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Movie Ticketing Promotions Are Prime Movers

24 Mar, 2003 By: Holly J. Wagner

Putting movie ticket vouchers in DVD packages is becoming a hot video promotional tool, not only because it pleases consumers but also because mass merchants are demanding something unique in exchange for favorable positioning at retail.

“Any time you see a promo at a big retailer the question is, why is that retailer and/or the studio doing this? It is as much a play to the retailer as it is to the studio. It is as much about the retailer–product-supplier relationship as the product-to-consumer relationship,” said Stephen Drees, president and CEO of Quantum Loyalty Systems' Hollywood Movie Magic voucher division. “There is as much leverage going on with the retail level as it is directly to the consumer. [Suppliers] know statistically that if that packaged good is positioned well, it will go off the shelves. They package these things and serve it up to the retailer and say, ‘If we do this, what will you do for us?’

Recent movie voucher promotions have included Fox's inclusion of a Daredevil ticket in its X-Men 1.5 disc release and MGM's tucking passes to Legally Blonde 2: Red, White and Blonde into copies of A Guy Thing.

Those follow a path New Line Home Entertainment used to link The Lord of the Rings: The Fellowship of the Ring to the theatrical release of its sequel, The Two Towers.

Warner Home Video did a similar promotion for Harry Potter and the Sorcerer's Stone. The title was released on disc in May, so the supplier sent pads of mail-in coupons for movie vouchers to retailers in October to promote the release of Harry Potter and the Chamber of Secrets.

Purchase incentives are common among consumer product manufacturers angling for shelf space at mass merchants, and have become more prevalent with studios as DVD has become a hot sellthrough product, Drees said.

“Whether it's Warner, Sony or Pampers, nothing is going into these positions without promotions. The home entertainment people at the studios have figured out very quickly that that's how it works at mass merchants,” he said. “They know their product will go off the shelf, but it will never get there without that promotion.”

In fact, other consumer product manufacturers started doing movie ticketing promotions about 10 years ago, but studios didn't start doing them until video became a dynamic consumer product, said Kim Krefetz, VP of partnership marketing at The Properties Group, which provides MovieCash vouchers.

“Tradition says that studios never pay for anything,” Krefetz said. “The beauty of it is that it's almost like an ad buy that will send money right back to the studios.”

A former Universal promotions executive, Krefetz changed jobs four years ago when she saw a growing opportunity to use movie tickets as marketing tools. She started with a Kodak promotion that offered vouchers for For the Love of the Game, but saw the possibilities shortly afterward as studio production slates filled with franchises and sequels that are a natural fit to link movie and home video promotions.

“It benefits home video divisions of studios because the retail sell-in for all of our programs has been phenomenal,” she said. “In only one case we did not go back and print because we had not done enough to meet demand.”

That was a fluke because retailers underordered the title: New Line's Fellowship of the Ring, which raised the bar for ticketing promotions with a 30 percent redemption rate on a full-price adult ticket packaged with the extended-version disc sets, compared to the 7 percent to 11 percent rate Krefetz said is the norm.

“With the MovieCash promotion, our objectives were to secure better retail placement of the product up front, to let retailers know so they would stock more of the product,” said Matt Lasorsa, New Line's SVP of marketing. “We sold all we made.”

The studio was still catching up with late retailer orders in January, long after the two-week movie voucher window had closed.

“The problem was, retailers thought this was a special edition and compared it to other special editions,” Lasorsa said. “It was hard until it came out and retailers really found out it was like a whole different movie.”

But the promotion was a smash for a variety of reasons.

“Lord of the Rings was such a different animal,” Krefetz said. “It was the second edition of the DVD. There were some deep discounts at retail. The first [film] was a cliffhanger. The other films you could watch them and not need to see the second one to find out what happens.”

Nobody outside the studios seems to be measuring how much impact the ticket promotions, which typically apply for the first two to six weeks of a film's theatrical run, move the needle on early box office returns.

Spokespersons for Nielsen EDI and the National Association of Theater Operators said they don't track voucher use. Anecdotally, one industry observer said a Kroger promotion offering tickets for Shrek accounted for 4 percent of the movie's opening weekend box office take.

The benefits also extend to consumers, who get to watch a free movie, and mass merchants, who get an added drawing card to lure in shoppers.

“Buena Vista pairs with Wal-Mart on this a lot,” Krefetz said. “Wal-Mart always wants something different than what the other retailers have. They always want something better.”

For the theatrical runs of The Santa Clause 2 and Return to Never Land, their predecessors on video included a voucher for one child's admission or one adult matinee nationally, but Wal-Mart also had $2 concession cash vouchers in its copies, Krefetz said.

Kellogg's, which has a line of Disney-branded cereals, offered a similar ticket for Monsters, Inc. in some cereals.

“Like marriages, all these things come about differently,” Drees said. “Generally speaking, the company — be it the studio or a brand partner — before they finalize the offer that will take place in the retailer, it is crystal clear what the studio or major brand will get from the retailer in advance.”

Ticketing promotions also let studios revive interest in catalog titles that have seen their sales and rental peak.

“In some cases, the promotion is wrapped up in the DVD release that is a tentpole and has done very well. In others, it is the opposite,” Drees said. “A lot of the business generated on the tickets from the home video point of view is for catalog titles. They find that the product moves based on that offer, and it's clearing shelf space for new products.”

That was the case with Warner's promotion linking Harry Potter and the Sorcerer's Stone, released on disc in May, with the November theatrical bow of the second film in the franchise.

“The strategy behind the ticket promo was to increase in-store presence for Harry Potter as a catalog title and to give something to retailers,” said Mike Saksa, SVP of marketing at Warner Home Video. “With the new release, there are very thin margins for the retailer. But by the time you get to catalog they get a better margin.”

The studio also feels less of a pinch from mail-in offers, Krefetz said, because the redemption rate shrinks to between 1 percent and 2 percent when the consumer has to mail away for the incentive.

Ticketing promotions also foster cooperation among departments within studios.

“I think you are seeing an increasing interaction between home video and theatrical. It benefits both retailers and exhibitors,” Saksa said. “It's maximizing awareness of the franchise at the time of the theatrical release.”

The vouchers are so successful that all parties expect the trend to continue. New Line will probably duplicate the promotion this fall with discs of The Lord of the Rings: The Two Towers and the film release of The Return of the King.

“If we mirror the similar strategy next year, more people should be aware,” Lasorsa said. “It's important to us to work out a strategy that mirrors the first one so people know what to expect.”

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