Theaters Respond to Declining Ticket Sales

Theater ticket sales are down, major chains like AMC and Loews are merging and technology continues to revolutionize movie production and distribution. How are theater owners and film production companies responding and, more specifically, how is it affecting marketing and promotion? The hope is in non-traditional marketing.Both film studios and movie theaters, while not abandoning traditional lobby and onscreen promotional tools like posters, standees and trailers, are turning to technology and non-traditional forms of promotion to draw crowds and get them to spend more after they arrive.Many theater owners, for example, have outfitted their lobbies with wireless digital display screens provided by AdSpace Networks, New York. The screens, which can be programmed and refreshed remotely, carry content ranging from trailers for upcoming movies to ads and commercials for refreshments sold at the concession stand. The screens also carry commercials, sold nationally by AdSpace Networks, for all types of branded consumer products, so theater owners can not only use them to promote their own wares but also share in the advertising revenue they generate.For this year, revenues are off about 7% while admissions, factoring in higher ticket prices, are down about 10%. In fact, July 4 was the 19th straight weekend that revenues were down compared with the same weekend last year, extending the longest slump since analysts began keeping track. AMC, which recently announced its merger with Loews, reported a 2004 loss of $10.7 million on revenues of $1.78 billion and Loews, like many other theater chains, operated under Chapter 11 bankruptcy protection only a few years ago.New Types of PromotionBy obvious example of the 20 minutes of previews now tacked on to each feature, theater owners faced with declining ticket sales rely increasingly on advertising revenue as a source of income. According to the Communications Industry Forecast Report, brands spent 37% more on cinema ads in 2004 than they did in 2003. Signage and other promotions in theater lobbies have also grown 47% in the past 12 months. By comparison, television advertising grew only 4% over the same period.One reason for these dramatic increases is the growing ease of ad placement. In the past, brands and their agencies had to invest significant amounts of time and research into placing a regional or national cinema media buy. In June, however, Hollywood Branding International LLC of Fairfax Station, Va., announced the completion of customized media placement software with a proprietary database of movie theaters nationwide offering advertising and promotional opportunities. These include not only on-screen ads and commercials, but also point-of-sale materials such as popcorn bags, soft drink cups and children's tray sponsorships as well as counter cards, static clings, mobiles, danglers, and backlit signs.The trend in theater advertising seems to favor methods that are interactive -- and, therefore, more subtle. "The problem with on-screen and in-theater advertising is that consumers resent having to pay to see the same commercials they are constantly bombarded with at home," says Terre Layton, director of product marketing for Reactrix of Redwood City, Calif. "The Reactrix system projects 2-D or 3-D digital content onto floors, tables, walls and other surfaces. The content can be anything from games to a branded story to a promotion. The system creates an interactive experience by bringing images to life and allowing consumers to control them using physical movements such as hand motions, pointing, dancing or kicking."The Convex Group, a media and entertainment company based in Atlanta, through its LidRock Division developed a patented and FDA-approved method of packaging mini-CD, CD-ROM and DVD discs in fountain soft drink lids. The discs feature anything from music to movie clips. Recently LidRock ran a Regal Cinemas Herbie: Fully Loaded program.Marketing Outside TheatersOne of the ways movie studios and theater owners find new sources of revenue, according to Claire Rosenzweig, president of the Promotion Marketing Association (PMA), New York, is by shifting the point at which consumers are exposed to P-O-P materials away from the theaters themselves. "The problem with on-screen and in-lobby promotional materials," says Rosenzweig, "is that they assume the consumer is already in the theater."DreamWorks won a PMA Reggie Award for its efforts in promoting Shrek 2, the sequel to its animated blockbuster. DreamWorks partnered with eight select brands to create a multi-tiered integrated campaign, Rosenzweig explains.Participating brands were Baskin-Robbins, Burger King, Dial, General Mills, Hewlett-Packard (HP), Pepsi/Frito-Lay, Masterfoods and the U.S. Post Office (USPS). These non-competing brands were selected because of the diversity of their respective target audiences.The strategy afforded each partner its own, distinct message and exclusive positioning in the marketplace while also providing ubiquitous coverage for Shrek 2. Several of the partners also offered innovative premiums and campaign elements based on the movie theme.Partnerships are beneficial even when executed on a smaller scale. Walt Disney Studios also partnered with Drexel Heritage, a leader in fine furniture design, to promote its Princess Diaries 2: Royal Engagement movie. Drexel created a special "Princess Mia" collection, based on the film's main character. Disney featured the special collection in the film and also allowed Drexel Heritage to shoot a commercial on the movie set. Drexel Heritage ran TV and print ads and placed special signage in its retail locations, where it hosted more than 100 promotional tea parties across the country. The results: Princess Diaries 2 opened at $23 million and went on to gross over $100 million in box office revenues. Drexel Heritage saw a 17% increase in sales of the collection.Reactive or Proactive?Not everyone agrees, or admits, that declining ticket sales are a problem."According to our research using movie ticket sale statistics from the Motion Picture Assn. of America (MPAA) and the National Assn. of Theatre Owners (NATO), box office sales are down only 60 tickets per movie screen per week," says Beverly Nation of Hollywood Branding International."We arrived at this figure by comparing the first 25 weeks of 2005 with the first 25 weeks of 2004." Additionally, she argues that 2004's ticket sales were skewed abnormally high due to the phenomenal success of Passion of the Christ, and the comparison to this year's sales is unreasonable."Of our 41 Reggie Award winners," says Rosenzweig, "six were movie studios and one of them won in two separate categories." "You don't see this kind of creativity from a desperate industry that's struggling for survival."

Theaters Respond to Declining Ticket Sales

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