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Market Insight

Pan-European exhibitor Kinepolis increases average revenue per visitor in 2013

February 24, 2014

Charlotte Jones Charlotte Jones Associate Director – Research and Analysis, Cinema, IHS Markit
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Pan European exhibitor Kinepolis reported a 7.9 per cent decline in cinema attendance across the four European markets (Belgium, France, Switzerland and Spain) it operates according to the group’s full year 2013 financial results.

Admissions were lower year on year in all markets; led by Spain (-20.0 per cent) where the recent hike in VAT plus the ongoing financial crisis continue to shrink the market for the fourth consecutive year, followed by France (-8.3 per cent), Switzerland (-5.3 per cent) and Belgium (-2.7 per cent). In France, lower admissions were directly related to a lack of strong local content in 2013.

Despite the larger decline in its core business, total revenue fell by just 3.3 per cent as improved operational efficiency and higher revenue per patron helped mitigate the drop in admissions. Screen advertising and film distribution, as part of the company’s non visitor related activities also grew year on year by 11.9 per cent and 11.2 per cent respectively. The film distribution element (KFD) benefitted from several successful releases including Olympus has Fallen, Marina and hit Flemish title Het Vonnis. While there was an overall drop in both box office and concessions revenue (or in-theatre sales), both metrics rose on a per patron basis over 2012, due to higher ticket prices as well as new and more targeted concessions mix. According to Kinepolis the remodelling of one complex in Nimes, Belgium, in tandem with launch of the Mega Candy concept had an immediate (positive) impact on in-theatre sales.

Our take

Kinepolis group operating results are a good reflection of market realities across the four territories it operates. The rate of decline for Kinepolis in both France and Spain appears to be slightly greater than the market average, according to provisional results for 2013. In Spain, total admissions are now one third lower than in 2008, falling by an estimated 15.4 per cent to 79.7m in 2013 alone. In Spain, long standing high youth unemployment plus the more recent (2012) raise in VAT on ticket prices, together with a cut back on average budgets for local production pose unique challenges for the Spanish and wider European exhibition markets in general .

Nonetheless, Kinepolis’s strategy of maximising revenue per patron in terms of both box office and concessions sales has helped mitigate some of the overall revenue decline for the group. The average ticket price across Kinepolis cinemas rose by 2.8 per cent to Euro 7,24 in 2013 from Euro 7,04 in 2012. The exact average in-theatre spend per patron was not available, but in-theatre sales as a proportion of the group’s total revenue was stable at 21 per cent year on year, compared with box office revenue which dropped one percentage point to equate to 54 per cent of total group revenue in 2013. Despite the 11.9 per cent increase in film distribution revenue, that business area remained stable and relatively minor for the group as a whole, accounting for just 1.0 per cent of activity in both 2012 and 2013. B2B revenue, however, increased by one percentage point to 16 per cent of the group's activity, derived from higher revenue from corporate events and advertising in cinemas.

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