Overseas exhibs test discount waters

Distribs generally welcomed initiative

SYDNEY – When does going to the cinema become a luxury rather than a regular, affordable pastime?

Some distribs in Australia were asking that question last month when the country’s three major chains slashed their Tuesday prices from an already discounted $A9.50 ($7.60) to $4 to stimulate admissions, which plunged by 20% in January.

Distribs generally welcomed the initiative, although some grumbled that $4 was too cheap and $5.60 would have been just as effective. But, more broadly, some execs fear the top price of around $12.20 at marquee cinemas is too pricey, particularly as that’s more than the price of some DVDs. “We don’t want to give the impression that cinema is an expensive entertainment,” says UIP Australia managing director Mike Selwyn.

Another Oz distrib contends that it’s becoming problematic to release midrange films that are destined to have short theatrical runs with top prices at current levels. “If those films finish up grossing around ($2.8 million), it’s difficult to make a profit theatrically,” he says. “The danger is that the business will become even more event-driven than it is now.”

Selwyn’s boss, UIP prexy and chief operating officer Andrew Cripps, contends that there are too many discount schemes run by competing chains in some markets, which he thinks runs the risk of confusing consumers. Those exhibs are in danger of devaluing their product, Cripps says. He’d like to see cinema operators join forces to come up with uniform discounts, as is the case in the U.K.

Clearly Oz is a price-sensitive market. The U.K. is much less so, according to Tim Richards, chief exec of Vue Entertainment, which bought Warner Bros.’ circuit in Blighty last year, augmented with several sites acquired from other operators.

Winning auds

“Our competition is not so much DVDs or 50-inch TVs as other forms of out-of-home entertainment,” says Richards, pointing to live shows, sports, restaurants or simply a night at the pub.

Richards, who will moderate an international panel at Sho-West, sees the major challenge facing U.K. exhibs as winning back the baby boomer generation who rarely or never go to the cinema.

To that end, Vue is introducing licensed bars and coffee bars, and reducing the time ticket buyers have to wait in line — at some theaters by selling ducats at concession stands. “Consumers have become more discriminating and we have to give them a better product,” Richards says.

The two-for initiative on Wednesdays launched in the U.K. in April got off to a slow start but is expected to grow in popularity, boosted by a marketing campaign sponsored by cell phone service Orange.

Market data

Key to making the promo more successful, according to Richards, is figuring out why it’s worked in some areas but not in others. Perhaps surprising, a city’s demographic profile appears to have no bearing on demand for two-fors.

The exhib biz in Blighty is taking a breather before the next spurt of development, which Richards expects will happen in 18-24 months as operators renovate aging multiplexes. “The first-generation multiplexes of five to seven screens are difficult to operate and not very productive: They need updating or replacing,” he says.

Vue has 30 cinemas and plans to add 10 next year.

Italo exhibs report a healthy increase in admissions since discounting was introduced last year. Richards worked with Warner Bros. when it entered that market some years ago and says, with the benefit of hindsight, “Maybe we set the prices too high when we went in. When you open up a new market, you have to encourage people to get back into the habit of moviegoing.”

Discounts of various permutations have long been a mainstay of the biz in Japan. Among the inducements: cheap Ladies’ Day tickets Wednesdays and 1,000 yen ($9.50) ducats on the first day of each month.

“Consumers in Japan get some nice price breaks,” says Warner Bros. Intl. Cinemas prexy Millard Ochs. “Our average ticket price in Japan doesn’t go up year by year, so we depend on the consumer base going up.”

In China, where Warners operates seven cinemas, with an additional nine due to open by the end of this year, concession sales are growing. New product lines to be introduced soon could further goose sales.

Ochs says Pepsi-Cola execs in New York had a brainstorming session last month to come up with innovative ideas for snack foods and libations for China.

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