On our Wednesday edition of the Boxoffice Pro CinemaCon podcast, Daniel Loria talks to Cinemark CEO Sean Gamble on the chain’s innovations in programming and amenities. Read the interview below, condensed for length and clarity, or listen to it in full on the Boxoffice Podcast.
You’ve been part of the Cinemark family for a number of years, starting your new role helming the circuit in January 2022. Could you go back and share your beginnings in the entertainment industry?
I spent the majority of my early career at General Electric, largely within their industrial businesses and a little bit in their financial services businesses. I have a long history there working in finance and operations. Actually, that somewhat led me to the entertainment space. I got involved with supporting the acquisition of Universal when NBC bought Universal back in the 2003-2004 timeframe. GE likes to insert particularly the finance folks in the new businesses that it acquires. So I was one of those individuals who went in to be the first head of FPA [Financial Planning and Analysis] for Universal Pictures.
I had a brief stint after that back in GE’s oil and gas business, and then I got asked to come back to be the CFO for Universal Pictures back in the 2009 timeframe. I wound up being the CFO of Universal Pictures for five years; two under GE’s watch, then GE sold all of NBCUniversal to Comcast, so three years with Comcast. And then had the opportunity to join Cinemark about seven and a half years ago as CFO. Coming to Cinemark was a good blend of my entertainment background on the studio side, as well as some of my GE background from a retail and just overall business standpoint. It’s been a fantastic experience being within the exhibition space.
You’re helping Cinemark as emerges from a very difficult position, like all of exhibition worldwide. From that perspective, what are your top priorities for Cinemark in 2022? What are you guys really focusing on this year?
Well, clearly the exhibition space has been one of the harder-hit industries within the pandemic. And as we looked into 2022, we viewed this year as a continued year of recovery for our industry and for our business. We’ve outlined three main areas of priority for our company in 2022.
The first one is continuing to effectively navigate the pandemic, because even though it seems like it’s ending, it’s not fully gone yet. So we’re continuing to be mindful about expense management and liquidity and the way we’re operating our circuit, and clearly health and safety and employee engagement. So all those things remain on the mind, and we’ll continue to focus on those.
While doing that, the second big bucket of priority is just reigniting theatrical moviegoing. We’ve been working actively with our studio partners to get back to a more steady stream of content and film releases. Fortunately, we’re finally back to that state of more week-to-week releases of commercial films. As well as working with our consumer base and getting out and speaking to our consumers, to improve both awareness that theaters are back open and movies are out there as well as confidence coming to theaters, because everybody’s still getting comfortable getting back into society post-pandemic.
And then the third bucket is just continuing to evolve our company for ongoing success in a post-pandemic landscape. Clearly, there’s been a lot of change and evolution—that was already happening to a certain extent before the pandemic, but certainly happened during the pandemic. So we’re actively working on how we continue to position Cinemark to be successful in the new norm, post-pandemic.
How do you engage moviegoers in 2022? And is that very different than the way we used to engage moviegoers in 2019? I’d love to get your thoughts on the difference that these last three years have made in bringing that audience back to the movies on a consistent basis?
I would say it’s continued to evolve. It all starts with just a phenomenal experience, right? The product or the service has to be exceptional. And I’d say that, if nothing else, just the availability of more options vying for people’s time or entertainment sources continues to put an emphasis for us on, “How do we take that overall experience to the next level?”
Specifically on the idea of how we engage our consumers, we’re fortunate to have been leaning heavily into more sophisticated marketing efforts prior to the pandemic. We’ve really built industry-leading, world-class marketing in terms of building awareness, driving impressions, and exciting consumers to come to our theaters. We’re getting actively in front of them when they’re making their entertainment plans in advance. There’s a heightened focus, clearly, from consumers coming out of the pandemic in terms of the value they’re seeking, the quality of experience, their expectations around safety and cleanliness. All areas we’ve been focusing on. That’s a big part of our message, as we tried to get consumers comfortable and excited about returning to theaters.
Part of that appeal is leveraging the unique aspects of the moviegoing experience to the consumer. We’ve seen a number of circuits actively invest in their movie theaters. Cinemark is one of them. You are one of the leaders in luxury seating footprint in the United States. And you’ve also invested very heavily in your premium large format strategy: CinemarkXD, your local brand, and your partnerships with D-Box for immersive seating and Imax for PLF. Could you go into some of those areas that you are currently looking at to ensure that Cinemark remains dynamic and up-to-date across your locations?
We’ve had a fairly consistent history here at Cinemark of investing in our circuit. Not only in new amenities, but also just in the general maintenance of our circuit, which is really important in terms of maintaining a theater [to look] like it’s current, even if it’s an older theater.
Cinemark is an industry leader in presentation and service. It’s paramount to take that overall experience to the next level. So we’re certainly looking at how to do that. Even though we may lead the industry in those areas, how do we take that to the next level? With regard to presentation, we have the best light levels in the business today. And we’re in the process of converting our projectors… to laser projectors over time. We have a whole heightened service initiative that we’re undergoing to take our guest service to that next level.
We’ve seen a big spike in interest in premium amenities coming through the pandemic. We have the highest penetration of recliner seats amongst the major exhibitors in the industry, with over 65 percent of our domestic circuit already featuring our luxury lounger reclining seats. We’re continuing to work on that.
We’re continuing to advance our enhanced food and beverage, which is both a revenue opportunity and part of that experience of giving consumers more choice and greater options when they come to our theaters. We’re also focused on making the overall ability to transact with us more frictionless, easy, and simplistic. We’ve rolled out, over the course of the pandemic, a new online opportunity to purchase food and beverage with our Snacks in a Tap platform. Now you can actually order your food and beverage before coming to the theaters, avoid waiting on line, and either pick up your food at the concession stand or have it delivered directly to your seats, just making that overall experience more seamless and easy. Those are some of the key things I would say that we’re focusing on, currently, in terms of how we’re advancing that overall experience.
Of course, the other half of that equation is programming. One of the things that has been really interesting over the past couple of years is Cinemark’s willingness to work with major streamers, given an exclusivity window. If I’m not mistaken, you guys are probably the biggest circuit worldwide that is working with Netflix through an exclusivity basis. Can you speak about, in general, the importance of making sure that the content that comes to your screen is exclusive to you guys for a period of time, whether it comes from studios or major streamers?
Conceptually, even before the pandemic, we had been talking about the possibility of more dynamic windows, depending on what type of content it was. We were open to trying that and testing that. There’s been a lot of testing and learning throughout the pandemic, and we certainly have been doing the same thing as it pertains to different types of windows and different types of content. We’re all just trying to figure out, what’s the optimal model going forward that will present a win-win for both our studio partners as well as for us in exhibition?
I’d say more specifically to windows in general, we still absolutely believe—and we think that clearly the data shows and continues to show over the course of releases in 2022—that an exclusive theatrical window is of high value, not just for exhibition but for content providers. It’s a way to drive bigger box office results and reduce piracy. There is a need to create these bigger cultural moments. You need that runway and time in order to achieve that goal. It increases overall revenue value. Long-term, because of those things, it helps to elevate that perception of content and emotional connection, which ultimately leads to better brand building and high promotional value for films.
A lot of momentum has been building in the theatrical results of the films that have been released to-date in 2022, many of which are performing at levels comparable or better to pre-pandemic. Those windows have really been a key component of being able to deliver. We’ve seen the difference in how those films have performed relative films that have not had that. So it’s valuable in terms of the ultimate promotional impact it can provide studios for their streaming platforms and their other windows. It’s important for filmmakers and talent. And it just provides just an overall lift for those films for everyone.
From your perspective, having worked with streamers and having worked with studios in defining that post-pandemic window, how confident are you that things are going to stabilize moving forward, that studios and streamers alike are realizing the value of the exclusivity proposition you speak of?
I and those of us here at Cinemark are very optimistic about future prospects. There’s almost been this false narrative, I think, created in the media of streaming versus theatrical. It’s just not true. The reality is, as seen through numerous surveys and conversations with our consumers and just our own behavior, that the most active streamers are the most frequent moviegoers. It’s not one or the other. I actually find the data more compelling that the least frequent moviegoers: half of people surveyed don’t go to the movies, don’t stream. And another 20 percent of those same individuals beyond that only stream one to three hours a week. So it’s not as if people are trading off one thing for the other. People who love content love it at all formats. I know that is my own behavior. I love going to our Cinemark theaters, and I watch movies at home.
The reality is, there is a true value of quality and the perception and the connection that consumers have with content in theaters that creates value for those platforms. It’s no different than how movies historically that were released theatrically consistently performed better in the home, whether it was on VHS or DVD or the paid TV window. There just is a perception of value increase, better awareness, and a promotional element to it. So I don’t see how that’s any different when it comes to streaming as well. There’s a real positive here, in how these two different types of distribution can be complementary to another versus “one versus another” That doesn’t mean that all films necessarily will have the same window, or all films necessarily should have.
If anything, I think one of the things that we’ve seen, through the challenges prior to the pandemic, is some of the smaller or more niche films had a much more challenged financial model for the studios. And because of that, you weren’t seeing as many of those types of movies being released theatrically. They get pushed out direct to video, or to VOD and those types of formats. Now, with a more flexible window, I can actually see a situation where more of that content comes back into theaters, because there’s a more viable viable holistic film model for the studios that works.
So, again, I think there’s still going to be some evolution and learning. But I’m very optimistic about how these different types of distribution channels can actually be very complementary to each other, versus this false narrative of them competing against each other.
We’ve seen event cinema and alternative programming really take off and be optimized during off-peak periods. You’ve seen anime grow to a top-10 genre here in the U.S. And event cinema events like concerts often do fantastic worldwide. Cinemark did something very interesting last December, when you guys partnered with ESPN to bring the college football playoff to your screens. Could you talk about efforts to bring on other types of content that may engage audiences in these in-between periods?
Absolutely. We’ve been big believers in alternative content, as we call it, for a long time. If anything, we’ve had more of a frustration that it hasn’t become bigger than it is at present. But you’re starting to see more and more examples of success, like the BTS concert recently, Jujutsu Kaisen 0, Triple-R [RRR: Rise, Roar Revolt]. There’s been more and more of these types of films recently that have really had some significant results. We were very thankful to our partners in Disney for helping us to enable the ESPN events with the college football playoffs and championship. Like you said, it was just something that we were trying out to see what type of interest there would be and future potential.
One of the things we’ve seen, particularly with these types of events, is the incredible fan excitement that they produce. We will show things like the ESPN championship and playoffs as an example, right? Something that you can see for free at home. We’ve had numerous examples of that with different gaming types of events we’ve had. People come to the theaters because the energy level and the crowd engagement, it’s just a totally different experience. You’re giving the fans something. The owners of this content, they’re providing their fans with this experience they might not otherwise be able to have. And they love it. It’s a way to actually support your fans, by producing these types of events. I think we’re gonna see more and more of those types of opportunities because of that. The key is figuring out what types of content really can have meaningful scale, because a lot of these events take a lot of work to put together. .
On the flip side of that equation, [there’s the question of] how are we managing some of those gap periods? One of the other learnings for the pandemic is how to operate that much more flexibly in terms of the scheduling and programming of our theaters. In the past, operating hours tended to be more set, more consistent throughout the course of the week, maybe varying a little bit on the weekend. Whereas now we’re far more flexible and dynamic, just in terms of the way we’re flexing our hours of our theaters based on the demands of the program that’s going on. That helps with the cost side of the equation, in managing the business.
What are you expecting from this year’s edition of CinemaCon?
I suspect it’s going to be a great event with a tremendous amount of energy. The momentum of moviegoing just continues to build, with the majority of films released in 2022 overperforming expectations and delivering results, as I said earlier, at the level of if not better than 2019. So I think there’s just a real sense of positivity and positive energy there. And I expect that’s going to be rampant while we’re in Las Vegas at CinemaCon. While the studios had to do what they needed to do [during the pandemic], I suspect there’s gonna be a lot of studios leaning more heavily back into theatrical. We’ll hear a lot of that messaging while we’re there, because again, it’s in everybody’s best interest: the fans, the filmmakers, the studios, and exhibition. So I think it’s going to be a fantastic event, and I’m looking forward to being there.
What factors, from your perspective, do you believe will help the theatrical industry not only recover but thrive in the coming years, even with all this competition and noise we’re hearing from media fragmentation around us?
It all starts with great content. That’s something that we always look to filmmakers, our studio partners, and alternative content providers to provide us. Then it’s on exhibition to really continue to provide a phenomenal experience and make that experience better. We all need to lean heavily into making service better and cleanliness better and that overall cinematic value of moviegoing better. I know we’re not alone in working on doing that. Leaning more heavily into sophisticated marketing, as I talked about. It’s not enough to expect that people are going to come to the movies now, with so many competing forces. You’ve got to really be out there and in the consumer’s mindset when they’re making plans. So I suspect that’s something else we’ll all going to be leading into.
And then, of course, just how are you going to thrive in the near-term and long-term. I think fully getting past this pandemic and people getting back into their more social and communal behaviors will bode really well for movies. Because when you strip it all down, it’s a great experience. It’s a great use of time. And when you consider going to the movies versus alternative forms of mobile entertainment, we’re still one of the least expensive and most rewarding experiences you can choose from.