Microsoft Advertising UK Entertainment Industry Insights: August 2014
With the recent release of UK box office data for the first half of 2014 showing that admissions were down 8% on 2013, now seems like a good time to reflect on the state of the industry and think about what the rest of the year and beyond could hold in store.
Using a mix of industry data and proprietary data gleaned from Microsoft’s 14.5 million Bing user database, we’re sharing our view of the key trends and untapped opportunities available for entertainment brands.
Is the increasing number of films being released too much for the market to bear?
Month-on-month, both February and April 2014 were up year-on-year, but May and June were down by close to 20%, despite there being a number of major films released, including the latest X-Men; Godzilla and Pompeii. There are many hypotheses as to why the box office has had such a tough start to the year, including the nice weather and the effects of the World Cup, but could it be because so many more films being are now being released?
BFI Film Fund’s director Ben Roberts suggested in a recent article (1) that the increasing numbers of film releases is having a detrimental impact on the ability of a film to make a healthy return “We are at a point where 698 films a year is too much for the market to bear because individually it means that if the overall box office take does not increase then each film makes less.”
Using BFI statistical yearbook data (2), the Microsoft analytics team have unpicked this further to see what impact increasing number of film releases are having on admissions and revenues:
The number of films released every year has increased every year since 2001 and 698 films were released in 2013, double the number released twelve years previously. Over the same period, box office revenues increased by 68% to £1.1bn and total annual cinema admissions have been broadly stable. In 2001, there were 156m admissions, whilst last year there were 166m, near identical to the average over the previous twelve years (despite some annual fluctuations).
Whilst admissions are down so far this year, there appears to have been a rise in popularity of outdoor/event screenings this summer throughout the UK, with rooftop, drive-in and secret cinema showings all proving popular (Universal's Back to the Future with Secret cinema was the UK’s 7th most watched film on the 1st weekend in August, grossing over £500k), so come the end of 2014, admissions are unlikely to be a far out from the long-term trend and we don’t believe this to be the start of an ongoing decline in admissions.
Opportunities for entertainment brands - the digital home entertainment market
Whilst the above analysis suggests little evidence to substantiate that the increasing number of films released is harming box office admissions at a total level, what does become apparent is that the average number of admissions for each film has nearly halved (from 477,000 in 2001 to 238,000 last year).
This decline in cinema viewing creates a huge opportunity for the burgeoning digital home entertainment market which is in the midst of fast-paced change as consumers shift from physical copies to digital video.
Video-on-demand services generated £612m in 2013, and now account for over a quarter of the total market, up from just 10% in 2010. (4) Xbox video is a good example of this growth with annual viewing hours to video and TV content up 40% year-on-year in 2014. This growth is being driven by over-the-top subscription services such as Netflix, with some estimates suggesting their UK user base is now as large as 4.5m subscribers. (5)
Due to Sky’s exclusive rights with the six largest film studios’ for the 1st subscription pay-TV window, it can be argued that Netflix’s growth is predominantly being driven by their exclusive TV content (unlike in the US where the company holds more film rights), and therefore new innovations such as Sky’s recently launched ‘buy and keep’ service (which offers an instant digital download of a movie with a DVD copy also sent by post), as well as increasing volumes of downloads are where we believe the growth in digital film home entertainment will continue to come from.
The Lego Movie and Sky lead the way in 2014
The highest grossing film in the first six months of this year was The Lego Movie, which recently launched to home entertainment retail market and early indications suggest it is likely to perform just as successfully in this space as it did in cinemas. Microsoft's keynote speaker at the Cannes Festival of Creativity 2014 was in fact The Lego Movie producer Dan Lin. You can watch Dan discussing how he uses technology in his creative process below.
Interestingly, Sky was the number one digital retailer of The Lego Movie in its first week of sales (3) – putting its success down to its aforementioned ‘Buy & Keep’ service. Sky are firm believers in the effectiveness of digital advertising to drive sales of entertainment content - as demonstrated in a recent Microsoft case study - 38% would consider buying Sky Movies after integrated native advertising solution on MSN UK Entertainment.
The second half of 2014 and un-tapping targeting opportunities with Bing insights
With a large number of new film releases still to come in 2014 which expect to pull in big audiences, the big press coverage is likely to be drawn towards blockbusters such as The Hunger Games: Mockingjay, Interstellar, and The Hobbit. By utilising the power of Bing data (of the most searched for upcoming films) we are able to predict that films such as The Rover, Dumb and Dumber To, and The Nut Job are also likely to be very popular with audiences.
As consumption of film content digitally continues to increase, we’d expect that home entertainment divisions of film studios increasingly will start investing more of their budgets in the digital advertising space to take advantage of the synergies this offers, especially as data becomes more widely available to enable marketers to ascertain the ROI of these investments. An editorial piece in July by Cue magazine stated that data is one thing the industry is currently short on. (6) Microsoft are actively exploring the possibility of bringing in cinema and home entertainment industry data, but thanks to Bing and out other proprietary tools already available, the data we have on consumers’ digital lives means we’re already well placed to offer unique insights to advertisers and clients.
As well as being able to help track future sentiment about specific films, we are able to track search behaviours of users on different devices, so we can for example see that among those searching for cinema listings, on Wednesday’s two-thirds of users are searching on PCs, with around a third on mobiles and tablets, whilst on the weekend it’s close to a fifty-fifty split.
This type of information has potential implications for both which advertising channels are selected and how creative is used across different screens as well as being able to understand the most effective frequency of messages.
Microsoft has recently launched a sequential targeting product which enables companies to tailor different messages across multiple devices and with our campaign evaluation tools we’re also able to offer evidence of real (rather than claimed recall of) digital behaviours like visits to film and cinema websites, and digital retailers where the trailer is hosted, in addition to tracking growth in related keyword searches for the film or its characters post-exposure.
If you’re interested in finding out how Microsoft can help you further understand your customers and improve your advertising, do get in touch.
Kristina Bolger, Head of Entertainment & Media Partnerships, Microsoft UK
1 ‘Too many films’ as box office slides – Cue Entertainment, July 25th 2014
3 BSkyB FY Press Release, July 2014
4 UK home video: digital switchover – Enders Analysis, July 2nd 2014
5 Netflix sees rapid growth in Europe – Inform ITV, July 26th 2014
6 Digital sales data is needed – July 2014