06 Nov PwC: The Future of Film — Thinking Beyond Theatrical Windows
Movies have always offered us a window into the future. From silent pictures to today’s special effects wizardry, film has consistently displayed our advances in technology. Yet while the technology of movie production continues to evolve, the technologies and approaches related to how cinema is marketed and monetized have not kept pace. Traditional models for distribution, marketing, ticket pricing, and consumer services are outdated. Disruption to these models is not a question of if but when.
In a digital, on-demand world, consumers are in control and strategies exist to quench the thirst for greater flexibility across a growing ecosystem of screens. As a result, studios and exhibitors need to leverage technology to their advantage and focus their business model on consumer preferences. That means using data effectively to transform marketing and re-envisioning the moviegoing experience.
Differentiating the Consumer Experience
No two consumers are exactly alike. But these days, what nearly all consumers have in common is the expectation of getting what they want, how, when, and where they want it. “All-you-can-eat” online streaming subscriptions for home and mobile movie viewing have gained popularity and loyalty as a result. The game has changed. We have created the expectation among an entire generation that viewing content can be easy and low-cost. Now, the question is, will theaters adapt to consumer demands before they too are disrupted? Ticket pricing structures haven’t changed since discount matinees were introduced decades ago. For years, one ticket has meant one showing. Yet, the all-you-can-eat model has clearly taken hold for at-home and mobile viewing, especially among younger viewers; and there are signs of innovators looking to port this model to cinema.
- Dynamic Pricing – Uniform pricing suggests a uniform experience, but does the consumer view it that way? From airlines adding premium price points for better seats, to Broadway venues charging more for center seats, the use of dynamic pricing is accelerating. Should cinema chains follow suit and offer consumers more options when it comes to the price of seating? Other industries have demonstrated an increase across average ticket pricing by taking such actions. Can theaters utilize supply and demand to capture similar consumer surplus at the time moviegoers are most excited about a film?
- The Subscription Model – Time is of the essence; however, disruption is coming to a theater near you; there is another attempt to upend cinema pricing through an all-you-can-eat model. While dynamic pricing may have better resonance with consumers, all-you-can-eat pricing is incredibly appealing as demonstrated in the at-home space. Rather than fight, perhaps exhibitors can work with the innovators to identify a way an all-you-can-eat model could work for those days of the week and/or times of the day that they need help filling empty seats?
Opening the Windows of (Marketing) Opportunity
Rich new sources of consumer data about consumption, preferences, and habits abound, yet the movie industry has not used this data to its advantage. Current movie “windowing” strategies require heavy initial investments in marketing, followed by a blackout period, and then expensive new campaigns when films are finally released for at-home and mobile viewing. Why are rules that create significant inefficiencies worth keeping? Studios and exhibitors have the ability to utilize technology to both spend less and get better results.
- Social Media Impact – The analytics exist to target consumers with one-to-one tactics rather than expensive and broad national campaigns. Devising marketing strategies based on reliable consumer data is not merely viable but, as consumer preferences increasingly dictate what happens in the marketplace, they are essential. Social media has proven its impact to an opening weekend performance, so why not capture these consumers and leverage their voice into more effective campaigns?
- Marketing Dollars & Sense – Synergy can be built across marketing campaigns. As the studios move to compress and/or remove windows, additional opportunities exist to up-sell moviegoers for a take-home copy. That could significantly reduce the costs associated with the multiple campaigns now required to market a film, from its initial in-theater release through home video.
Embracing a Digital World
Tech companies are driving everything from formats, to aggregation and analysis of data, to management of the consumer experience. For the film industry, this should be good news, because the movies embody both advances in technology and a focus on consumers—their audience. However, the implications may seem daunting and merit serious consideration.
- Managing Release Strategies – What can studios and exhibitors do to prepare for the many technological issues around rights management if every movie has its own individual release strategy?
- Leveraging Consumer Data – With the advent of big data and advanced modeling techniques, de-coding consumer behavior requires new technology to capture, store and prepare these large datasets for interpretation and analysis. This needs to be started now in order to provide a competitive advantage.
- Taking a Holistic Approach – In a digital world, it’s hard to imagine a future for cinema that doesn’t embrace a holistic “tech-enabled everything” approach, from the box office to the back office. So, the question looming on the horizon is, what will an “all tech-enabled” movie industry look like?
At their very best, movies transport the audience, telling stories and delivering unforgettable memories. Yet, the cinema experience is in danger of becoming not only forgettable, but increasingly obsolete. Without identifying and adapting to consumers’ evolving expectations and appetites, we risk losing generations of moviegoers to come.
Todd Supplee is Partner, US Entertainment & Media, PwC.