Source: Courtesy of Hoyts Cinemas

Hoyts’ Chadstone site in Melbourne

Australia’s exhibition sector is focusing on customer experience as well as top-class international content to woo audiences back to cinemas.

In the first half of 2023, Australian cinema ticket sales were down 23% compared to the same period in 2019, the year before the Covid-19 pandemic emerged. By September, however, that gap had closed to 16.5%, according to Comscore, with sales 4% up on the equivalent period in 2022.

This was thanks in large part to the Barbenheimer effect.  “When good films get exposure, audiences will come out,” as Frank Perikleous, Comscore’s Asia Pacific and Australian vice president of movies, puts it.

The success of Barbie and Oppenheimer now has the Australian industry optimistic this recovery can continue — if supply issues can be resolved and patrons continue to have a good time.

Cameron Mitchell Profile

Source: Courtesy of National Association of Cinema Operators

Cameron Mitchell

Cameron Mitchell, National Association of Cinema Operators (NACO) executive director in Australia, says local cinema chains have always been good at keeping patrons close and capitalising on new trends and expectations. He points to Brisbane’s Event Cinemas Chermside and Melbourne’s Hoyts Chadstone and Village Cinemas Crown as being “light years” ahead of most international offerings.

“Exhibitors invest heavily in world class IT systems, loyalty platforms, e-commerce solutions and guest feedback programmes, all with a view of understanding what guests want and over-delivering on the experience,” he says.  

Upskilling and incentivising staff also feeds into their success, adds Mitchell, who returned to Australia in 2021 after 15 years with VOX Cinemas in the Middle East.

This attention to the customer experience is paying dividends, notes Perikleous.

“The average ticket price was A$14.50 in 2019 and A$16.26 in 2022. This isn’t because ticket prices have gone up, it’s because more people, more often, are choosing premium offers such as Gold Class and Vmax [which come with upgraded seats, bigger screens and dedicated catering options].”

Gaining ground

There is, however, plenty of ground to make up. Australia’s best box office result ever, according to Comscore, came in 2016, with A$1.26 billion. In 2019 — a year marked by floods and bushfires — box office was nearly A$1.3 billion. Then, in 2020, the pandemic hit and Australia enforced lockdown in the most populous states, including Victoria; this, followed by capacity restrictions, public wariness and distributors delaying releases, saw the country’s box office down by nearly 70% compared to the year before.

“Covid-19 eroded an estimated $2 billion in box office between 2020 to 2022 in Australia and New Zealand,” says Mitchell. “If not for the commitment and tenacity of exhibitors, the forecast for the industry could look very different.”

As of 2022, Australia — a country with a population of 26.5m — had 492 cinemas with a total of 2,278 screens and an average per-screen seat count to 161; Hoyts, Event and Village account for about half of these screens. 

In all, across Australia at least 20 locations have closed since March 2020, although some may still reopen. Event closed several three-screen city houses in 2020, but some of these are now under the control of independents. And at least 10 new- build sites representing 80 screens have opened for business, including a 15-screen Palace (Australia’s biggest independent cinema chain) in north Melbourne and an 11-screen Dendy (a subsidiary of Icon Productions and the country’s second biggest indie chain) on Queensland’s Gold Coast, together with six six-screen sites.

For some, however, the pandemic has left a lasting impact. When Western Australia’s iconic independent family-run Grand Cinemas went into voluntary administration in late 2022, the shock was seismic. It had existed since the 1920s and was well known, as was the public face of the business, Allan Stiles. 

“Our landlords, up to a point, had been good to us but a domino effect happened because one landlord in one location … did not understand the cinema business,” says Stiles. “Our business here is built on trust and relationships with suppliers and owing people money is the killer.”  (Four of the five Grand sites have since been taken over by Hoyts and the fifth by Reading.) 

Sharon Strickland LR

Source: Courtesy of Dendy/Icon

Sharon Strickland

“Without great landlords you were in trouble, or if you were living hand to mouth, or had [excessive] loans and other liabilities,” notes Icon/Dendy Group CEO Sharon Strickland.

Dendy had to stand people down, including head office staff, carefully manage costs and closely liaise with landlords to survive. Having an understanding banking partner and cashflow from distribution arm Icon’s television deals and transactional VOD also helped.

“Coming out of Covid, patrons are looking for a superior, elevated experience, whether it be from a seating perspective or the food and beverage offering,” says Strickland. “We recently refurbished our premium lounge in Canberra and redesigned our menu with assistance from an executive chef.

“We are also focusing on alternative revenue streams, such as film festivals and events to manage times when box office is low or unpredictable,” she continues. “Over the last few months, we have made some tough decisions, undertaking a restructure and consolidating overheads.

During the pandemic, the federal government subsidised wages across many industries and instigated new regulations preventing property owners from acting against commercial tenants. It also provided a fund for indie cinemas but not majors, while state governments also helped 

Scott Seddon, president of Independent Cinemas Australia (ICA), Australia’s other exhibitor organisation, says a shortage of older-skewing mid-range films and family films isn’t helping independents to recover: “You can only sell the vegetables you’ve got on your cart”.

“Speaking for my own locations, for the [most recent] school holidays we saw Elemental from Disney/Pixar working reasonably well but it was the only family movie, and the only family movie for the entire northern hemisphere summer. We would have expected [in past years] a minimum of three in the June to October period.” 

Some exhibitors are also faced with aging digital projectors. Various options are being discussed, including leasing versus buying outright, using older machines to provide spare parts, and swapping to laser to save on power bills and operating expenses.

“Capital has been eaten away by Covid and borrowing money is expensive,” says Perikleous. “The need to replace digital projectors is cinemas’ biggest fear after whether audiences return, and if product is available.”  

Mitchell says the biggest challenges are the quality, depth and diversity of releases across the full calendar year, piracy and the US strikes: “Without question they are a huge concern to our members and we hope the industry comes together to find a workable compromise quickly.”