date in the home were tested during the pandemic, it highly increased the piracy rates. Effectively, you were putting a pristine copy of the movie into a home environment that could be easily duplicated and sent around the world. I think we’re going to settle down into ’22 with a more consistent distribution pattern.
Notwithstanding that, I think it’s important to say we’re not naive to think that there won’t potentially be some additional tests and thoughts along the way. By the way, we’re testing, too. We’re testing with Netflix, and we’d like to test with Amazon as well. We’re willing to test shortened windows for significant reductions in film rental. We anticipate continuing to test with Netflix. The key thing with the streamers is that, not only does it have some form of an exclusive window—whether that’s 17 days or 24 days or 31 days—but also that the streamer puts forward a substantial marketing campaign. If a movie just gets laid out there without a significant marketing campaign, then it’s not going to do very well. Netflix and others are in the process of testing that out.
Late in 2021, we hosted a State of the Art House roundtable, where one of the thoughts brought up—by Paul Serwitz, president and COO of Landmark—is that when streamers release films theatrically, what’s important to them isn’t so much box office as it is a handful of other things: marketing, awards contention, keeping filmmakers happy, attracting new filmmakers. How can you make sure that your goals are aligned with what a streamer wants from a theatrical release?
What we’re trying to do is convince streamers that they can have both. In other words, they can release the movie theatrically, have a box office success, and eventize that movie, which in turn makes it more valuable for the first home exposure. We’re going to continue to try and do that. Maybe we’ll get some key markets that we’ll test it in, so that they can see the results of doing a significant test in three or four key markets and really going after those markets with an aggressive consumer marketing campaign that we would then supplement with an aggressive retail marketing campaign with our web and app and in-theater to be able to show them that, ultimately, that’s more profitable for them.
The research has shown over the years that people who stream more content, [including] movies, also tend to go to the movies more. These are people that have a big appetite for entertainment. So they’re not mutually exclusive. People actually like to see a movie in the theater, enjoy it, and then have the ability, in a relatively short amount of time, to access it in the home as well, whether it’s streaming or pay-per-view or VOD. That’s what we’re trying to work with the various streaming services to illustrate.
On the subject of marketing, you discussed in Cinemark’s Q3 earnings call that, moving forward, Cinemark would retool and revamp your marketing campaign. Can you expand a bit on what’s changed?
Over the past, I would say, 12 to 24 months, we have really increased our digital marketing reach. That’s on our app, it’s on our website, it’s on our email. It’s actually spending marketing money to create e-commerce. More and more of our ticket sales are now online, because we’re going to existing customers, and we’re going to customers that we think will have the likelihood to want to go to that movie. We’re acting much more like a traditional retailer would act to attract customers into our theaters.
We have the database. We have millions of people in our free loyalty program. And we have over 900,000 people in our Movie Club subscription program. We know exactly who they are. They have movie credits in their account. We know exactly what they’ve seen. So we can actually go to that family and know that they’ve seen animation before, so therefore, you’re going to talk to them about Sing 2. Or you know they’ve seen action-adventure before, so you’re going to go to them and promote the next James Bond or Spider-Man movie. The access to data that we have today is significantly greater than what it was even 24 months ago, and we have a marketing team that specializes in digital and social marketing.
How does this marketing piece tie into Cinemark’s premium amenities, whether it’s Cinemark XD or Cinionic laser projectors? The average moviegoer, they might not know what those things actually mean or why they’re better than a typical cinema experience. How do you communicate that to them?
We had a previous XD campaign in the past. We’re going to continue to aggressively market our XD theaters. We’re building a brand with XD. It’s the largest PLF format in the United States. When we put a movie like Spider–Man on sale, the first screens that get sold out are our XDs. They’re charging, usually, $3 more. But they’re the first ones [to sell out on a] big action-adventure movie. We’ll have quarters where only 4.5 percent of our theaters are XD, and we’ll do 12 or 13 percent of our box office out of XD auditoriums. We’re continuing to build and convert into XD auditoriums, both domestically and internationally. We’re continuing to add more D-Box across the country. We have the highest penetration of recliners of any of the majors. Sixty-five percent of our screens have been fully reclined with the luxury electric seats, the majority of them heated. Consumers absolutely love the recliner seats. I think it’s been one of the keys to our success. We’ve grown our market share from just under 13 percent to a pretty consistent 15 percent market share right now. It’s been the combination of marketing, film, recliners, XD, D-Box—it’s all these things.
One other thing that doesn’t get talked about enough is really solid guest services. We put a big emphasis on training our people, both hourly people and our management teams in the theater. People go to the theater because it’s a good place to go see a movie, but they also go because they’re treated nicely and fairly. Somebody welcomes them, and the concession prices are reasonable, and the ticket prices are reasonable. The emphasis that we put on guest services is equally, maybe even more, important than XDs and recliners.
You can’t forget about that baseline. You can have the most advanced seats in the world, but if the basics of customer service aren’t there, it doesn’t matter.
If somebody is not friendly to you, you’ll find another place to go. A lot of our people are hourly people. Some of them are seasonal. They’re students. You have a relatively significant turnover in those hourly people. Those are the people that are interacting with our customers. It’s very, very important to continue to train them into the culture of Cinemark, which has always been, going back to the early days of Lee Roy Mitchell, really focusing on the guest experience.
Cinemark has also revved up its gaming content over the last year, hiring a vice president to work on gaming initiatives and partnering with the app-based Mission Control gaming platform. For cinemas, e-gaming feels like something that’s been in the works for a while, but it’s never gotten fully off the ground. What’s your view of e-gaming and how it plays into the future of Cinemark?
We think it’s a potentially significant growth area. It’s not a big, significant portion of our business today. That’s why we’ve decided to get very serious about it and bring in an executive who understands the gaming world and then [can] tie that into the theatrical world. Every time we’ve experimented with things, we’re learning more and more. You may know what we did with “Critical Role,” where we rolled that out into 30 cities. It was highly successful. [“Critical Role” is a streaming series featuring a group of professional voice actors playing an ongoing game of Dungeons & Dragons.]
We’ve had everything you mentioned, from Mission Control to Super League Gaming. We haven’t fully cracked that nut yet. But we are putting real assets and time and effort and money [into it]. Alternative content is really, really important to us, especially in the world that we’re living in. People will come out to be within their gaming universe and to experience things both as a player and as a spectator, even though they could spectate some of that online. But it’s the fact of being in a community together. That’s what “Critical Role”was all about. They could have watched that online, but they came out to the theater, and they paid a significant amount to get in and see it, because they wanted to experience it as a community of people who love that particular game. Gaming is a real strategic initiative for us as we move into 2022.
Looking back on your time with Cinemark, is there anything that you’re especially proud of?
I’d say it’s a couple of things, all kind of [interconnected]. One is the way that we very aggressively reoutfitted our theaters and redesigned our theaters to put recliners in. Two is the digital transformation that was put in place to market and promote our films. And three is the real emphasis that we put on data and consumer loyalty. Consumer loyalty is not only our free [loyalty program]. We were the first exhibitor-sponsored subscription program [in North America]. We put a unique twist on it. The models coming out of Europe had been unlimited [tickets]. We tested that and researched that. We also researched it against the model of the rollover plan, which is more like what you see at Amazon Audible, or what you see with data plans. Our Movie Club subscription program has been highly successful.
And then the expansion of our food and drink and other amenities. We now offer expanded food in about 70 percent of our theaters and alcohol in about 50 percent. Now, also, you can order online. We’ve rolled out a whole new concept called Snacks in a Tap. The consumer can order online and either pick it up when they get there—and it’s made fresh, because as soon as they scan their phone, we know you’re there and we make it fresh—or you can walk to your seat, and we’ll deliver it to you. That’s all part of the guest experience.
After Covid hit, you’ve had great success with private watch parties.
Thank you for bringing that up. That was an initiative by a person here who had the idea to do it. It wasn’t me. It was a person on the team. And boy, we heard it and said, “That’s a great idea.” And, effectively, what it was, was to help people feel comfortable going back to the cinema when the vaccines weren’t as broadly distributed. For $99, you could get up to 20 of your friends and have a bubble. We sold over 3 million tickets with Private Watch Party. Especially in the beginning, the vast majority of those people hadn’t been to the cinema for six months, either because [the cinemas] were closed or they weren’t quite ready to come back. We’ll continue with private watch parties. Obviously, they’re not as big as they were when the cinemas didn’t have first-run content. But each and every weekend we’re selling as many as 500 to 1,000 private watch parties, still.
What does the future hold for you post-Cinemark?
I’ve been in this business—I hate to admit it—for 40 years plus. I’m going to stay in it, but I’m going to stay in it more strategically. I’m going to remain on the board of Cinemark. That’s more of a strategic role. I’m also on the board of National CineMedia and three philanthropic boards. The truth is, I’ve been married for 45 years, and I look forward to a little bit more time with my wife. She has been incredibly patient as I’ve done the Cinemark adventure. We now have five grandkids, with a sixth one on the way. Between the [Cinemark] board work and NCM and philanthropic [work] and having a little bit more time to ourselves, I think I’m going keep myself more than busy. What I’m not looking for is the next full-time gig. If I wanted a full-time gig, I’d be staying at Cinemark.
Sounds like a nice work-life balance ahead of you. Hopefully we’ll still get to see you at CinemaCon, though!
I’ll come to CinemaCon if there’s a good reason for me to come. It’ll probably be more of a fly-in, fly-out as opposed to the death march that we’ve always done in the past, where you show up and you’re busy from morning to night. I don’t think I’m going to have to live that CinemaCon life again.