“Even in the midst of a lot of great alternatives at home, people are getting out of their houses to go see a lot of different movies, and it’s not just all ‘Avengers: Endgame,'” Cinemark CEO Mark Zoradi says
The theater business is proving a challenge in 2019: Fighting the pull of Netflix and finding new ways to overcome so-called franchise fatigue is the new normal.
Hollywood studios raked in a record-setting $11.9 billion at the domestic box office last year. Nearly halfway through 2019, it’s down more than 10% compared to the same point last year and down roughly 2% compared to 2017, when the overall box office grossed $11.1 billion.
Box office analysts, Hollywood executives and cinema chain CEOs predicted 2019 would be a bigger box office year than 2018. Cinemark CEO Mark Zoradi told TheWrap he believes it still will.
“Even in the midst of a lot of great alternatives at home, people are getting out of their houses to go see a lot of different movies, and it’s not just all ‘Avengers: Endgame,’ though that was a giant hit,” Zoradi said. “It’s the old adage: If studios make great content, and we exhibitors create a really good guest experience, you get record years. That’s what you had in 2018 and what I think will happen in 2019.”
Cinemark, the third-largest cinema chain in the U.S. behind Regal and AMC, is finding ways to keep audiences coming to the theater, even as streaming and the comfort and quality of home entertainment continue to loom large.
Zoradi is not worried, as he explains in an interview with TheWrap:
(This interview has been edited for clarity and length.)
You talk about the importance of making sure moviegoers are coming back to your theaters, but how are you building that relationship?
Modern technology has allowed us to be able to know who many of our customers are and have the ability to be able to understand the kind of movies they go to and then when we’ve got a critical mass of data, we’re going to be able to suggest movies to you based on what you’ve seen in the past and what we know you like because you come and so we can start communicating with you a little bit more on a more personalized basis. That’s really the biggest reason for doing these loyalty programs.
If we have good data on who’s coming and what they like then we can communicate effectively with our guests. This allows us to be really good partners with studios. We don’t sell this data, but what we clearly do is partner with studios to help them market their movies, so we’ll cooperatively use the data to promote a studio’s movie who wants to a co-promotion with us.
What is Cinemark doing differently? What has changed in the last 5-10 years?
We focus more on guest services and the guest experience more than ever before. And we define that this way: A frictionless and simple subscription program and purchase process that makes it really simple and modern. Nearly 50% of our tickets are sold either online or the mobile app. A subscription platform makes it simple and affordable, so that’s the first part of it.
Then once they get to the theater, more than half of our auditoriums have those new luxury recliners with seat warmers. So you walk in and you go, ‘Oh boy, this is a different experience.’ And then about 70% of our theaters now have what I’ll call expanded food, so it’s not just soda pop, popcorn and candy. It’s everything from Pizza Hut to hamburgers and sliders and tacos. And about half our theaters now offer beer and wine, so it’s just a different experience than what your mom and dad went to.
How do you juggle big blockbusters, which are great for business, with smaller, more intimate films?
We love to play the independent Academy movies. In fact, we have a whole brand called CineArts, and we try to dedicate some of our screens to the more independent, upscale movies. We’re pretty agnostic about wanting to give every potential commercial movie their opportunity to shine, and basically the only thing that we ask for is two things:
One — that the movie comes with a marketing plan to help generate consumer awareness and obviously your big movies are gonna have a much bigger plan than your smaller movies. We recognize that they aren’t necessarily going to have the same campaign, but they have to at least have a campaign, that’s number one.
And No. 2 — that the movie is rated. We don’t play NC-17 movies in our theater circuit. So if a movie is rated, and it’s got a campaign behind it to go after its target audience… it can be the big honkin’ commercial movie like “Star Wars” or “Endgame” or “Lion King” or it can be a smaller movie. It can be an Indian-language movie. We do a lot of business in English and Indian-language movies. We’re pretty eclectic in the kind of movies that we play.
But the ROI must be much less…
Fox Searchlight, which Disney now owns, is going to have a completely different distribution plan that one of their broader movies, but those Fox Searchlight movies we still very much want to play. It’ll just be in a smaller number of theaters, and it’ll be more of a rollout strategy as opposed to going out in 4,000 theaters on day one.
Actually, I think that things like the subscription program with movie club encourages people to test out movies more than just the big blockbusters. So it’s amazing the number of people that utilize their movie credits for what would be considered a non-blockbuster movie.
Netflix has established itself as a landing spot for smaller films. What are your thoughts on the debate over its theatrical release adverse approach?
It’s interesting because it comes up a lot less than it used to, but I think there are two things to it. No. 1: There was a recent industry study by Ernst & Young on streaming and movie going and the key point that came out of it was people who watch more streaming also go to the movies more. These are high consumers of content. They like to watch movies, whether it’s in their home or streamed TV shows or go out and see a movie.
As it relates to Netflix, we have a good relationship with the Netflix folks, and I’ve said on multiple occasions that we welcome Netflix and whatever their big movie is. They’ve got Scorsese’s “Irishman” coming. We welcome that to play in our movie theaters, open arms. We only ask one thing and that is that they play by the same rules as The Walt Disney Company as Comcast/Universal, as AT&T/Warner Bros. and as Sony.
Basically the window today is 74 days to [Electronic Sell Through] and then the studios have established their own two-week window in EST before it goes to DVD and VOD, so that takes the 74 days to 88 days, and that’s the window arrangement that we’re operating under and we’re not under any significant pressure to change or modify that today.
So, to the extent that they’ll play by the same rules as our really big clients, we welcome them. But to the extent that they want a different deal, that’s really hard for us to do when our big clients are playing under one set of rules. We can’t change that set of rules for somebody that’s got a relatively small number of big commercial movies