Our industry has experienced its share of past, as well as current, disrupters and, more recently, we’ve debated extensively on the different competitive threats we face. In most cases, we’ve managed to ensure that third parties don’t erode value from the symbiotic relationship that exists between studio and exhibitor in our mutual goal of delighting audiences. In our own case, Majid Al Futtaim has built the MENA region’s largest cinema chain by acknowledging and executing upon a simple premise: more box office equates to larger production budgets which, in turn, translates into more screen-content, and we need to continue to work closely with content-providers to optimise their earnings all within the confines of the proven exhibition frameworks.
We believe that we aren’t just competing with streaming services, video on demand and tech-competitors like the former MoviePass, but additionally with countless other competitors for the discretionary dirham, and for which the competition is fierce and growing rapidly. And whilst we acknowledge that having a reasonable window between when a movie is screened in cinemas and released through other channels is critical to our success – and we do need our industry to have a sensible debate around optimising windows to our mutual benefit – the World Cup, our indoor ski-slopes, gaming, theme-parks, restaurants and concerts, all continue to compete for consumer attention and spend. Protecting and optimising the window and ensuring tech-disrupters don’t erode value is critical to our success and, as we look ahead to 2020 – additionally focusing our collective effort upon enhancing our industry’s attractiveness to the newer generations (who’s loyalty cannot be automatically assumed).
Th need, and desire, for world-class entertainment options presents a massive opportunity for Cinema, and particularly in markets where cinemas are generic and yet to embrace the latest technologies and complementary add-ons that can transform the cinema-going experience. I’ve personally seen countless examples in which the chains that are experiencing the highest levels of growth and profitability aren’t those with the lowest prices or the higher pro-rata screen counts but, rather, those that choose to focus relentlessly upon experience.
Looking ahead to 2020, we are optimistic about the line-up of Cinema which will translate into box office growth, particularly in emerging markets. Internationally, a recent study conducted by PwC forecasts that China will surpass U.S. box office revenue in 2020, increasing from US$11bn to US$12.3bn. In our region, despite Cinema only re-emerging in April 2018, we anticipate that Saudi Arabia will contribute around US$300m to global box office in 2020, marking a threefold increase from 2019.
Supporting the investment the studios will be making in content, our strategy remains focused upon several pillars, all of which centre upon ensuring that every experience and every touch-point in our cinemas is exceptional, providing experiences that guests love, rather than just ‘like’. In a recent local study, 9 out of 10 UAE residents considered that ‘sharing moments with loved ones’ provides them with great personal satisfaction and fulfilment. The study also asked if respondents would rather pay full-price for an experience they’re sharing with a friend, or half-price to do it on their own. Two-thirds surveyed opted for the more expensive, shared, experience.
So, whilst we are seeing competitors discount with the hope of attracting more guests, we are doubling-down on our strategy of keeping cinema affordable whilst also continuing to enhance cinema-going with complementary elements such as F&B, service, technology and experiences–Cinema must remain a weekly experience and not solely for special occasions.
Our industry continues to face its challenges, and we will see increased competition from streamers, tech-competitors and other disrupters. None, in our opinion, have the ability to capitalise on the shared experience of cinema-going as a theatrical medium. None can offer the in-cinema big screen experience, the shared moments of love and laughter (as we fight over a bag of Maltesers or for that last kernel of pistachio popcorn) and the impact of these competitors will be mitigated significantly if our industry remains collaboratively focused upon producing great content, upon building exceptional venues, embracing the latest technologies and ensuring that every touch-point with the consumer remains exceptional.
This article was first published in arabianbusiness.com