One of the biggest moments of last year’s edition of CineEurope came during Paramount’s slate presentation. After a year-and-a-half of enduring operating restrictions and release delays, exhibitors in attendance were genuinely surprised to see Tom Cruise walk on stage to introduce footage of his upcoming Paramount releases. Stars often make personal appearances at CineEurope and other major cinema conventions—but Cruise’s in-person cameo at Barcelona in October 2021 felt different. Notably, Tom Cruise was the only star to make an appearance at any cinema convention in 2021. And while he received a warm welcome when he walked on stage, it was difficult not to notice that the auditorium was far from being at capacity.
That CineEurope 2021 took place at all is a minor miracle, a testament to the resiliency of the event’s organizers—UNIC and Film Expo Group—to bring the industry together in the midst of its biggest crisis. Cruise’s personal appearance resonated with those in attendance for that very reason. He showed up when no one else did. He took the stage and expressed his gratitude and support for an industry that many had left for dead. Before leaving, he promised to continue delivering great films made to be seen at their cinemas.
Within a year of making that promise, Cruise returned to Barcelona for Paramount’s slate presentation at CineEurope 2022. This time he received a lengthy standing ovation before an auditorium that was nearly at capacity. Earlier that week, Top Gun: Maverick crossed $900 million in global box office in its first four weeks of release—the biggest box office hit of his career.
That moment encapsulated the mood in Barcelona for CineEurope 2022. If the 2021 edition recognized the industry’s resilience, this year‘s event celebrated its revitalization as cinemas welcome audiences back from the pandemic. According to UNIC’s annual report, cinemas across the European Union were shut down for an average of 120 days in 2021. In Belgium and the Netherlands, cinemas were shut down for nearly six months. The impact of the closures resulted in a protracted recovery at the box office, with admissions across Europe up 36 percent against 2020 but still 56 percent behind 2019 figures.
2021 was a tale of two halves once restrictions began to ease across the continent. France, one of the region’s top markets, was down 53 percent in box office against 2019 during the first half of 2021. By the second half of the year, the French box office had regained enough ground to finish the second semester of 2021 22 percent behind the same period in 2019, according to data presented by Comscore at the event. Access to locally produced films proved to be a determining factor in that turnaround. Domestic films claimed 40 percent of the market share at the French box office, a higher figure than any other country in the region.
Comparatively, countries that experienced a disruption in the release of new domestic titles suffered most at the box office in 2021. That was the case in Italy and Turkey, countries where domestic cinema plays an important role. The Italian box office finished the year 74 percent behind 2019 box office receipts and 76 percent below admission levels. Turkey was dealt similar results: 71 percent behind 2019 box office and 79 percent below admissions.
Despite these obstacles, Gower Street Analytics is currently forecasting $31.5 billion in global box office by year’s end—25 percent below 2019’s record-setting $42.3 billion. As we get deeper into 2022, the cinema industry is entering a period where it won’t be able to blame the pandemic for its shortcomings. This year’s CineEurope panel sessions provided a glimpse into some of the strategies exhibition circuits around the world are taking to reclaim their audience.
“People want to come back when there’s a great film to see. All our data and research points to that,” said Jane Hastings, CEO of Event Hospitality and Entertainment Limited, which operates cinemas in Australia, New Zealand, and Germany. “But what’s key moving forward is premiumization: having as many cinema experiences as you can offer that suit a local cinema area.” Eddy Duquenne, CEO of Belgium-based multinational circuit Kinepolis, echoed Hastings’ comments, remarking: “There is more demand for more experience” among audiences emerging from the pandemic.
The numbers back up those assertions. Imax is coming off the best year in its history in global box office market share, while CJ4DPLEX’s panoramic screen and 4DX immersive seating reported record-setting figures with the release of Top Gun: Maverick. Peter Forstam, CEO of Scandinavian circuit Svenska Bio, shared that in one of his circuit’s new Swedish locations premium priced seats, which represent around 20 to 25 percent of the site’s total capacity, were responsible for nearly half of the cinema’s box office revenue.
For a cinema’s premium strategy to be viable, however, circuits must ensure the price-value relationship remains competitive for consumers getting hit by inflation. Kinepolis’ Duquenne believes there is an advantage in consumer perception, finding that today’s consumers are less likely to make purchasing decisions based on the value of watching content than they are on the unique out-of-home experience cinemas can provide.
“Back when I joined Kinepolis in 2008, friends were telling me: Why are you buying tickets for the cinema when you can bring home the DVD to your family for half the price?,” said Duquenne. “Today, no one talks about the value of watching content because of all the [streaming] subscriptions we have—content is considered free—but the willingness to pay for an experience is much higher.”
Marcus Theatres CEO Rolando Rodriguez, who also serves as chairman of the National Association of Theatre Owners, believes exhibitors need to confront the price-value relationship of moviegoing more seriously during this phase of the global cinema reopening. “You look at what’s happening with labor cost and in the supply chain—we’re all feeling pain, and some level of pricing adjustments are having to take place to keep your operating levels at a certain place,” he said. “We need to provide a great experience and cater to consumers, and there’s a cost associated with that.”
Rodriguez cautioned against passing on increased operations costs to the consumer or pricing out entire audience segments with premiums. “When we look at the U.S., we have to keep in mind that median incomes fluctuate greatly,” he said. “In California and New York, a $20 ticket isn’t that much more than a cup of coffee. But in parts of the country with a lower median income, $20 is food on the table.”
Instead, he believes the key to success in instituting a premium strategy is optimizing the price-value relationship across a circuit’s range of experiences by offering a competitively priced movie ticket for every audience. Marcus, which operates over 1,000 cinemas in the U.S. alongside its dine-in theater brand, Movie Tavern, offers a range of enhanced F&B menus and premium formats while also maintaining a popular Discount Tuesday program.
Rodriguez is betting on frequency, not average spend, to get exhibition back to pre-pandemic admissions levels. “Our industry is predicated on traffic and attendance,” he said. “I know of no consumer-facing business that can survive without traffic. The restaurant industry stopped talking about the average spend. They talk about traffic. Within that traffic they’ve got to have a certain amount of average spend to make it work, but restaurants today are more concerned about how to get people through the door, build loyalty, and build frequency. That’s one of the things we have to figure out as an industry right now.”