Revenues down up, profits up at Oz cinemas
Revenues at Australian cinemas this financial year are projected to drop by 2.5% to $1.4 billion but profits are expected to improve slightly to $140.8 million.
That’s according to the IBISWorld Cinemas in Australia report for 2013-2014. The study forecasts the exhibition industry will grow by a modest 1.3% per year in the next five years, reaching $1.5 billion in 2018-19.
Growth will be constrained by increasing competition from digital pay-TV services that screen feature films; films being released to DVD more quickly after showing at cinemas; households buying home theatre systems; and film piracy despite the efforts of the government and industry associations, it said.
Despite a slight drop of industry-wide attendances, cinemas are achieving higher profit margins due to increased ticket prices and spending on food and beverages.
The report, which tracks 360 exhibition businesses, estimates cinemas derive 73.5% of their revenues from ticket sales, 19.7% from food and beverages and 6.7% from video games and other entertainment. It said 3D movies accounted for 11.5% of ticket sales and that is expected to rise to 13.8% in the next five years.
The total number of screens rose from 1,985 in 2008-09 to 2,015 and of those about 29.5% are owned by independents. Consolidation is likely to occur over the next five years, particularly affecting independent suburban and regional operators
The top four operators are estimated to generate 60% of the industry revenues, up from 52.4% five years ago as Hoyts, Village, AHL and Reading opened new sites, added screens and boosted food and beverage revenue.
Based on Screen Australia data, people aged 18-to-24 account for 23% of industry revenues, up from 21% in 2008-09. The 25-34 segment represents 23%, with the 14-17 demographic at 11%, 35-49 at 22% and the 50-plus age group at 21%.