Despite falling attendance, concessions sales are helping maintain healthy profit margins
Los Angeles, CA (PRWEB) March 22, 2013
The $1.7-billion Movie Theatres industry has grown slowly during the past five years, with performance tied largely to the success or failure of major blockbuster releases. While economic conditions like per capita disposable income directly influence households' ability to spend on nonessential goods and services, including entertainment and movie tickets, the marketing efforts and popularity of a blockbuster truly drive admissions, says IBISWorld industry analyst Matthew MacFarland. As such, during 2009, when the recession caused a drop in disposable income and unemployment spiked, industry revenue grew strongly as the film Avatar sent consumers to theatres in droves. Likewise, in 2012, the success of Marvel's The Avengers across the North American box office led to significant growth that year. On the other hand, films that are unable to galvanize attendance lead to contractions in revenue. As such, during the past five years, industry revenue is expected to grow at an annualized rate of 2.6%, including 2.3% growth in 2013 alone.
On the whole, attendance at movie theatres has been slipping, partly due to the growing popularity of video-on-demand streaming services. While this source of competition is somewhat limited in Canada by the bandwidth caps of most internet service providers, it still presents a way for consumer to access new content from home at little cost (given that they stay within their data usage allotment). According to MacFarland, exhibitors have been combating falling attendance by emphasizing concessions and other merchandising, revenue streams that are typically more lucrative because a theatre shares income from ticket sales with distributors as a part of film licensing agreements. Concessions sales have helped the industry maintain healthy profit. The Movie Theatres industry has a high level of market share concentration, with the three largest theatres being Cineplex Inc., Empire Theatres and Landmark Cinemas. Cineplex is the leading force in the industry in terms of revenue; it operates in lucrative metropolitan markets (e.g. Toronto, Montreal and Vancouver) and makes about three times the industry average per location. Empire Theatres has a presence in the less-populated Atlantic Provinces, and Landmark Cinemas is focused on the western regions. IBISWorld expects a small degree of consolidation to continue in the industry as smaller exhibitors fold under the pressure of the industry's leaders or are acquired. However, the thriving French-language market in Quebec and strong film production culture there ensures some demand for independent theatre operators.
During the next five years, exhibitor revenue will continue to depend on films' ability to draw attendance. The release of a new Star Wars movie will likely send revenue skyward during the year of its debut (currently scheduled for 2015). Other trends, such as the consolidation of locations under fewer operators, are forecast to be consistent throughout the five years to 2018. As major players like Cineplex upgrade theatres and add amenities, independent venues will find competing difficult, and many are expected to close down. For more information, visit IBISWorld’s Movie Theatres in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry comprises businesses that primarily exhibit movies. It includes cinemas, drive-in and outdoor movie theatres, and film festival exhibitors.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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