Global impact: Overseas success of movies affects the U.S. concession biz
U.S. cinemas are a vital part of the global cinema market, but no longer larger than the rest of the market. The global market, as a whole, has surpassed the U.S. in attendance and ability to open a film independent of the U.S. lead. Iron Man 3 was released internationally before it was released in the U.S., and created a great buzz on which the American market was able to capitalize. The film would have played well here anyway, but this is a new direction for where and how a blockbuster is released.
The global market is growing, as many countries are creating a consumer demand for film within their growing economies. You don’t really think about a movie when you need to think about basic needs. But as developing countries improve their economic reality, movie theatres become possible. The growth of cinemas in Eastern Europe, South America, Southeast Asia and China has been explosive over the last five years. In China, the disparity between the number of cinemas and the number of people is still very big and the growth in that country alone is difficult to keep up with.
So how does this impact the U.S. market, aside from film release power and prestige? One answer lies in the products found within cinemas.
If you questioned the effect of the global cinema industry on product, this year’s corn debacle should have opened your eyes. Yes, the corn crops in the U.S. were greatly damaged. But the added pressure of the sheer growth of popcorn’s popularity in movie theatres around the world expanded the pressure exponentially. Farmers, packers and distributors have worked hard on contracts and prices just to be able to serve the market. It has been challenging for cinemas to lock down contracts with certainty that they will be fulfilled.
In China, the cinemas do not really serve the candy choices that you will find in other regions of the world; culturally, they do not consume candy at the levels of the United States, for example. But they serve popcorn, and it is very popular indeed. The growth of the Chinese cinema market has increased the pressure on corn and affected prices on the other side of the globe. This is all too familiar with other commodity products, such as oil and steel. These types of problems are great to have from an economic growth standpoint, but they are problems nonetheless when it comes to sourcing.
Another product affected by global growth is the promotional funding available for films and marketing programs. There was a long period of stability in the U.S. market when it dominated the cinema industry scene. Then Europe came blazing its own trail, followed closely by South America. Today, companies are forced to see their marketing funds globally distributed; the U.S. and European markets are no longer singular in their importance. Moving from regions to top decision-makers, all promotional programs are global in nature, and each market and its importance is closely compared and addressed.
This affects how much Coke or Nestle or Hershey or ConAgra is willing to invest in programs in the U.S., as their annual marketing budgets are now viewed on a global basis for this market segment. The good news is this makes for sharper, clearer marketing programs. It also means the concession stand has to see itself as part of the bigger picture. We are usually experts at this anyway, as the concession stand funds the operation along with box office. Viewing the U.S. market as taking a share of the pie, and not the whole pie, is the new economic reality in this industry.
One further observation about this growth is crossover of both operators and suppliers who are moving products and services around the world, without staying within one country or region. This is a good thing for keeping our product experience for our consumers on a trend-setting, high expectation level. When we interact with companies running cinema operations around the world, we take ideas back to our own cinema that can prove successful. CinemaCon was a great example of that, with the international clientele continuing to grow and the exchange between supply companies and operators no longer restricted to in-country connections. This phenomenon will continue to grow as we see more and more crossover between owners and countries, and global suppliers and distributors. The effect of global growth can be felt in many corners of the cinema, and today’s operators must be on top of the challenges, and opportunities, this affords.
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