The market

Structure of the Market in the UK and Ireland

The combined UK and Irish cinema market is dominated by three major UK exhibitors, Cineworld Cinemas, Odeon UCI and Vue. In total, they account for over 70% of the total market box office revenues. The rest of the market is represented by smaller multiplex operators (including Picturehouse) and independents which tend to operate non-multiplex cinemas (less than five screens).

In 2013, Cineworld’s UK and Ireland box office market share increased to 27.4%.

Retail and advertising revenues continue to be the significant other sources of income for cinema chains. Popcorn and soft drinks remain the most popular retail items. There is however a growing demand for a wider range of retail products and the traditional offering is increasingly being supplemented with products such as coffee.

Digital Cinema Media Limited (“DCM”) which is a joint venture between Cineworld Group and Odeon UCI, generates approximately 80% of screen advertising revenues in the UK. In addition to Cineworld Group and Odeon UCI, DCM’s clients also include Vue and a number of other smaller cinema operators. Its only and smaller competitor is Pearl and Dean, which represents the Empire cinema chain and a collection of other smaller operators.

The rate of new cinema openings has been falling in recent years, partly due to the limited number and associated lead time of new retail and leisure developments. There were over 3,900 cinema screens in the UK by the end of 2013 (2012: 3,858) representing growth of over 1.0% compared to a 0.9% growth in 2012 (Source: The Cinema Exhibitors’ Association).

Underpinning the overall success of the cinema industry is the need for a strong film slate. Whilst there are no £50m plus films slated for 2014, there are a good number of titles from popular franchises which should ensure that national box office revenues are broadly in line with those achieved in 2013.

The major cinema chains in the UK and Ireland are now fully converted to digital projection. Cinema chains will continue to identify ways to maximise return on their investment by taking advantage of the increased flexibility in film scheduling, digital advertising and wider event cinema opportunities offered by digital projection.

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