The Silver Screen Shines: 2015 Box Office Success and Future Challenges

2. The Silver Screen Shines for 2015 • According to data from the National Association of Theater Owners, 2015 scored better in two of the most important metrics for the industry: total US/Canada box office grosses, $11.12 billion, +6.9%, and total US/Canada admissions, 1.32 billion, +3.9%. • The average US ticket price was the highest ever at $8.43, or a 3.2% increase over 2014. The industry can thank the total grosses of Star Wars: The Force Awakens, $740 million; Jurassic World, $652 million; and Avengers: Age of Ultron, $459 million. • During 2015, the top movie genres by market share were action, 26%; comedy, 20%; adventure, 19%; drama, 18%; and thriller/suspense, 10%. Action, comedy, drama and thriller/suspense movies increased over 2014 while adventure films declined 10 points.

3. Distributor Data and Theater Trends • Although Warner Bros. has the largest market share among distributors for the period 1995–2016 (to date) at 14.91%, Universal and Walt Disney accounted for more than 40% of the market during 2015, at 21.6% and 19.2%, respectively. • The total number of US movie screens increased to 40,174 during 2015, compared to 2014’s 39,956. Indoor screens increased from 39,356 to 39,579; however, drive-in screens decreased from 656 to 595. • US cinema sites decreased from 5,856 during 2014 to 5,724 for 2015, with indoor sites decreasing by 88 and drive-ins by 44.

4. Where Youth Gather in Great Numbers • Teens and young adults, 18 to 24 years of age, were largely responsible for making 2015 a better year, as they attended an average of 8.4 movies, compared to 2014’s 7.1 movies – and the data did not include Star Wars: The Force Awakens. • According to National Research Group’s 2015 Moviegoing Report (released during November 2015), youth consider movie going a social event, typically attending with a group of friends and seeing the same film more than once. • Those moviegoers younger than 25 accounted for the largest age group at 8 of the 10 highest grossing movies of 2015. They were attracted to Jurassic World, Avengers: Age of Ultron and Furious 7, but less so to The Martian and Spectre.

5. 2016 Cinema Calendar • During 2016, the goal of filmmakers and studios will be to exceed 2015’s record-breaking box office, which is why many screens will feature comic book superheroes, additional X-Men movies as well as prequels to Harry Potter and Star Wars. • Major summer releases include Captain America: Civil War, X-Men: Apocalypse, Warcraft, Finding Dory, Independence Day 2: Resurgence, The BFG (Steven Spielberg), Ghostbusters, Star Trek Beyond and Bourne 5. • Major Q4 2016 movies include Doctor Strange, Fantastic Beasts and Where to Find Them, Rogue One: Star Wars Story, Assassin’s Creed and Passengers.

6. Cinema Advertising Insights • Movie theaters are a useful media channel for brand and retail advertisers. Theater and TV advertising are very complementary according to Brand Science, as cinema ads generate an 80% sales lift when combined with TV. • According to the Cinema Advertising Council’s Q3 2015 Market Representation Report, 6 companies – BeforeTheMovie, CineSpots, National CineMedia, On the Wall, Screenvision and Spotlight Cinema Networks – represented 2,835 local theaters and 31,388 screens. • At a national level, 3 companies – National CineMedia, Spotlight Cinema Networks – represented 4,072 theaters and 34,910 screens in 210 US markets.

7. Challenges and Competition • According to PwC research, electronic home video revenues will surpass cinema revenues by 2019, at $12.0 billion and $11.8 billion, respectively. • 2016 will be the first year virtual reality (VR) devices will be available to the public; however, it will be a few years before filmmakers and studios begin to produce and release movies for a totally immersive experience. • Although Amazon and Netflix have not yet challenged movie theaters with major movie productions, they are expected to invest heavily and potentially lure filmmakers from major film studios, distributors and producers to create big-budget VOD content.

8. Advertising Strategies • TV advertising AEs may find it beneficial to partner with local cinema advertising representatives to sell the appropriate advertisers on the significant lift they can derive from a TV/cinema combination buy. • Share The Media Audit data in the Profiler with prospective and current clients and show them how a combination of TV and Internet advertising targets the prime audience for many retailers: adults, 18–44, ethnically diverse and a $35K to $100K household income. • Since teens and young adults attend movies in groups, suggest that theaters offer a special group rate or bundle, with tickets and refreshment coupons for groups of 5 or more and groups of 10 or more. Another target is extended families, especially Latino Americans.

9. New Media Strategies • For popular-themed movies, such as comic book superheroes, Harry Potter and Star Wars, theaters should use social media to motivate patrons to dress in costumes, upload photos and videos prior to entering the theater and then asking users to vote for the best costume. • Since theaters already attract large numbers of youth, they could designate a few older adults who are regular patrons to serve as “brand ambassadors,” posting short reviews of movies, especially for older adults, and receiving free admission as ambassadors. • For a major motion picture release, movie theaters could create additional buzz by using Periscope or Meerkat to stream a live cast from the lobby with “brand ambassadors” or a local personality conducting interviews, distributing free refreshment coupons, etc.