Six Questions: Malcolm Clarke, VP of Digital Commerce With Cineplex Entertainment16 Dec, 2013 By: Erik Gruenwedel
The contentious relationship between movie theaters and home entertainment in the United States is slightly less so up north in Canada. That’s because the entertainment status quo has been in a state of hubbub ever since Netflix set up shop in September 2010, quickly adding 1 million streaming subscribers — much to the alarm of the country’s cable operators, and to a lesser extent, movie theaters.
Cineplex Entertainment bucks conventional domestic theatrical thinking by embracing home entertainment as an ancillary revenue opportunity to the big-screen window. The Toronto-based chain, which operates 161 theaters with 1,635 screens nationwide attracting about 77 million moviegoers annually, also markets new-release titles in its online store.
The digital storefront is more than a platform for digital sellthrough. It has links explaining Digital Copy and UltraViolet (Canada’s first UV vendor), in addition to cross-promotions tying home entertainment releases with movie tickets, and marketing the premium-priced SuperTicket, among other offerings.
The chain bowed SuperTicket over the summer with the theatrical launch of Pacific Rim. In the United States, Paramount bowed SuperTicket with World War Z. To Cineplex, the strategy is aimed at keeping the chain in the minds of consumers after the lights come on and the soda goes flat.
Home Media Magazine asked Malcolm Clarke, VP of digital commerce with Cineplex, to elaborate on the multichannel distribution channel strategy.
■ Should the movie theater remain the first distribution channel for movies, and do you believe compromise between theatrical and retail is possible?
Clarke: Film studios, distributors and exhibitors generally agree about the importance of protecting an exclusive window for theatrical distribution. The film release window provides guests an opportunity to see the film the way it was meant to be seen — on the big screen with cutting-edge surround sound. Theater exhibition is the engine that drives the train — and really sets the stage for the balance of the film’s life cycle.
■ Cineplex is offering Warner’s The Hobbit: The Desolation of Smaug as a premium-priced SuperTicket bundle, which includes both the preorder of the movie’s Digital Copy and predecessor The Hobbit: An Unexpected Journey Digital Copy — both with UltraViolet functionality. What’s the upside to SuperTicket for Cineplex beyond the higher margin?
Clarke: SuperTicket provides Cineplex the opportunity to engage the customer at the start of the film’s life cycle and allows our guests to gain access to the digital copy of the movie first. First and foremost, SuperTicket is about building a relationship with our customers. We build that relationship by providing value.
■ How are you creating customer value charging $34.58 for a movie ticket?
Clarke: SuperTicket creates value by providing bonus scene points, access to exclusive extras, special footage from the movie and cast interviews, as well as special offers on related catalog movies. Added value offerings vary by movie.
■ Cineplex’s online store offers promotions on LG TVs and Blu-ray Disc players, in addition to digital and packaged-media retail. Why is home entertainment important to you?
Clarke: Cineplex is Canada’s premiere movie brand. Like SuperTicket, the inclusion of Cineplex apps in some LG, Samsung and Toshiba televisions and set-top boxes, is a means to connect with our customers at other stages of the film’s life cycle. We connect with Canadians first, with more than 77 million guests — a number double the population of Canada — visiting our theaters each year. We want those guests to stay with us as they move through the film life cycle to home entertainment.
■ Is Cineplex still bullish on Blu-ray, DVD? In the United States, much attention has been given to the digital sellthrough of movies. Yet, studio revenue for digital sales in the third quarter paled in comparison to packaged media. How is it in Canada?
Clarke: There is still a large, a huge market for packaged media in Canada, though we do see it declining over time. We think we’re very well positioned to capitalize on the expected strong growth in digital, with CineplexStore.com, our innovative SuperTicket offering and being the first Canadian retailer to offer UltraViolet.
■ Is Cineplex considering portable, on-demand distribution of movies in the future? There is a slow but steady push of TV Everywhere in the United States among multichannel video program distributors, should theater operators join the bandwagon?
Clarke: Cineplex offers a VOD service today on multiple devices supporting major studio releases, catalog and TV content. What VOD provides is the ability for theater operators such as Cineplex to engage customers outside of the theater and continue the movie-watching experience in the home or anyplace customers wish to take their devices. VOD movies and EST ownership allows Cineplex to engage customers that don’t visit the theaters frequently and, via our reward programs, drive those customers back into the theater. This enables Cineplex to begin the engagement cycle at the earliest release of the movie. Theater owners in general have the unique ability to capitalize on the early customer engagement with a new release, at the time when a movie can have the most hype and marketing support and use this to drive home watching via VOD or EST ownership.