UK admissions are set to increase 21% by 2011 - boosting box-office revenue by $673m (£336.1m), according to Dodona Research.

The industry analyst says strong upcoming film product, benefits from digital technology and a turn in the investment cycle in new cinemas will increase admissions by 34 million to 190 million in the next four years.

Dodona compared box-office performance in 38 European countries and found the UK had the fourth-fastest underlying growth once the effects of inflation and gross domestic product (GDP) growth were stripped out. It trails only South Korea, the Czech Republic and Latvia.

This growth potential may seem optimistic, especially as the UK saw a gradual decline in the number of admissions per cinema screen across the UK from 1994 to 2006 - admissions dropped from around 60,000 to 50,000 per screen over the 12-year period.

But analysts support positive medium-term forecasts in the UK cinema market by taking into account recent trends in box-office performance in relation to GDP. While most markets lag GDP growth, UK box office has grown 2.6% a year faster, compared to -1.1% in the US.

Analysts measured the compound growth rate in inflation-adjusted box office between 1998-99 and 2004-05, minus growth in GDP, in order to arrive at a trend rate of box-office growth.

Pairs of years were chosen, containing both good and bad years, in order to neutralise the impact of product volatility.

Using consensus forecasts for GDP and consumer prices and 'fairly conservative' assumptions relating to future ticket prices, historic trends found the UK cinema market could reach 190 million admissions by 2011, while gross box office could hit $2.2bn (£1.1bn) the same year.

'Digital is going to be a catalyst for significant growth'
Impressive 2007 box-office returns are expected in the UK with the release of new instalments from big franchises - Harry Potter And The Order Of The Phoenix, Shrek The Third, Spider-Man 3 and Pirates Of The Caribbean: At World's End.

The Golden Compass (pictured above), the first of the His Dark Materials trilogy, is also expected to see solid returns from its end-of-year release. And already this year, the UK saw a 10% year-on-year increase in first-quarter reports.

But in order to exploit any growth potential, Dodona managing director Karsten Grummitt said exhibitors must continue to invest in facilities, customer service and marketing.

He added that taking advantage of this potential surge in the market would mean finding ways to address different demographics, and said that digital technology would be pivotal for success. Digital projection may facilitate greater personalisation, allowing people to rent smaller auditoriums for private screenings while encouraging experimentation with alternative theatre formats.

'Digital technology doesn't mean that everybody is going to retreat into their bedroom and watch 'content' on their phone,' he says. 'The movie business is, at heart, one of the most opportunistic businesses the world has ever seen, and out of the threats and opportunities presented by digital technology, the latter will predominate. Digital is going to be a catalyst for significant growth.'