“I could see more quantity of films released over time, rather than less” because of the dramatic changes in the sector, Gamble said Tuesday at the Morgan Stanley Technology, Media & Telecom Conference. That uptick in volume, he said, will be due to the rise of newer players like Apple, Netflix and Amazon, along with ongoing efforts by traditional distributors.
Cinemark has conducted extensive test-and-learn initiatives with Netflix, booking Zack Snyder’s Army of the Dead nationally for a one-week exclusive theatrical run last year. While that engagement didn’t yield big results, Gamble said more examples are in the offing, though he didn’t offer specifics. “They’re seeing the value of releasing those films, promotionally and in terms of how it improves and enhances the impression of that content,” he said. “It’s also really important to the creative community.”
Gamble declined to say whether domestic box office would return to the pre-pandemic high point of $11.4 billion in 2019. But he said strong results by several films in the second half of 2021 and then in the current quarter offer ample reason for optimism. He also expects a wider range of genres in theaters, as opposed to the superheroes-will-conquer-all narrative that many industry observers have adopted.
“One of the challenges prior to the pandemic that the traditional studios experienced was on the smaller-to-mid-tier films because of the rigid window,” he said. Exclusive theatrical windows had been a minimum of 10 weeks, often a bit longer, but are now contracting to 45 days or less.
“The cost to make and market those [smaller] films had gotten to a place where it was a tougher financial model,” Gamble continued. “So, in some ways, a slightly shorter window and a more dynamic window actually leads to a more viable model for those films. I personally could see a situation where more of that content starts to come back — the romantic comedies and the raunchy comedies and dramas, which we’ve seen far fewer of in recent years because there’s a greater opportunity for those films now.”
As to the forecast for release windows, “there may not be a single model, as there was before the pandemic,” Gamble said. “There may be a range of scenarios. That said, most of the meaningful commercial films tend to be converging toward a 45-day window.” He ticked off what he sees as the many benefits of a theatrical run, including box office revenue, perception, cultural real estate and a reduction of potential piracy.
CFO Melissa Thomas, who joined the company as CFO last November, accompanied Gamble during the 30-minute session. She addressed recent trends in dynamic ticket pricing, which factored into the massive opening weekend for The Batman as some theaters charged a bit more for it than for other releases. Cinemark, compared with AMC and other rivals, tends to take a less aggressive approach in hiking prices based on the perceived value of a given film, given the fraught industry politics of the process. Still, the circuit had been studying the tactic even before Covid and is pursuing it with greater urgency at this point.
“Our approach is to maximize attendance and box office and further monetize with ancillary revenue opportunity,” mainly concessions, Thomas said. Nevertheless, “we do see an opportunity on the pricing side and we continue to look at that strategically, looking to leverage data and analysis to get more sophisticated with our pricing over time. We’re not deploying a one-size-fits-all strategy. … We’re currently testing into it and to really see how elasticity has evolved during the pandemic period and then from there we’re making adjustments. That could be increases in some cases, or decreases in some cases, but all with an eye toward not hampering demand.”
Moderator and media analysts Ben Swinburne asked Thomas if that meant the company would be “increasingly getting to more dynamic pricing on a full-time basis” down the line. “Yes,” she replied.