Western European Exhibition Entering New Phase
Western European Exhibition Entering New Phase of Evolution
Box office in Western Europe is forecast to increase by 17% over the next five years according to the latest research from leading cinema industry analysts, Dodona Research.
Cinemagoing Western Europe 2007* forecasts aggregate box office for 13 countries: Austria, Belgium, Cyprus, France, Germany, Greece, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain and Switzerland will reach 4.7 billion by 2011. The fastest-growing markets will be Greece, the Netherlands and Spain, while Malta, Germany and Belgium will see steadier increases.
The rise in box office over the last few years has been almost wholly due to rises in ticket prices, rather than increasing admissions. In fact, Dodona’s research shows that admissions have actually fallen across the region by almost 10% since 2001. Admittedly, 2001 was an outstanding year thanks to films from both the Harry Potter and The Lord of the Rings series being released, but since then nothing seems to have matched their popularity. The markets of Germany and Spain have suffered particularly recording declines of 23% and 17% respectively.
After very poor results in 2005, 2006 saw a recovery for most territories. However the report concludes that following a number of difficult years the Western European market is fundamentally saturated and can no longer be expanded by building new cinemas. “That is not to say that there is no call for some new screens in selected locations and ongoing upgrading is always necessary.” said report author, Karsten Grummitt. “However there will be new drivers of growth including conversion to digital cinema and the expansion of domestic film industries, which will take the industry into the next phase of its evolution.”
Two companies are spearheading European digital cinema: the Belgian Kinepolis Group and the Luxembourg-based Utopia Group. Kinepolis has cinemas in Belgium, France, Spain and Switzerland. In Belgium it is market leader operating 27% of all cinema screens. Utopia Group also operates in Belgium as well as having cinemas in Luxembourg, the Netherlands and France.
Domestic film industries stand to benefit greatly from the increased market segmentation and programming flexibility that digital cinema will provide. The region’s largest market, France, has one of the healthiest domestic industries helped in part by the moratorium on advertising films on television, and a state sector that heavily funds and supports French filmmaking. Indeed, the French are Western Europe’s most enthusiastic cinema-goers, with every man, woman or child making three visits to the cinema a year.
The second largest market, Germany, is far less inclined to visit the cinema attending only 1.7 times per person, per year. The country has fewer screens, more expensive ticket prices and a declining market. Its apparent lack of profitability has meant that consolidation in the exhibition sector is far less widespread than in other markets.
Indeed, the last year has seen considerable consolidation in exhibition notably in Italy, Spain, Austria and Switzerland. Following acquisitions in Italy, UCI is Western Europe’s largest exhibitor with almost 900 screens. The French exhibitor, EuroPalaces is second-placed with 800 screens in France, Italy, the Netherlands and Switzerland. Greater Union and UGC both have more than 500 screens, while Cinebox’s acquisition of Cines Abaco takes its Spanish-based circuit to fifth largest with 478 screens. A further 13 companies have more than 100 screens.
Cinemagoing Western Europe predicts that there will be more consolidation in the coming years. “Financial and economic conditions permitting, we anticipate that there are more deals to be done resulting in an increasingly simpler exhibition sector.” said Grummitt.