Market Insight

Exhibitors post higher admissions revenue from US cinemas in 2013 financial results

March 07, 2014  | Subscribers Only

Charlotte Jones Charlotte Jones Associate Director – Research and Analysis, Cinema, IHS Markit
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Carmike Cinemas, the fourth largest US exhibitor, reported higher attendance and box office per patron in its full year 2013 financial results. Total operating revenue increased 18.9 per cent to $634.8m in full year 2013, of which the recent acquisition of nine Muvico theatres is included in this. Admissions revenue accounted for 62.7 per cent of the revenue total, down in contribution terms from a larger 63.6 per cent in 2012.

The decrease in admissions revenue as a percentage came despite a 3.1 per cent increase in Carmike’s average ticket price to $7.06. However, average admissions per screen, a positive indicator, actually increased by 2.3 per cent to 22,558 in full year 2013 which outperformed the US market average dip of an estimated 1.4 per cent according to IHS provisional data. Average concessions spend per patron also rose by 7.2 per cent to $4.19 in 2013.

The average film rental margin (or film exhibition costs as a proportion of total admissions revenue) reached 55.3 per cent in full year 2013, up more than one percentage point from an average 54.2 per cent in 2012. The increase can be attributed to the mix of titles particularly in Q4 which included a number of strong blockbusters and 3D titles, of which the revenue split tends to edge higher. As a result, Q4’s 2013 film rental actually averaged at 55.6 per cent.

Carmike’s performance in the US theatrical market in 2013 was also matched by Reading International, which posted a total increase in operating revenue of 1.5 per cent to $254.4m in 2013. Revenue from its total cinema segment rose by $4.7m (percentage increase was not reported) which was primarily driven by a $9.9m increase in its US cinema division. Reading cites the strong 2013 film slate coupled with higher average ticket prices as the main drivers for growth in the US. Likewise, the performance across it New Zealand cinemas was also up by $2.6m on the back of higher cinema attendance overall. The group attributes this mainly to the reopening of a previously closed cinema that was damaged as part of the earthquake in 2012. The stronger performance for its US and New Zealand cinemas were, however, partially negated by an overall decline from its Australian cinema division (exact figures not available) due to a decrease in the average Australian ticket price, noted as 5.1 per cent down, and compounded by a decrease in the value of the Australian dollar. Reading has 26 cinemas with 249 screens in the US (of which 31.5 per cent were 3D enabled) and a total of 56 cinemas with 467 screens across the three markets it operates.

Our take

Although considered a mature exhibition market, both Carmike and Reading International reported overall admissions revenue growth for the US market in 2013, of which ticket price inflation was a major contributor. The general upward trend in the US market is strongly linked to the increased provision of premium cinema whether giant screen, luxury seating or digital 3D, all of which charge higher admissions prices.

As part of its push into the premium market, Carmike added an additional eight giant screens in 2013 as well as for the first time 4D configured auditoriums, although the latter actually came with the Muvico acquisition. Carmike operated a total of 34 premium screens in 2013, of which just 12 were Imax brand screens. The group’s IMAX screens actually came from its various recent acquisitions (Muvico, Cinemark and Rave Cinemas), but it also entered into its own direct agreements in October 2013 to install another 10 IMAX screens.

As well as actively seeking to upsell and improve the cinema experience, overall growth has come from recent acquisitions (most recently nine Muvico theatres comprising 147 screens in 2013). The group is now targeting a total of 3,000 screens over next few years mostly through further acquisition opportunities, but also through some new site construction. Carmike has added 400 plus screens to its total since 2011, an increase of 18.9 per cent over the three year period. The net gain in screens comes despite a closure of 102 screens from underperforming sites in 2013 alone. Carmike had a total of 2,660 screens in 252 theatres at end 2013, of which 35.5 per cent of screens were configured for 3D.

Nonetheless, the increasing size of Carmike’s footprint was also matched by other key US exhibitors targeting further industry consolidation. In fact, the top four US circuits (Regal, AMC, Cinemark and Carmike) all increased their screen provision to account for a combined 19,188 screens in 2013, which was up an average 7.6 per cent year on year.

While ticket prices are generally assumed to be rising in mature stable markets (as well as rapidly developing exhibition markets), they were actually down year on year in a couple of key international markets in 2013 notably Italy, Portugal, Japan and South Korea. In Greece, the financial crisis has also led to a severe fall out of ticket prices.

 

Organization
IMAX
Research by Market
Media & Advertising
Category
Cinema
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