Cinema resorts to the birthday party to come out of the dark in sales

Birthday party, loyalty programs, exhibition of shows and sports competitions. All these alternatives have been adopted by movie theaters in an attempt to come out of the dark in sales, whose fall has haunted the sector since the beginning of the pandemic.

However, the exhibitors’ plan B has been responsible for only 5% of the revenue according to Abraplex (Brazilian Association of Cinematographic Exhibiting Companies Operators of Multiplex). Multiplexes are sets of at least ten movie theaters, which are installed especially in shopping malls and represent around 70% of the sector’s sales in the country.

According to Abraplex, the box office is at levels much lower than before the pandemic: it fell by 70% between 2019 and 2021, to R$ 882 million. The number of rooms decreased by 8% to 3,249 and is expected to shrink by around 300 units this year. “Our sales should only return to the pre-pandemic level in 2024, in the world”, says Marcos Barros, president of Abraplex and the Cinesystem network, the fifth largest exhibition rfede in the country – after Cinemark, Cinépolis, Kinoplex and UCI.

The fear of contagion is not the only reason for the poor performance, as other entertainment options have returned with a vengeance, such as concerts and football games. At least since the last quarter of 2020, with some interruptions, cinemas have reopened, maintaining the distance between seats.

“Our biggest problem is the low volume of launches”, says Barros. “We were the first to close, the last to reopen and the shelf is empty. Theaters don’t have all the movies they need”, says the executive, noting that many productions have been postponed due to the pandemic.

But there are two structural issues getting in the way of the sector’s recovery: streaming services, such as Netflix, Amazon Prime and Disney Plus, which were the home entertainment option in the most acute moments of the pandemic, didn’t just take the public out of the rooms – with monthly fees that equivalent to the value of a single ticket–, as they were also privileged to receive first-hand releases from the studios.

At the same time, shopping malls, the main growth channel for multiplexes, slowed down their expansion, which compromised the opening of new rooms. With the pandemic, the big shopping centers, by the way, started to bet more and more on restaurants as new anchors, to the detriment of cinemas (which lost audience to streaming) and large retail chains (which in turn redoubled their bet in online sales).

A senior executive in the shopping center sector said, on condition of anonymity, that the cinema is no longer considered a major attraction for the public. The latest blockbusters, the blockbusters – like Spider-Man, Batman and Dr. Strange, now in theaters–, they stay in the theaters for a short time, because they go straight to streaming.

Streaming remains a strong rival to the big screen, despite the hit on Netflix

It’s the so-called “launch window” of a movie: how long it stays exclusively in movie theaters, before going to streaming. Before the pandemic, this space reached 90 days. Since Covid-19, some launches have gone straight to digital channels, debuting in consumers’ living rooms.

“But today the film industry has already convinced itself that it is necessary to debut in the cinema first, to increase the profitability of the film”, says Barros. “A production that could bring in $2 billion is restricted to $500 million in streaming,” he says. In addition, according to the executive, the streaming format is the most conducive to piracy. “A copy becomes readily available for illegal sale.”

Currently, the average movie release window is 45 days, half of what it used to be before the pandemic.

Netflix, the biggest exponent of streaming services, has seen better days. In April, it posted its first quarterly loss of subscribers in more than a decade: 200,000, while it hoped to add 2.5 million to the base. “At first, streaming caught the pay-TV audience and, later, during the pandemic, the cinema audience”, says Marcelo Tau Carneiro, an analyst at Lafis Consultoria.

“Netflix surfed alone for a long time in this market, until the arrival of major competitors, such as Amazon and Disney, which have other sources of revenue”, says Carneiro. “Unlike Netflix, these companies can withstand a period of loss longer.”

According to Barros, the industry has lost customers mainly in niche films – novels, dramas, comedies. “Blockbusters continue to appeal,” he says, noting, however, that the audience for these major releases has gotten smaller, below the usual 10 million per film.

THE Sheet was on the 14th, a Saturday night, at the Cinesystem at the Morumbi Town mall, in the south of São Paulo, ten days after the release of the film Dr. Strange, one of the top box office bets this year. Although there was movement, the rooms were far from crowded.

A movie party can cost BRL 2,700

Exhibiting networks have sought to rent spaces to close accounts at the end of the month, in addition to launching loyalty programs to increase sales.

Of Mexican origin, Cinesystem has 57 cinemas in the country, with 422 screens. The company launched Clube da Pipoca, a frequent flyer program that already has 600,000 subscribers. From the purchase of tickets or items from the bomboniere, subscribers add points that can be exchanged for more food, drink and tickets. Club birthdays have free tickets and a card-carrying fan member has a discount.

Wanted, Cinemark declined to give an interview. It only informed that its loyalty program, Cinemark Club, has 10,000 members in the country. Each of them pays R$39.90 to have two free tickets per month. The value is equivalent to the purchase of a ticket on weekends. The subscriber is entitled to a popcorn and soda combo in the month of the birthday and a discount of up to 20% on the bomboniere.

In the first quarter of this year, the American company – which operates in 16 countries in the Americas, with 5,849 screens in 520 cinema complexes – announced revenue of US$ 460.5 million, four times higher than in the same period last year (US$ 114.4 million), but 36% lower than the first quarter of 2019.

On the earnings call this month, Cinemark global president Sean Gamble commented that mall openings are slower than before Covid-19. The number of spaces, however, was not the problem.

“There weren’t enough launches in the first quarter of the year,” Gamble commented to analysts – noting that the period included school holidays in Latin America.

Theaters are betting on the next big releases to pull sales in 2022. Among the big premieres planned are Top Gun – Maverick (this month), Minions 2 (June), Jurassic World 3 (June), Lightyear (June), Thor– Amor and Thunder (July), Black Panther: Wakanda Forever (November) and Avatar 2 (December).

Any of these films can be the subject of a corporate event or birthday party: the choice of production is up to the customer.

A party for 50 guests at Cinemark in Higienópolis, west of São Paulo, for example, costs R$4,600, including a small portion of popcorn and soda.

At the Cinesystem at the Morumbi Town mall, in the south of São Paulo, the same party costs R$2,700. In both cases, you can take cakes, snacks and drinks on your own. There is an extra fee to take away a buffet.