Late last year, our CEO, John Aalbers, shared his thoughts on the growing cinema industry in Asia with Film Journal. As exhibitors continue their expansions there over the coming year, we thought we might repost his article.
While the number of cinema screens worldwide grew by around eight percent in 2016, it was the Asia-Pacific region’s impressive double-digit expansion driving it. Add that a significant number of Asian countries are now in the top 20 worldwide box office, and Asia is really becoming a tour de force in the cinema industry. Even so, their box-office rankings still aren’t in line with their dense populations, so there is clearly even more room to grow before their market is saturated.
With the exception of a few countries like Japan, Singapore and South Korea, the prevalence of cinema as a social destination is relatively new. The growing disposable income of the emerging middle class now means that, across the region, more people have the opportunity to engage in more leisure activities. And cinema, once out of many people’s reach, physically and financially, is a very attractive option. The number of new screens opened will, naturally, taper off as exhibitors start to close in on demand levels; however, growing box office and supporting revenues can, and should, continue to boom.
How is this possible?
Most of the new screens across Asia have been opened relatively recently—in the past eight years or so. Whilst that might not appear very significant on the surface, it does have huge impact on the way and speed at which they can think, operate and move. They are digital natives, and can take advantage of everything that means.
They are digital natives, and can take advantage of everything that means.
Compare this narrative to the history of cinema in Europe and North America, where the infrastructure was optimized to handle the unique challenges of 35mm film, and all of those analog processes were then adapted for digital. In many ways, the shift to a digital mindset is still happening there, whereas Asian cinemas, unencumbered by the deeply embedded legacy of 35mm film and the limitations of VPF deals, have evolved in a completely digital environment.
The question is: How are Asian exhibitors leveraging this to grow sustainably?
The answer: They build their businesses on a foundation of interconnected digital systems, and embrace the benefits of a digital estate from the start. These benefits are, chiefly, the efficiencies and cost-savings that automation and centralization provide them, from which they can build up their operations.
Local automation significantly reduces the technical back-office tasks required at site level, and centralisation technology moves all of those worries to a single head-office location, so site staff can get back to more valuable customer-centric activities. As well as a better-engaged audience, and fewer manual errors, this also makes it easier to hire and train local staff, and decreases the operational cost of opening new sites.
Connecting all of their screens to head office from the beginning immediately improves their odds of ongoing success. Why? Data.
Better access to high-quality data means they can make increasingly better business decisions over time as they collect ever more data. Pooling all the information about their screenings, hardware and revenues—every success and failure—at the fingertips of the people deciding their business strategy ensures that they can be agile, responsive and informed.
Digital infrastructure is inherently flexible, but traditional film programming still prevails in much of the industry. With the right content management and POS software, shows can be scheduled in a matter of minutes and changed just as quickly. This gives cinemas unprecedented control over their scheduling, meaning they can dynamically respond to the needs of their market. This doesn’t only relate to the feature performance, but to their pre-show and lobby, too. So, from the entrance to the big screen and back, exhibitors can plan every aspect of a customer’s journey for maximum appeal at every time of the day.
So, digital-first cinemas can quickly and easily open new sites, try new technologies, and gather the data they need to invest in the right places. All while their staff on-site are as focused on the customer experience as they should be as a business in the hospitality industry.
Above all, these new cinemas are using digital technology to keep the barriers to future innovation and further expansion low, so that they can keep up with whatever changes to audience tastes or technology might come their way.
Whilst we cannot undo our past, with VPF ending we are now at the point where exhibitors can make changes to their businesses. Approaching cinema with a digital-first mindset completely changes the way the cinema business can, and should, be run: reliably, efficiently and simply.