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UK and Ireland Market Overview
The combined UK and Irish cinema market continues to be 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 and provide over 60% of the total screens in the UK. Cineworld Group plc is listed on the London Stock Exchange, while Odeon UCI and Vue are both privately owned groups.
Cineworld Cinemas’ box office market shares in the UK and the combined UK and Irish markets in 2012 were 25.9% and 24.7% respectively (2011: 26.1% and 24.6% respectively). Cineworld Cinemas also leads in terms of admissions where it contributed 27.3% of all UK admissions (2011: 28.2%). In terms of number of cinemas and screens, Cineworld Cinemas has been the second largest operator in the combined UK and Irish for a number of years behind Odeon UCI.
City Screens Limited and its subsidiaries form the “Picturehouse” group of cinemas. Most of the cinemas trade under the Picturehouse name. The box office market share in the UK and Irish markets in 2012 was 1.7% (2011: 1.5%) which makes it the largest of the non-multiplex cinema chains.
The rest of the market is represented by smaller multiplex operators and independents which tend to operate non-multiplex cinemas (less than five screens). Cineworld Cinemas has a small presence in Ireland with one, albeit significant, cinema in Dublin and is one of the top ten largest cinemas in the combined UK and Irish markets in 2012 by gross box office (Rentrak/EDI).
2012 saw consolidation in the UK market with Odeon acquiring the BFI Southbank and a site from AMC, Vue acquiring the Apollo cinema chain and Cineworld acquiring Picturehouse. Before this the UK market was largely constant for a number of years though the ownership of Vue changed in late 2010. There are significant barriers to entry, both through acquisition and organically. Competition law limits the potential for major consolidation in the industry. The rate of new cinema openings has been falling in recent years, partly due to the limited number of new retail and leisure development opportunities and the long time to bring developments to fruition. This has been exacerbated more recently due to reduced funding for developers in the present financial climate though confidence has started to improve and a more visible pipeline of new sites in future years is emerging.
Box office revenue in 2012 in the combined UK and Irish market increased 2.9% to £1.17bn (Rentrak/EDI), whilst UK admissions fell 1.4% to 170m (CEA). Overall cinema has remained resilient in the prevailing economic and consumer environment. The low price of going to the cinema compared to other forms of entertainment and leisure and the desire for escapism have remained key attractions.
Approximately 80% of screen advertising revenues in the UK during 2012 were generated by a separate business called Digital Cinema Media Limited (“DCM”) which is jointly owned by the Cineworld Group and Odeon UCI. In addition to Cineworld, Picturehouse and Odeon UCI, DCM’s clients also include Vue (from the beginning of 2011) 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.
Underpinning the overall success of the cinema industry in 2012 was the strong line up of films and the completion of conversion to digital projection. The number of films released in the 3D format at 37 was the same as that of 2011 and is expected to remain broadly constant in 2013.
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