Cinema exhibition and distribution in Australia:
Trends in cinema-going

Analysis by Sandy George

Residents and visitors spent $895.5 million buying movie tickets in Australia in 2007, $28.8 million more than in 2006. This box office gross is the second highest ever: in 2004 the result was $907.2 million. In the past 20 years annual revenues have only fallen twice compared to the previous year.

Admissions were 84.7 million in 2007, compared to 83.6 million in 2006, with moviegoers paying $10.57, on average, for their tickets.

A construction boom redistributed audiences

In the past two decades, the number of cinema screens has increased from 712 in 1988 to 1,941 at the end of 2007, with most of that growth occurring in the 1990s. Exhibitors have been doing most of the building within suburban shopping centres and, to a lesser extent, outside the major capital cities. For many thousands of people this has made it easier to get to the cinema than ever before. There were 86 screens in inner-city locations at the end of 2007, the lowest number for the last 20 years. In contrast, there were 1,063 in the suburbs. This is 12 times more than in city centres, whereas 20 years ago there were 111 screens in city centres and 158 in the suburbs. The contribution made by suburban cinemas to the annual gross box office was about 60 per cent in 2007, although the proportion of screens was 55 per cent. There are 792 country screens now, compared to 330 two decades ago, and they account for about 30 per cent of box office.

With the growth of new multiplexes and megaplexes able to offer a choice of films, facilities and experiences under one roof, many older, smaller cinemas have closed down. This is a key reason why the number of cinemas in Australia has fallen by 35 to 485 venues in the past two decades, despite the number of screens increasing three-fold.

Attendance rates are falling

In 2007, 67 per cent of Australians over the age of 14 went to the movies at least once – the lowest rate since 1994 and the third successive year of decrease.

People have not been going as frequently as they once did either. On average, people aged 14 and over went to the pictures 7.2 times in 2007, reflecting a steady drop for most of this decade.

Cinema-going remains a very popular habit in Australia, however, especially when judged against other cultural pursuits. People were nearly three times more likely to go to the movies than to an art gallery or a popular music event in 2006. Compared with the rest of the world, Australia’s annual per capita attendance rate is the fourth highest internationally and, despite the small population, total admissions are the 15th highest.

Those aged between 14 and 24 years are cinema’s core audience: the 84.4 per cent of this group who went to the movies during 2007 did so an average of 9 times, although some would have gone a whole lot more. The 25–34 year olds are the next most reliable cinema-goers: the 72.9 per cent who went to the movies did so, on average, 6.7 times. As people get older a smaller proportion of them go to the cinema: 68 per cent of 35–49ers went in 2007 and 54 per cent of those over 50. However, the former went only 6 times on average while the 50–plus age group went 7.2 times – more often than 25–34 year olds.

In all demographics, attendance and frequency rates are down compared to ten years ago – except for the over 50s. The number of people in this group who have been going to the cinema at least once each year has been growing fairly steadily since 1986.

New technology has an impact

Many diverse factors fundamentally affect whether and how often people choose to go to the pictures, from the appeal of individual films to how much the sun shines over summer and how high interest rates climb. In other words, potential audiences respond to what is on offer – both at the cinema and elsewhere – and how much disposable income they have.

The installation of home entertainment systems is regularly cited as having a negative impact on cinema attendance and so is piracy (the sale of counterfeit DVDs and illegal downloading from the Internet). Internet-based activities such as social networking and watching user-generated and other content are also often given as a reason for cinema losing some popularity among young people. It is this group that causes the most concern, not just because they have always been the most loyal cinema-goers, but also because they have many years of potential cinema-going ahead of them.

Cinemas show films before those films are available on television or on other home entertainment formats and this has helped them stay in business. However, as broadband speeds improve and computers and televisions converge, it will be increasingly feasible to download high-quality material to view at home. These new technologies combined with the desire for instant gratification mean simultaneous release is inevitable, for some films at least.

The business will adapt

Faced with these challenges, cinemas are adapting. One of the biggest attractions of cinema is that it is a social experience. Auditoriums with up to 500 seats, huge screens and Dolby Digital and DTS sound have been re-introduced in recent years to give patrons a big-screen, big-sound, big-crowd experience. Small luxury cinemas with food and wine service continue to be very successful.

The arrival of digital projection will open up new opportunities. As of the end of 2007, only 30 of Australia’s nearly 2,000 screens had been converted from film to digital technology but in the US the process is already well underway; it will save the studios millions of dollars in manufacture and transport costs on prints.

The emergence of films in 3-D is touted as the big benefit of digital: DreamWorks Animation has said that all its films will be released in this format by 2009 and Titanic director James Cameron’s new science-fiction film Avatar is expected to be a significant showcase for the 3-D experience.

For many years cinema executives have talked about introducing new forms of content, such as live sporting events and concerts. Digital can make it a reality. In 2007/08, for example, audiences filled cinemas in various regional centres around Australia to enjoy live performances by the Australian Ballet at the Sydney Opera House through the Australian Film Commission’s Regional Digital Screen Network. Gaming on the big screen, or other not-yet-thought-of activities, may be what attracts young people back to the cinema in droves.