-By Andreas Fuchs

“Cinema has shifted from being about ‘exhibition’ to being about ‘experience.’” Delfin Fernandez, chief executive officer of Sydney, Australia-based Hoyts Entertainment and CinemaCon’s International Achievement Award recipient, is describing how the theatrical exhibition market has changed. “The term ‘cinema exhibition’ is very process-based: sell a ticket; thread up a film. To paraphrase Field of Dreams, it suggests, ‘If you show it, they will come.’ We don’t live in that world anymore. People have myriad entertainment and leisure options and we need to offer a true experience in order to remain competitive. I believe Hoyts has adapted very well, with ongoing focus on guest service, bigger and better facilities and new concepts and offers to cater to different tastes and occasions.”

Born in Puerto Rico and raised in Caracas, Venezuela, Fernandez earned his B.A. from California State University Long Beach and began his career in movie exhibition with United Artists Theatres, supervising cinemas in Southern California, Nevada and Washington for several years as a regional manager. In 1994, as director of international operations, he led UA’s new international strategy in Latin America. He joined General Cinema International in 1997 and one year later was appointed managing director of a newly formed joint venture, Hoyts-General Cinema, based in Buenos Aires, Argentina. Following an ownership change in 2002, he was named CEO of Hoyts General Cinema South America.

After two decades in the international cinema business, Fernandez knows a thing or two about change. “I have spent the vast majority of my professional life in cinema and have worked in the industry all over the world,” he says, noting what sets Hoyts apart for him. “I can say unequivocally that the Hoyts team are the most passionate, knowledgeable and hard-working people that I’ve had the pleasure of working with.”

Film Journal International had the pleasure to first speak with Fernandez when his work at Hoyts General Cinema South America received international recognition at ShowEast 2005. Shortly thereafter, he was appointed to his current position and relocated to Australia. The operations in Argentina, Chile, Brazil and Uruguay have since been sold, but there certainly has been continued expansion in Australia and New Zealand. “We believe there is still real opportunity to grow cinema in our own backyard,” he says of the change of strategy, “but to do so successfully requires us to focus our time and resources locally. If we spread ourselves too thinly, we risk compromising our performance on all fronts.”

Performance was such, in fact, that Hoyts was acquired in November 2007 by Pacific Equity Partners (PEP), one of Australia’s leading private-equity firms. “Under their ownership and support, we have transformed the Group,” Fernandez reports. “It’s been a very busy and rewarding time.” In addition to expanding the exhibition portfolio, “Hoyts also acquired Oovie, a DVD kiosk rental business similar to Redbox. The Group’s screen-advertising business, Val Morgan, also expanded into retail media via the acquisition of two mall-based advertising businesses.”

On the cinema front, Fernandez spearheaded the purchase of Berkeley Cinemas in New Zealand and facilitated re-entry into Queensland via the acquisition of the AMC circuit (Australian Multiplex Cinemas). “We opened a new flagship cinema in New Zealand and upgraded 30 sites. We also rapidly deployed digital and 3D technology across the circuit [to the point where] Hoyts is rapidly coming to the end of its rollout,” he confirms. “Eighty percent of our screens are now digital, with 60 percent of our complexes fully digitized. Within six months, every screen in every complex will be digital. More than 40 percent of our screens in Australia and New Zealand are already 3D-capable.”

Other changes encompassed the rollout of 22 Xtremescreens across Australia and New Zealand and three IMAX cinemas in Australia; the introduction of mobile apps and ticketing, alternative content, gift cards and voucher innovations; as well as launching the Hoyts Rewards loyalty program and bringing Ben & Jerry’s Scoop Shops and Eagle Boys pizza franchises to cinema lobbies.

“We always have new things up our sleeve,” Fernandez assures, “but most of them are a surprise! We do like to provide our guests with cutting-edge innovations. For example, earlier this year, guests of our La Premiere premium-cinema concept became the first in the world to use a MasterCard smart-phone app called QkR which allows them to select, pay and have their food and drinks delivered without leaving their seat.”

Speaking of La Premiere, Hoyts also offers a second premium concept called Directors Suites. “Both offer exclusive lounges, luxury seating, gourmet menus and reserve wine lists with personalized in-cinema waiter service,” he notes. “The key difference is that Directors Suite operates in dedicated, smaller auditoriums with around 30 seats to offer an intimate, upscale experience, while La Premiere operates as a ‘dress circle’ at the back of our largest mainstream auditoriums to combine luxury with a genuine big-screen experience.”
With so many experiences on offer, “Xtremescreen, our large-format screen,” is the favorite of Fernandez. “While I do enjoy the luxury of sitting in La Premiere or Directors Suite, to me cinema-going has always been about watching a blockbuster on the big screen with big sound and that’s what Xtremescreen is all about. Differentiated experiences are key to the future success of cinema-going. One size can’t fit all anymore and we need to respond with different experiences for different tastes and occasions.”

To understand those ever-changing expectations of the public, he says “staying close to your guests” is key. “Guest insights will drive the next generation of our cinema design and operation, including new concepts, service models and F&B offerings. We must shift our marketing approach from traditional mass-market campaigns to highly targeted communications sent to specific segments via their preferred media: e-mail, SMS, social channels. One-way monologues need to shift to two-way conversations. And of course, it doesn’t hurt to have a constant supply of great movies! If we provide all of this at a reasonable price, cinema-going will continue to be what the Australian Bureau of Statistics determined ‘Australia’s favorite cultural activity.’ And Hoyts will still be going strong to celebrate its bicentenary!”

Looking not quite that far ahead, what will the favorite activity look like ten years from now? “The elements of an enjoyable night out at the cinema remain the same: watching a great story on a big screen in a comfortable seat with tasty treats in the company of friends and family. However, the specifics continue to evolve. Watching the story is even more immersive with digital 3D. The screen is getting even bigger and the image and sound are crystal-clear every session. The seats are larger and may recline or move in sync with the onscreen action. And the treats now extend to a full meal and a glass of wine.”

Moving forward technically, “our industry will continue to enhance the movie-watching experience with films shot and exhibited in 48 frames per second and with additional audio channels,” Fernandez continues. “Cinema operators like Hoyts will continue to reinvent cinema facilities to constantly evolve the cinema of the future, and we will harness new technology to allow us to treat our guests as individuals, giving each a world-class cinema experience based on their unique needs.”

Given all the elements at play, what is our biggest challenge today? For Fernandez, it is “the same as it’s always been: constant change. Changing technology, changing consumer tastes and expectations, changing entertainment and leisure options. The reason our industry continues to remain relevant is because we embrace change in ways that improve cinema-goers’ experience. Premium cinema concepts, 3D and digital, big-screen format auditoriums, motion seating, beanbag cinemas, expanded food and beverage options are all examples of how Hoyts has responded to our changing landscape and our guests. We’re in trouble the minute we stop evolving, but I don’t think it’s in our industry’s DNA to stand still. It’s certainly not how Hoyts got to be 103 years old!”