Cinema’s category revitalisation

Five years ago doom-mongers forecasted the death of cinema. "The box office isn't in a slump, it's in a slide," reported the Los
Angeles Times, as a box-office slump entered a
record-breaking 19th week. The Week's cover showed the
Titanic sinking as a boy slept in an empty theatre, and asked: "The
end? Why movie attendance is on the decline."

Well, fast forward to today, and we have record-breaking box office receipts. UK sales of £1.05 billion were up 11%, with attendance of 170 million up 6%. What can we learn from this dramatic turnaround? What has the cinema industry done to revitalise itself?

1. Sausage/Content is king:

First and foremost the studios have created better movies. Back in 2005 the biggest box office hit was a nature documentary The March of the Penguins, owing to a string of failed blockbusters like XXX: State of the Union. In 2009 we had many great movies such as new Star Trek, Slumdog Millionaire and Up. And the year ended with an almighty bang that will continue into 2010 with the release of Avatar. The new movie from Titanic director James Cameron was reported to have broken US records for new releases in December, earning $77.3 million on its debut weekend.

2. Investing in technology

The cinema industry has responded well to the dual threats of increasingly sophisticated in-home entertainment and pirated movies on the internet. Cinemas have invested heavily in 3D and IMAX technologies to create a differentiated cinema experience. The Guardian reports that "3D has been 10% of box office receipts this year despite being only 3% of the hundreds of films released".The other benefit of this innovation is that it has driven "premiumisation" through higher ticket prices. This is shown by revenue growth of 11% being ahead of attendance growth of 6%.

3. Connecting with consumers

In our paper on Recession-proof branding back in 2008 we talked about the opportunity for brands to share the pain, or entertain. And entertain is what cinema has done, allowing people fed up with the gloom of recession to go out and escape for a couple of hours. And this escape is made more powerful by being a shared experience. Mark Batey, chief executive of the Film
Distributors' Association says: "It's an incredibly immersive shared experience. It's this special experience that can't be
replicated at home."

So next time pessimists reel out that old line about your category being doomed to decline, take some inspiration from the cinema world. Great content, innovation in customer experience and connecting with the cultural zeitgeist can combine to create a brighter future.