Star Power: FJI celebrates 20 years of excellence at Kinepolis

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Cinemas Features

Kinepolis Group, the pioneering theatre circuit based in Ghent, Belgium, has threefold reason to celebrate at CineEurope 2017. The chain is marking its 20th anniversary this year, but it’s also something of a double anniversary, since its roots go all the way back 90 years to a single screen opened in a suburb of Kortrijk in 1927. And not coincidentally, the company’s current record of success is being heralded with the naming of Eddy Duquenne, chief executive officer, as “International Exhibitor of the Year.”

“Eddy Duquenne and his team at Kinepolis have created one of the most innovative exhibition circuits in Europe. Central to that success has been the leadership of Eddy himself,” declared Andrew Sunshine, VP of the Film Expo Group, which manages CineEurope.

Phil Clapp, president of Europe’s International Union of Cinemas (UNIC), also praised the circuit’s achievements: “Kinepolis has been at the forefront of recent innovations by European cinema operators in terms of the big-screen experience and continues to be a standard-bearer for new and exciting approaches. But they have never forgotten that it is the customer who should remain at the center of the business. This award is a fitting acknowledgement of the achievements of Eddy and his company colleagues.”

Duquenne joined the board of directors of Kinepolis Group in early 2007, and rose to co-CEO in January 2008, sharing the title with Joost Bert, whose grandfather founded that first theatre in ’27. He previously served as CEO of tourism company Sunparks Group from 1998 to 2007; though a novice to the movie exhibition business, his expertise has set Kinepolis on a robust growth path in recent years. But more about that later…

Kinepolis Group was established in 1997 via a merger of two leading Belgian exhibition clans, the Bert family and the Claeys family. But this wasn’t the first time the two families came together. As Joost Bert explains, “In 1968, myfather Albert took over the Kortrijk cinema from his father and turned that cinema into the first duplex, purpose-built in the 1970s. It was a great success. Then in 1973, he wanted to build his first four-plex. Unfortunately, my father didn’t have enough money, so he entered a joint venture with the family Claeys to build the first four-plex in Hasselt. They continued to build a number of cinemas in Belgium. Then in 1976, the families split again and expanded in different parts of the country.

“In 1981, the Decascoop in Ghent was considered the first multiplex in Europe. It had 12 cinemas and 3,000 seats—that was four years before AMC built their cinema at Milton Keynes in the U.K. Then the families came together again, because we had an opportunity in Brussels but we were competing with AMC to build a cinema next to the Atomium [an atom-themed structure built for the 1958 World’s Fair]. It was too big for either family alone, so we decided to do it together. Jointly we introduced a plan to the exposition palace in Brussels, and we won that competition mainly because we included an IMAX theatre and a Showscan theatre.” That theatre, which debuted in 1988, was the 25-screen Kinepolis Brussels.

The two families again pursued separate projects, but fate and necessity intervened once again. As Bert recounts, “In the beginning of the ’90s, we had a company called Decatron and we were selling knowhow to third parties—we were building cinemas not only for our family but for third parties. At the same time, we came in contact with Hoyts, who along with other Australian companies was looking to expand into Europe. Hoyts tried to go into a joint venture with us, and at a certain point in time after working with Peter Ivany and Paul Johnson, we came to the conclusion that we could do it ourselves and maybe even better than in a joint venture with Hoyts.” Once again, the Berts united with the Claeys family to launch an IPO, and Kinepolis Group was born.

The name itself dates back to 1987. “We were looking for a name that didn’t sound too Dutch or too French and was acceptable for the English-speaking community in Brussels,” Joost Bert explains. “So when my father, Yves Caucheteux from Quinette and Madame Claeys came together in a restaurant in Paris, my father wanted to call it ‘city of cinemas.’ And since Mr. Caucheteux had a knowledge of Latin and Greek, he said: ‘City, that’s easy. In Greek it’s “polis.”’ But we had a problem translating ‘cinema.’ He came around with the name ‘kine,’ which means movement. So Kine-polis was born as a name in Paris, six months before we opened in Brussels. And it’s nice to see that our name has been copied a number of times, by my colleagues at Cinépolis in Mexico and Kinopolis in Germany.”

The new union of the Bert and Claeys families was short-lived. “Two years after we came together,” Joost Bert recounts, “we made an acquisition in Germany: 50 percent of Cinemaxx. But that was a sick deal. We had to write it off immediately, and that made the relationship between the two families very sour. That was the main reason why in 2006 the family Claeys decided to leave the joint venture and sell their stock.”

Current board chairman Philip Gherkiere, an attorney, had been a key advisor during the merger and IPO, and it was he who found Eddy Duquenne when Bert assembled a new board. “He said, ‘Joost, this would be an ideal guy for our new board.’ His track record was fantastic—his previous company was always broke, and after five or six years he sold it with an unbelievable multiple. He was a value creator.”

Bert continues, “We were a steer-less ship. Eddy’s first task was to clean up the mess and give the ship a heading. And three or four years after Eddy came onboard, the stock price went up, the profits went up, the dividends went up. After four years, we said: OK, now the company is ready for an expansion plan.”

Duquenne notes, “I was the first independent CEO, not one of the members of the family. What we were doing from 2008 to 2012 was almost a commercial, operational and financial restructuring of the company, based on a fact-and-figure-driven approach. About ten percent of our staff are business owners running their own profit centers, based on financial and qualitative KPIs such as customer satisfaction and employer satisfaction. They come with propositions on how to improve spend per visitor, efficiency of operations, new product ideas, measures to improve customer satisfaction… We are [aiming] for value creation in the long run, and in the long run you need to keep your customers and employees onboard. We do a lot of internal benchmarking, bringing people who have the same responsibilities to the table and having them discuss what we can do better.”

Duquenne continues, “I call this a self-learning organization. You don’t just start with such a thing, it’s something that needs to grow, and it took us a while to get there. It’s about having talented people onboard. If 230 or about ten percent of your employees are jointly thinking what can we do to improve our performance and the customer experience, 230 people are smarter than one CEO. That is the reason why this award is not my award, it’s a team award.”

Along with the day-to-day operations of the circuit, Duquenne has also spearheaded a dramatic expansion from 23 to 49 cinema complexes (totaling 500 screens) in the past three years. In 2014, he led the company’s acquisition of the Dutch group Wolff Bioscopen, along with two Spanish cinemas. In November 2015, Kinepolis took control of Utopolis locations in Holland, France and Luxembourg. Five new-build cinemas opened in 2016 in the Netherlands, France and Spain, and more projects are in development.

Under Duquenne’s guidance, Kinepolis delivers on a three-pronged strategy: to invest in innovation and “a peerless customer experience,” to invest in digital marketing, and to invest in real estate.

One of the most exciting initiatives at the company is its Innovation Lab. Everyone at the company is encouraged to brainstorm new concepts and “dare to be entrepreneurial.” Every quarter, the best ideas are chosen and teams assembled to develop and implement them. The best idea is rewarded with an annual “Innovation Award,” and employees whose ideas are singled out are given an “entrepreneur bonus,” whether or not the idea is put into practice.

The program has reaped many benefits. Says Duquenne, “The Cosy Seating concept [extra-wide armrests, snack tables and even a coat hanger] came out of this. We are testing sushi bars, testing more intelligent ways to program movies. We have robots cleaning our foyers at night. All those ideas come from our teams.”

Innovation has always been a hallmark of the Berts’ theatre operations. “It’s in the DNA of the family,” Joost Bert declares. “My father was the first to introduce Cinemascope in the 1950s, he introduced 70mm. He always wanted to bring the best technology to his customers. When we were competing with AMC for that project in Brussels, it was my father who took the decision: Let’s go for Showscan and let’s go for IMAX. We were the first commercial IMAX theatre in the world; before that, all the other IMAX theatres were always linked to a museum or an exposition park. We were the first cinema including an IMAX. And it’s still the biggest IMAX screen in Europe: 90 feet by 60 feet.

“We were also the first to introduce digital projectors, the first to buy three projectors from Disney and Texas Instruments for France, Brussels and Madrid. We were also the first with digital sound, the first to implement laser projectors… We try to give business class for the price of coach.”

Kinepolis Group is investing heavily in laser projectors—nearly all new-build complexes are fully laser-equipped. “We’ve been combining Barco RGB laser with Dolby Atmos to create our premium-large-format Laser ULTRA [cinemas],” Duquenne notes. “We have a lot of huge screens. Before our expansion, we did one million tickets on average in each cinema. You need more light power. That’s how it started, together with the ambition of making the ultimate movie experience. We have equipped each of our megaplexes with one laser theatre. And our five new theatres built in the past 12 months are fully equipped with phosphor lasers and RGB lasers. It’s more expensive, but you have a cost saving on xenon bulbs and power consumption.” The energy-efficiency of laser technology aligns with the company’s ecologically conscious sustainability project “Green Star,” which also encompasses LED lighting, optical sensors on water taps and other measures.

This past January, Kinepolis debuted its newly revamped app for Android and iOS users; for the first time, tickets are delivered directly within the app to the user’s “My Kinepolis” account. The circuit is also rolling out a new cinema ERP system from Vista, software that enables central management of data.

Digital technology is also enabling improved marketing. Says Duquenne, “It’s only in recent years that people are talking about customers instead of tickets, and trying to understand who those customers are. In 2008, we started a direct-marketing program—for roughly 80 percent of our unique customers, we have their e-mail addresses, and for half we have a complete profile. We are working more with active movie programming, programming based on customer clusters. Each cinema is different—we have cinemas where there are university students, we have cinemas in poor regions, cinemas in upscale regions.

“We want to be the ultimate movie experience, which is of course the ultimate cinema experience—but if the movie you saw wasn’t the right choice, you won’t come out of the theatre feeling: I had a great night. And so we want to help you choose the right movie. We want to be the sommelier of film. In a restaurant I will always go for Chablis until someone tells me I have something for you, you should try this. And that’s the way you discover something. The best movies I have seen in my life were often by invitation. People want to be amazed.”

Duquenne notes that “we have much more content on the screen on a yearly basis than we did 20 years ago. One of the barriers for our customers is awareness—they just don’t know what we have on the screen. I think that is one of the impacts of windows getting shorter—the life cycles of those movies are getting shorter and shorter. In Europe we don’t see a lot of publicity for movies on the streets. Thanks to social media, young people are more aware of what we have on the screen than people in their 40s and 50s. We try to approach them on a one-on-one basis through direct-marketing techniques.”

Duquenne believes that more can be done with the alternative programming options that digital projection technology provides. “We could be more creative on the content side. The most amazing thing is the Met Opera—it’s a huge success. But for the rest—sports, gaming, pop concerts… I think there’s much more potential for pop concerts than there is for opera.

“With digital, your theatre suddenly becomes a multimedia room. We opened the door for business-to-business. About 15 percent of the revenue of the company is business-to-business—a large part of that is events, and using those projectors for other things than just movies.” One of the most intriguing events the theatre has hosted is a cooking demonstration in which attendees watched the chef in action on the screen.

“The future for us is more experiences, and trying to come up with experiences that are different and more adapted to what the customer wants,” Duquenne advises. “The spending power of someone 15 or 50 years old is different, so flexibility is important. At the end of the day, this is a low-margin industry.”

Because of those low margins, Kinepolis places great emphasis on ownership of real estate. “In the long term,” Duquenne observes, “cinema attendance is not a growth business in the Western world. So you feel financial sensitivity if your numbers go down a little. That’s what happened, for instance, in Spain: A lot of operators were stressed to pay their fixed rents. So the real estate component is very important… In 2007, the return on capital employed at this company was very, very low—less than eight percent. We didn’t have a lot of risk reward. Now we are around 20 percent, which is very good performance.”

Kinepolis currently has two new complexes scheduled to open in late 2017 or early 2018, in the Netherlands and France. “But we are focusing more and more on trying to expand the group with acquisitions, because it goes faster,” Duquenne reveals. Some of those acquisitions may be in new countries, he confides. “We are working on several opportunities, but it takes two to tango and you need to wait until the counter-parties are ready to dance.”

Working in different countries is a challenge Kinepolis has addressed through its corporate structure. “In the United States, though there are differences of mindset between the North and South, if you go to a shop, what will you find is very similar. That’s less the case in Europe. Europe is much more a conglomerate of cultures. In each country we have an overhead, an office with people doing the programming and marketing and business-to-business. We have five national overhead structures in Spain, France, Belgium, Luxembourg and the Netherlands.”

Kinepolis is not joining the in-theatre dining trend that is gaining a larger foothold in North America and other parts of the world. “We are in huge sites with ten restaurants, and those restaurants live from the traffic we generate,” Duquenne explains. “We are the destination as such. Around 40 percent of our customers visit those restaurants or bars before or after the movie and it makes for them a night out. Keep in mind as well that the cost of labor in Europe is more expensive.”

But Kinepolis does offer a self-service snack concept “with a huge range of products” (including drinks from Coca-Cola’s new Bridge machines) and its Leonidas Chocolates Café at Kinepolis Antwerp offers tempting Belgian chocolates. The Sushicque sushi bar developed at the Innovation Lab is a hit at the Alcante and Madrid complexes in Spain.

Along with its aforementioned business-to-business endeavors, Kinepolis has other subsidiary businesses. The company acquired the ad agency Brightfish at the end of 2011 and utilizes it for screen advertising. And Kinepolis Film Distribution releases 10 to 20 domestic features per year, many for the Flemish audience. “As an important player in the Belgian market, we feel it’s our responsibility to support the production of local content with distribution,” Duquenne states. “We invest a lot of money in it, and now for the first time we are into co-production as well. It may not be that profitable as such, but it represents 15 to 17% of the tickets.”

“A number of those films are on the same level as U.S. blockbusters,” Bert says. “If you have good local content, in some cases it can do better than U.S. content.”

Kinepolis is also partnered with Dutch FilmWorks, the largest independent film distributor in the Netherlands.

Coming into the cinema business from a different field, Duquenne modestly admits, “It’s a very difficult business—it took me a while to understand it. You are at the forefront of everything that happens in the world. You are affected by all the possible trends out there. The first thing I did was listen to what people had to tell me. What I introduced was a way of working together and listening to each other within the company.

“The family Bert and the family Claeys were real entrepreneurs... Joost’s father a long time ago received this same award. We are only building on what the family and Albert Bert left us. It’s a huge portfolio of nice cinemas. But some things needed to change. In the beginning Joost was around and it was: OK, would it work? Twice a week we try to have lunch together, we go to the conventions together, and Joost has a lot of relationships—he was almost born in the cinemas. He’s Mr. Cinema—he knows a lot, he has a lot of experience. [In fact, Bert is also being honored at CineEurope as one of the key founders of the show.] So it’s very helpful to have someone experienced next to you with whom you can team up and who can easily open doors for you… And at the end of the day, Joost is a really funny guy. He makes me feel that he’s a real partner and friend. We have a lot of fun in a business that at the end of the day wants to offer fun to our customers as well.”

Bert also has high praise for his co-CEO: “Eddy is fantastic. Everybody is behind Eddy. There’s a really good ambiance in our corporate office. I’m really proud when I walk through the corridors to feel the atmosphere, to feel how all the noses are pointed in the same direction. He’s done a fantastic job in creating his own thing.”

In 1997, Albert Bert accepted the “Exhibitor of the Year” Award at Cinema Expo International. It seems only fitting that as Kinepolis Group celebrates its 20th anniversary, the man who’s carried on Bert’s legacy and made it stronger than ever will be honored with the same award. Proost!

 

Saluting Kinepolis and Eddy Duquenne

“Congratulations to the Kinepolis Group and Eddy Duquenne on their 20th anniversary and being named CineEurope’s International Exhibitor of the Year, respectively. Under Eddy’s leadership, Kinepolis have been one of the most dynamic and innovative companies in Europe and we at 20th Century Fox are delighted to see them recognized in this way and look forward to continuing our collaborative relationship.”

—Andrew Cripps, President, International Distribution, 20th Century Fox  

“Eddy joined the Kinepolis Group as its CEO in 2008 and has emphasized a need to focus on the customer and innovate ever since. Combined with his recent efforts to expand the business via acquisition of the Wolff Group in the Netherlands, the Dutch, French and Luxembourg parts of the Utopolis group, as well as significant new-build activity, it's no wonder that Eddy's leadership has been recognized and he has been named CineEurope's International Exhibitor of the Year in 2017. Congratulations, Eddy, on this illustrious award and we at Paramount value and look forward to furthering our longstanding partnership with you and the Kinepolis group in the years to come.”

—Mark Viane, Co-President, International Theatrical Distribution & Marketing, Paramount Pictures

“On behalf of Frédéric, Jean-François, Lee, Manuel, Marcel, Serge, Sharita, Tony and all of the Disney teams across Europe, a heartfelt thanks to Eddy and Kinepolis for the many years of tremendous cooperation and support, but above all congratulations to Eddy on the International Exhibitor of the Year Award. Thoroughly well-deserved and a fitting recognition for everything that Eddy has done for the industry. Gefeliciteerd!”

—Tony Chambers, Head of Studio Sales & Distribution, EMEA, The Walt Disney Company

“Early on in my career as a movie executive in the Netherlands, I would regularly travel south of the border to spend whole days in the Kinepolis Antwerp or Brussels to enjoy cinema-going the way I believed it was meant to be.Ever since, I have come to admire Kinepolis as a true example of how movies should be experienced.Under Eddy Duquenne’s inspiring leadership, the company has raised the bar at a global level, particularly in terms of strategic vision and innovation.On behalf of Universal Pictures, I warmly congratulate Kinepolis on their anniversary and Eddy on his well-deserved recognition.”

—Niels Swinkels, Executive VP, International Distribution, Universal Pictures

“Congratulations, Eddy, on this well-deserved honor as Exhibitor of the Year for CineEurope 2017. Everyone at StudioCanal is delighted for you, and want to thank you for your support of our films in Kinepolis cinemas over the years.

We have special memories of the French premiere of Warner Bros.’ We Are Your Friends at Kinepolis Lomme in 2015—the only place where we could create a huge event that would impress both Working Title and our star, Zac Efron. We had such a wonderful time there that day—a heartfelt thanks to Eddy and all the French Kinepolis team.Best wishes from your friends at StudioCanal.”

—Simon Bobin, VP, International Distribution, StudioCanal

“Twenty-seven years ago, Joost Bert approached me at a dinner in Los Angeles, introduced himself and suggested I come to Brussels to discuss an idea about starting a ‘ShoWest’-type convention in Europe. Cinema Expo International was born 26 years ago in Hysiel, Belgium, with all the screenings at the Kinepolis 25 Theatre. Just like Cinema Expo growing to what it is today, behind the leadership of my good friend and partner, Kinepolis has grown to one of the biggest circuits in Europe with 49 cinemas in seven countries. Congratulations, Joost, on your 20th anniversary. Albert would be very proud of you. And congratulations to your co-CEO, Eddy Duquenne, on his well-deserved CineEurope award.”

—Robert Sunshine, President, Film Expo Group

“Over the past 20 years, Kinepolis has been a true industry leader, looking for new ways to innovate and keep up with the fast-paced changes of the cinema industry. From the digital transition, back in 2005, to its latest adoption of cutting-edge audio and video technology, they continue to lead by example. This persistence has led to its success in reaching the impressive milestone of 500 digital screens across six countries.

Dolby has been in lockstep with Kinepolis through its successful digital rollout, providing guidance, support and state-of-the-art technology to deliver the best experiences to its patrons. This collaboration continues to thrive today, as evident by Kinepolis’ recent migration to our latest server technology for new site openings.

When it came to the future of audio, Kinepolis was once again at the forefront. Eager to deliver an impressive sound experience to its patrons, they adopted our revolutionary Dolby Atmos technology. In addition, Kinepolis is always one of the first to test new releases, and was a beta customer for Dolby products like the Theatre Management System TMS4 solution and Dolby Integrated Media Server IMS3000.

Kinepolis’ strength is its strong leadership driven by its CEO, Eddy Duquenne. Eddy and his team continue to push the boundaries of the cinema experience with a fearless approach to adopting new technology. That is why he is receiving the 2017 CineEurope ‘International Exhibitor of the Year Award’ and why Kinepolis continues to thrive. His relentless approach to experiment with new technologies and evolve the cinema experience has set a precedent the industry can’t ignore.

On behalf of myself and Dolby, congratulations to Eddy on his ‘International Exhibitor of the Year’ Award and to Kinepolis on a successful 20 years of excellence. Here at Dolby, we look forward to seeing what the next 20 will bring!”

—Doug Darrow, Senior VP, Cinema Business Group, Dolby Laboratories

“Congratulations to our valued partner Kinepolis on its 20th anniversary. 

Since its inception, Kinepolis has been a pioneering force in cinema exhibition, establishing Belgium’s first multiplex in the 1960s and launching the world’s first megaplex in 1988, which included an IMAX theatre. The theatre featured an IMAX 15/70mm film system and was the first-ever IMAX theatre in a commercial cinema.

Today, the Kinepolis legacy of pioneering innovations continues. In 2016, the company launched an IMAX theatre at the landmark Kinepolis Brussels complex, ushering in a new era of immersive moviegoing in Belgium. The theatre is not only one of the largest IMAX theatres in the world, it also features the groundbreaking IMAX® with Laser system capable of projecting an image with up to a 1.43:1 aspect ratio coupled with a powerful new sound system. Thanks to our valued partner, the theatre, with its iconic location and world-class operations, represents the best of IMAX.

As the film industry continues to evolve and face new challenges, leaders such as Kinepolis will pave the way in new improvements to the overall customer experience. Under the leadership of Eddy Duquenne and Joost Bert, Kinepolis continues to raise the bar in the European exhibition industry for its commitment to quality and excellence. From operations and marketing to technology and programming, their passion inspires us all and we applaud their well-deserved CineEurope 2017 award recognitions.

On this milestone occasion, we extend our best wishesand offer our sincerest thanks for Kinepolis’ continued support of IMAX. While our relationship dates back almost 30 years, our shared focus on innovation on which our partnership was founded remains the same. Together, we look forward to bringing more moviegoers the best entertainment experiences possible.”

—From your friends at IMAX