Eddy Duquenne acts as chief executive officer of the Belgium-based Kinepolis Group alongside Joost Bert, taking on his role at the exhibition circuit in 2008. During his tenure, Duquenne has helped make Kinepolis one of Europe’s premier cinema lines, at the forefront of innovation and a hotbed of professional advancement for its staff. The circuit has grown in recent years with the acquisition of cinemas in France, Luxembourg, Spain, and the Netherlands. Kinepolis’s presence now spans 49 locations in Belgium the Netherlands, France, Spain, Luxembourg, Switzerland, and Poland. Boxoffice spoke with Duquenne as the executive was en route to the Cannes Film Festival to get an update on the Belgian circuit and European exhibition in general.
We are practically halfway through the year. How has the first semester of 2017 been for Kinepolis?
It has been a good year. We had a strong first quarter, almost as good as last year’s. We expanded our group with the opening and acquisition of new theaters and began the year with five new-build cinemas. Apart from the expansion, we made progress in our business thanks to a good lineup of films.
Kinepolis is present in numerous markets. What do you believe sets it apart as a brand?
We try to offer the best movie experience. This is something we do through several aspects: our buildings, our equipment, our seats, and so on. It took us several years of working hard at digital marketing to get our message across to our customers. We have a lot of premiumization; we were the first to go with laser projectors in our complexes. We try to communicate that in our new markets to attract those customers. When we do acquisitions, unless we go in and renovate the locations with our concepts, we don’t rebrand the new cinemas because we think that first thing we need to offer is our experience.
We’ve seen big changes in European exhibition in the last year, how has recent consolidation affected the region as a whole?
There were several operators that had been bought by private equity players in the past, and we’ve seen some of those previous owners didn’t bring the experience they needed to provide for consumers. That’s something that was bad for our business because it affected the reputation of going to the movies, something we saw happen in the Spanish market. Now we have operators from within our industry, and I suppose they will have more of a long-term view in terms of value creation. They are investing in their cinemas and in their brands, and that helps the global reputation of going to the movies.
That’s the value of having ownership groups committed to the industry for the long-term—establishing management groups that can sustain growth.
It’s a trend I’ve seen for the last several years: we are getting more professional as a business. We need to have both managers and movie lovers working for us: movie lovers to make the right programming choices—content is what it’s all about at the end of the day—but we need business people as well because there are many locations that operate on small margins. In Europe, with the population growing grayer and changing in terms of composition with growing immigrant communities, the industry needs more management in order to keep it profitable. It’s something we’ve been working on at Kinepolis. We try to lower our breakeven point every year; the impact of it can be huge.
Competing for people’s leisure time is always a change, and there is a saturation of content today that gives audiences endless options. What can European exhibitors do to address the evolution of new audience tastes?
Take the car industry in Europe, for example; a company like Audi had three ranges 30 years ago—today they have many more models. It’s about trying to adapt to the needs of all different customer groups, and I think that’s the way to go for us. In many theaters, the key differentiator is content, but each customer group has different expectations when it comes to guest experience. We have customers who are interested in champagne and oyster bars, the so-called “popcorn lovers,” and between those two there is a wide range of possible experiences we can offer. That’s what we’re working on right now. We are testing sushi bars, chocolate fountains, and we are seeing very little cannibalization—they address different customer groups. We are seeing people’s willingness to pay for an experience; it’s difficult to say if a film is going to be good before seeing it, but the moviegoing experience is something we can ascribe value to. By adding something like better seats, sound, or laser projection—at an upcharge of 20 or 30 percent more per ticket—we are seeing from our customer surveys that people are realizing the value of those upgrades.
In the United States we have seen a rise in trends such as alcohol service, recliner seating, premium large format, and dine-in cinemas. What are some of the biggest trends you see in the European market?
In our group, we focus our premiumization on what we can show on the screen: laser projection, IMAX, immersive sound. We are also looking at premium seating concepts. Other innovations such as immersive seating might be a little difficult considering the audience in Europe. There are some early experiments with recliners in Europe, and we’re waiting to see those results—will recliners bring the same success to Europe as they have in the U.S.?
Are there any innovations out there on the market that you believe can make a big impact in the future of European cinemas?
Anything that can adapt and welcome customers in conjunction to the movie. We will be launching a family seating concept soon, which is more based on couches—that’s something that can influence the experience of our customers. Technology, for example, will give us the opportunity to better reach our customers with information about upcoming movies based on their profiles. We can become better sommeliers of movies. We want to know our audience so well that if we recommend them a movie, they’ll know it’s something they absolutely need to see. People often go to movies that were recommended to them by their friends; the impact of word of mouth is very big.
How do you think the moviegoing experience will change for European audiences in the next 15 years?
[Laughs] If I had to predict 15 years into the future, I probably wouldn’t be working as the CEO of a cinema chain! But if we go back in time, we see that the theatrical windows have become shorter and shorter, and that means that today we have many more movies than we used to. Studios are simply no longer able to promote all those movies. One of the biggest reasons why people don’t come to our cinemas, and we’ve done research on this, is that people don’t know what we have on our screens. I believe that’s an indirect effect of the windows becoming shorter. There is also the fact that a lot of the value was destroyed by the home entertainment business because of uncontrolled price erosion. My fear is that if we continue seeing shorter windows, this business will no longer be under control. There will be a lot of price competition that can affect the volume of ticket sales at our theaters. Today, the theatrical window is the most important term in the value chain of a movie. If that disappears, I think that the first to lose will be cinema exhibition, and the next to lose will be the studios.