BFI yearbook offers lessons from Blighty's biz
LONDON — This year marked the 10th anniversary of the British Film Institute’s Statistical Yearbook, an annual publication of U.K. market data that many consider a benchmark for other markets.
The publication of the 2012 book warrants an analysis of key areas of the U.K. industry and of the prevalent trends reflective of broader international tendencies over the past decade — indicating where maturing markets in many territories are now headed.
“I think the U.K. is representative of what is and will be happening in the major international markets,” says Andrew Cripps, president of Imax Europe, Middle East and Africa.
The U.K. has seen changes in when audiences are choosing to watch films in theaters and the makeup of that audience, but the major influencer has been digital. “It has been dubbed the ‘Digital Decade,’ ” says Tim Cagney, deputy chief executive of the BFI.
Digital projection has revolutionized the possibilities of cinema exhibition, allowing for more flexible and broader film programming, the distribution of alternative content and the re-invention of 3D. Digital technologies have also transformed the way audiences consume film content, while digital television has provided a way for primetime feature programming to redress falling viewership on terrestrial channels.
Despite reaching their decade high in 2002, U.K. admissions have stayed fairly steady across the decade. “Most markets have seen admissions per head dropping off or holding level, with box office gains accounted for by rising ticket prices,” says Charlotte Jones, principal analyst of cinema at Screen Digest. “Compared to other markets, U.K. admissions are more stable, at around 2.8 per head.”
In the U.S. admissions per capita dropped from 5.1 in 2002 to a decade low of 3.77 in 2011. Spain, Australia and Japan also saw decade lows last year. The exception is France, where admissions per capita have been rising for the past four years, to a decade high 3.59 in 2011.
Tim Richards, CEO of exhibition circuit Vue Entertainment, anticipates further U.K. growth: “What we’ve seen in the last couple of years is the scope to set a record in modern times. I think U.K. admissions will continue to grow steadily for the next few years.”
The rise — and fall? — of 3D
Regardless of admissions trends, U.K. box office has grown significantly, with new records set each of the past five years and a notable jump in 2009. “It’s due to the 3D premium from 2009,” says Sean Perkins, BFI head of research and statistics.
Although 3D had started its digital re-invention with “Chicken Little” in 2005, premium ticket pricing became standard with Paramount’s release of “Monsters vs. Aliens” in. The global rise of digital 3D ensued, thanks to key releases, including “Avatar.”
A rise in average ticket prices reflects this change and accounts for the continuous box office gains of recent years, regardless of the number of admissions. In 2002, the U.K. ticket average was $6.70, rising to $8.50 in 2009 and $9.50 in 2011, an increase of more than 41% over the decade.
While many exhibitors were slow to convert to digital projection, the format has seen rapid gains since the re-emergence of 3D in the middle of the past decade. In 2009, exhibitors scrambled to be ready for many predicted would be an onslought of titles auds would demand to seen in 3D.
However, after rising rapidly, the ratio of 3D screens to digital screens has fallen off. In 2009, 3D-enabled screens accounted for nearly 70% of the U.K.’s digital screen count. In 2010, this had risen to more than 75%. Last year the market continued to see massive uptake of digital screens, with a 92% rise from 2010, but the 3D-enabled screen share of these digital screens declined to 54%.
“I don’t think 3D was the driving force for digital uptake,” says Vue’s Richards. “It is a fantastic benefit, but not a reason to put in (such technology). There are two big single factors with digital projection: It is a lot more efficient and, most importantly, it provides perfect flexibility of programming.”
Vue has spent more than $157 million in the U.K. and Ireland in the past four years upgrading and building sites, including better than $47 million in 2012. It completed rollout of Sony 4K Digital Cinema Technology into 650 screens across 69 sites in the market in August.
The reduction in 3D’s market share of digital screens can also be attributed to a cooling down of audience desire for 3D content. In 2009, 14 3D films delivered 3D grosses of $276 million, accounting for 16% of total box office revenues. The following year, 28 3D releases grossed $380 million from 3D screens, representing 24% of total revenues. However, despite an increase to 47 titles released, 3D revenues in 2011 fell back to $362 million, a 20% share of annual grosses.
On average the share of a film’s total box office take in 3D fell from 71% in 2010 to 57% in 2011. “Audiences are becoming more discerning about the films they will pay extra to watch in 3D,” says BFI’s Perkins.
The past decade also saw massive upheaval in the way film is consumed, with audiences now watching on everything from giantscreen formats to mobile phones. The variety of options and accessibility had a devastating impact on physical video. While the value of DVD sales continued to rise through 2004, the market has steadily declined since, hitting a decade low of $2.75 million in 2011. Meanwhile the rental market’s value has fallen throughout the decade and is now roughly half what it was 10 years ago.
Video on demand has provided a partial solution in the U.S., but while rising steadily had yet to really take hold in the U.K. as of 2011. This year, however, the launch of Netflix in the U.K., which is also galvanizing its competitors has brought a significant boost in VOD. Screen Digest estimates for 2012 suggest the value of online VOD will nearly double to $162.4 million, while television-based VOD will increase 19% to $213 million.
Television remains the key medium for reaching audiences. Last year saw 3.9 billion viewings of feature films across all TV formats excluding pay-per-view — more than 22 times theatrical admissions. For the first half of the past decade, however, film viewing on television was decreasing, as such viewership on the U.K.’s five terrestrial channels fell, and subscription film channels failed to take up the slack. The past four years have seen free-to-air digital channels, such as Film4 and ITV2, draw significantly larger audiences for films on TV.
Worldwide, filmed entertainment revenues will continue to see emerging and rapid-growth markets such as China, India, Russia, Brazil and South Korea, driving expansion in the next five years, according to estimates from PricewaterhouseCoopers.
China is expected to see filmed entertainment revenues, from theatrical receipts, physical video sales and rentals, and digital download and streaming revenues — but not television — increase 171% by 2016.
Among the mature markets, France is expected to still see significant growth — of nearly 24% — in stark contrast to Japan (6%), the U.S. and U.K. (both 3%).
The best news may be for content makers and providers. “The most interesting thing is that consumers are consuming more movies than ever before,” says Imax’s Cripps. “There are so many different ways to access product.”