Thanks for Visiting!

Register for free to get the full story.

Sign Up
Already have a Placer.ai account? Log In
Back to The Anchor

Box Office Update: The Storm Clouds Blown Away

Thomas Paulson
Jul 22, 2022
Box Office Update: The Storm Clouds Blown Away

Over the past several months, we have been writing about the recovery of theater audiences with big releases (see below for category visitation trends). We have also examined troubles surrounding the streaming industry--particularly Netflix--which is shifting studio talent and focus back on exhibitors. This hypothesis got more support this week with theaters seeing stronger than expected visitations and Cinemark posting foot traffic market share gains.

  • With the return of theater audiences, we thought we'd look at how Cinemark’s aggregate True Trade Area (TTA) compared to 2019 using Placer.ai's visitation data paired with Census data (below). Cinemark’s TTA population has increased by 8% compared to pre-pandemic levels. Attendance levels are still down, but 2Q22, when reported, will be better than the trend in 1Q22. Moreover, the mix of the audience is still largely the same from an age perspective (i.e., it's not just a younger demographic driving the theatrical recovery).

  • We also examined Cinemark's TTA using Experian Mosaic's customer profiles (below). The larger decline in Singles & Starters is from the sub-cohort Colleges & Cafes, which represents singles and recent college graduates living in college communities. This decline makes sense given the impact of the pandemic on colleges and universities. The decline in Family Union is from the sub-cohort Steadfast Conventionalists, which is conventional Gen-X families living suburban and city lifestyles. We are perplexed by the decline in this group as it would seem to be a cohort prone to visiting the movie theater. The increase in the Power Elite is from the sub-cohort American Royalty, which is wealthy, influential, and successful couples and families living in prestigious suburbs. This win by Cinemark is a nice positive and could also indicate increased traction as a result of their new upscaled food and beverage offering. The gain in Flourishing Families is broadly across all the sub-cohorts. Lastly, the gain in Booming with Confidence comes from Philanthropic Sophisticats, which are mature, upscale couples in suburban homes. These gains refute the assertion that the box office is being driven by twenty-somethings still living off their stimulus savings. Put another way, Cinemark's recovery is far broader and favorably distributed than box office bears would indicate and portends well for the 2H22 and into 2023.

  • Given these trends, we wouldn't be surprised if Netflix increased its theatrical output (something that thus far has been insignificant to their strategy and was not discussed on its 2Q22 update) or if Disney brought all its tentpole films to theaters in the years to come.
  • Netflix’s update this past week was "less bad" with respect to 2Q22 subscriber losses (-970K, including -1.3M in the U.S.). However, its 3Q22 subscriber outlook was worse-than-expected. Netflix shared its viewing hours in the U.S. for the last TV season (September-May) per Nielsen (below). Interestingly, the Wall Street Journal discussed the company's opportunity in advertising this week, concluding that the pitch is compelling and the interest large. Netflix offers advertisers a large audience and strong targeting capabilities to reach niches. This is what Facebook and social media did before Apple's IDFA/privacy changes disrupted their signal for reaching those niches. Should Netflix be successful (2023 and beyond) in taking advertising dollars away from social media as well as traditional TV, that would further weaken the digital ecosystem and economy and put more focus on the physical economy and real estate.

Schedule a Call

Required
Please enter your email
Required
Required

Thanks for reaching out!

I’ll be in touch soon

Go Back
Oops! Something went wrong while submitting the form.

Thomas Paulson

Director of Research and Business Development, Placer.ai

Thomas Paulson spent 20 years as a Wall Street analyst and a member of asset management teams at AllianceBernstein and Cornerstone Capital, representing top-50 ownership positions including Target, Home Depot, Nike, Amazon, Google, and many more. He brings consumer related expertise and knowledge of enterprises in retail, CPG, financial services, telecom, and entertainment.

Schedule a Call
Related Articles