The Top 4 Challenges Facing Cinema Chains

I’m a total and complete film nerd in the most ‘un-chill’ way possible.

Our SiteVis Slack channel for team ‘discussions’ is always full of my two-bit film reviews of the 10-15 films I’ve seen during the week. I have big plans to just go ahead and make my own film. Thanks to the time and budget for learning given to us by the SiteVis powers that be, I can actually do that! Pretty cool. 

So this, combined with my interest in the marketing challenges facing specific industries, got me thinking about the challenges that face my beloved cinemas. If I were to make a film, what would I be up against in terms of getting my film exhibited? How is the cinema chain business model changing, or being forced to change, in the light of those challenges?

And so I find myself here.

If you’re in the cinema exhibition industry and have any feedback or want to share your thoughts with me, I’d love that. At the end of the article you can find my contact details. For now though, I hope you find the following thought-provoking and interesting.

The definition of ‘film’ and the challenge of streaming

The definition of ‘film’ is something that’s currently being debated in the industry. There’s an argument raging between established legends of cinema like Steven Spielberg and those wanting to open up the industry to more disruption. 

To be eligible for awards, films need to be exhibited at cinemas for at least a month, usually at a specific time of year. Cinema chains and filmmakers like Spielberg have beef with this because Netflix will only exhibit their films, in most instances, so that they can be eligible for awards. 

But why do they have said beef? 

“Steven feels strongly about the difference between the streaming and theatrical situation,” said an Amblin spokesperson. 

There are a number of differences of course, but in terms of the threat to cinema, the main ones are that Netflix does not report on box office figures or respect the 90-day theatrical window. 

The majority of cinema chains demand an exclusivity window of 90 days before films are released on video and streaming services or rental availability. Netflix however, tends to exhibit its films for around a month to qualify for awards seasons and then immediately makes them accessible on their platform.

At first, this wasn’t an issue as Netflix’s first forays into original content creation were far from Academy Award standard. However, now it’s producing Oscar eligible work. 

Roma won 10 Oscars in 2019 and before that, House of Cards actress Robin Wright won a Golden Globe for her performance. Roma won ‘Best Film’ BAFTA but there was a backlash from Vue cinema chain as they believe the film was ‘made for TV’ because Netflix was the producer and should not have been eligible for the award. 

Vue cinemas, a huge chain, boycotted the BAFTAs because of this.

Cinema chains may well feel challenged by the easy access their audiences now have to high quality films in the comfort of their homes. But the added kicker that is adding insult to injury is that Netflix isn’t just another streaming service. It is actively and successfully positioning itself as a replacement for cinema experiences. Or rather, it’s also redefining what ‘cinema experience’ really means, 

For me, there is no replacement for experiencing a film with others.. 

I love heading to the Picturehouse around the corner from my home and not just enjoying an original story but enjoying the sense of community a big multiplex or the sofa in your home can’t give you. I went to see 1917 this week and ran into two people I hadn’t seen for a while. Cinema is a community and I don’t think that’s being used in compelling marketing for cinema chains anymore.

I think that we’re going to see the demand for that sense of community in mid-size cinemas grow. Audiences are getting franchise fatigue from bigger chains showing reboot after sequel after prequel and a sense of frustration and emptiness with the fast food nature of consuming VoD content that lacks the occasion and togetherness of a cinema screen.

Filmmakers Are Split Too

Some have embraced VoD for producing, distributing and promoting their work with perhaps the most well known director, Martin Scorsese releasing his Oscar nominated The Irishman through Netflix. 

The digital nature of VoD makes it accessible in a way that cinema can’t. It means that burgeoning filmmakers can get their work in front of wide audiences in a bid to gain a following, showcase their work and hopefully progress their careers. 

But in this lies a problem for platforms like YouTube and Netflix. Do filmmakers see these platforms as a means to an end? Is there a hierarchy of ways to exhibit your work and is this belief what is keeping cinema chains from really facing oblivion in the face of VoD competitors?

If you asked a filmmaker if they would prefer their work to be shown on Netflix or across multiple cinema screens worldwide, which do you think they would pick? But, ultimately, it’s not the filmmakers who have the power. It’s the audiences and the choices they make with their money.

Expect the ‘what IS film?’ debate to continue as Netflix and other platforms start to steal the limelight and the awards this year. The challenges will be for cinema chains to really understand the changing desires and pain points of those who use their services. To face this, cinema chains need to ask a couple of questions; what do those who prefer streaming services get that cinemas don’t offer? What marketing messages are they receiving and how can they reverse engineer those their benefit?

YouTube and the Rise of User-Generated Narratives

As I’ve mentioned, platforms like YouTube provide provide budding filmmakers with a potentially huge and inexpensive platform to exhibit and promote their work. 

YouTube is far from the platform of silly cat videos it used to be known for. Today, you can enjoy artfully made series and films made by anyone who has the time, resources and passion. Just take a look at some of the fan made films that will never grace the screen of a cinema but reach thousands of viewers globally. 

‘Why should people go out and pay money to see bad films when they can stay at home and see bad television for nothing?’. Well Samuel Goldwyn you’re officially out of date now with that quote now!

You can make high quality, mid-size budget films and series and exhibit them for free, cutting out the huge cost of distribution and exhibition.

Because it’s YouTube, the expectation of quality is lower, with audiences not expecting to see anything of cinema level standard. So when they realise they can get cinema quality content in their homes as well as produce it in their homes, I expect this will become more of a challenger to Netflix, Amazon Prime and other platforms.

Imagine a Netflix where filmmakers could upload their own content…for free. That is essentially what today’s YouTube is and I expect this to blow up like every other scene in a Michael Bay film.

Advertising Challenges for Cinemas

Perhaps one of the biggest issues facing cinema chains is advertising. Both their own advertising and the revenue they generate from ads for other businesses pre-movie screening.

During my research I came across a lot of comments from cinema-goers saying that they rarely turn up to a film screening ‘on time’. 

People rarely arrive eagerly to the cinema to watch what is now up to an average of 25 minutes of advertising before you even get to the trailers for upcoming films. 

Now, whilst cinemas will get revenue from showing ads before film screenings regardless of the number of bums on seats in a cinema screen, surely this will be having an impact on the validity and effectiveness of those ads? At SiteVis, we only want to run campaigns for our clients that we can prove to be profitable, sustainable and effective. We iteratively change tactics when they either don’t work or don’t reach the right audience.

So, if cinema audiences are savvy enough to avoid spending their time being advertised to by big brands, why do cinemas persist in advertising them? Is the revenue from these ads still worth it? I’m genuinely asking as I don’t know. I reached out to a few cinema chain marketing teams but haven’t heard back yet. *Sadface*.

I assume that the ROI for those ads is declining due to lack of exposure to an absent audience. Could this cause high end brands to decide that this marketing channel is not an effective part of their strategy? If so, this could impact a large part of cinema income.

How can cinemas utilise online advertising for brands instead? 

This year Picturehouse teamed up with Spotify to collaborate on their ‘turn off your phone’ message. 

Spotify’s UK marketing director, Olga Puzanova, said: “Picturehouse is the perfect partner for Spotify; through the collaboration we are able to connect with a young, urban audience with a love for the arts and diverse range of cultural tastes.”

As well as this, Picturehouse have launched a 3 year campaign with Refuge, a charity supporting women and children who are and have been, victims of domestic abuse. 

Connecting meaning and purpose within their marketing strategy is another way that cinema chains can get their brand in front of people in order to bring in revenue for the business. It connects all the dots. These meaningful brands, sometimes local in nature, expand the reach of the movie theatre across their own marketing channels. 

Using local marketing methods, such as local SEO and partnering with local brands is a tactic SiteVis use to connect with hyper relevant target audiences for clients with locally based services or products. 

Small cinema chains and independent cinemas will need to create, foster and encourage a sense of community and purpose around them in order to survive and compete against the larger chains. By supporting a cause with meaning in a way that is related to what you do as a business, you are able to connect with your audience in an emotional way. By coming to Picturehouse Cinemas, audiences will be reminded that by doing so, they’re supporting something bigger than themselves through their attendance. 

The key challenge for the Picturehouse will be making sure that audiences are exposed to this campaign in the right way over the 3 year span. How they can measure its success in terms of an increase in awareness for Refuge and also for their own brand and business objectives? Finally, what will come next and how will bigger chains like Cineworld, Vue and Odeon and other indie theatre chains like Curzon and Everyman Cinemas utilise these marketing tactics for themselves when it comes to supplying value to advertisers?

Experience Management & VR

The rise of VR over the last few years has started to change the gaming industry, but what does the future hold for film in this format? 

With almost all VR headsets, you can access apps that allow you to watch films and TV shows from your sofa. Some of these can even put you within the cinema screen environment so that you feel like you’re really in a cinema.

Of course, viewing films in this way comes with a few recommendations that aren’t normally required of the real thing. These include; having to take a break from the film you’re watching, closing your eyes to avoid feeling nauseated and needing to ensure your HMD is fitted properly on your face to avoid discomfort! But, there are advantages over a real cinema experience. You don’t have to sit among sweet packet rustlers and loud laughers. You’re essentially in your own, private cinema screen! 

So how can a real cinema compete against the rise of VR?

I recently went to my first 4DX film screening. It was my 5th viewing of Star Wars:The Rise of Skywalker. (I really had to go that many times to make sure Disney had in fact, ruined my life). 

Anyway.

4DX seats you in a moveable seat that throws you around in time with the events unravelling on the screen and pokes you in the back whenever someone in the film shoots a blaster which is, frankly, bloody alarming! As well as this, you get all manners of weather thrown at you, whirlwinds, water, snow and fog and, allegedly, a variety of smells. 

Despite my feelings about the film itself, I enjoyed this new way of experiencing cinema but, there is something that feels cheap about it, and it ain’t the price of the ticket! 

I’m a big lover of immersive events and experiences and this fell short. It’s incredibly distracting which, by definition is not what an immersive event should do. When pitted against a VR cinema experience, 4DX lacks real immersion which is somewhat ironic, right?

To compete with the rise of VR for film viewing, cinemas are going to have to have to try a different approach. 

Multiplexes are designed to churn through audiences like a production line. They’re soulless machines designed to palm off as much merch and overpriced snacks as possible and they’re products of what mainstream cinema has become. 

Den of Geek writer Simon Brew sums it up: “The multiplex is reflective of the state of modern day television, in that there are hundreds of channels, that still offer surprisingly little to watch. The whole idea, in an ideal world, of one building having ten, twenty or even thirty screens devoted to film is that it can host a broad selection of programming. But that isn’t the case. Instead, cinema chains use this to ride on the back of Hollywood’s desire to get films making their money in a couple of weeks.”

“I won’t quit until I get run over by a truck, a producer or a critic.”

This quote from Jack Lemmon sums up my journey through today’s challenges for cinema chains. I could have gone on for a lot longer, spoken to more industry people, read more Sight and Sound articles. There’s so much more to this topic that I have shared here and it doesn’t end in the last paragraph for me. I’ll be exploring it more and I hope that others reading this will join this conversation.

For me, the challenge for cinema chains that matters most is bringing back a sense of community to the cinema experience. 

Cinemas need to engage with their audiences and demand more originality from mainstream filmmakers and studios so that threats from YouTube, Netflix and other platforms and services are diminished. 

The theatrical experience shouldn’t be a comparable one to VR or VoD. It has a deeper connection to our human spirits because of the togetherness it causes and there are so many incredible marketing opportunities for cinemas to use this message to address the trials and tribulations the industry faces this year. 

Cinema is a different ball game to streaming services, so was it ever a threat?

In this article from The Drum, Vue founder, Timothy Richards expresses a similar sentiment:

‘Despite the rhetoric of how streaming services could destroy cinemas, Richards is adamant that the likes of Netflix and Amazon Prime Video are not a “threat” but a “completely different business model” which should be more of a concern for terrestrial TV than theatre owners.’

I guess he’ll have to have a conversation with Netflix about how many film industry awards they’re winning and then reassess the level of “threat”…

So what do you think? Are there any other challenges facing cinemas today? We’d love to continue the discussion further! Feel free to leave a comment below or email me at rachel.pearson@sitevisibility.com. 

Similarly, if you’re interested in finding out how marketing can be harnessed in this way and want to work with a digital marketing team who care about connecting brands with their audiences, old and new, then pop me and email and let’s nerd out together.