The two major factors that drive the development of cinema sites, both in the UK and globally, are commercial advantage and community interests. Over the last decade or so, a lot of cinema development has been spurred on in a commercial sense by shopping centre owners, and in a community sense by local authorities. Each stakeholder often shares the common goal of wanting to transform the fundamental dynamics of their local area or shopping centre asset, with a particular focus on the evening economies.
Town centres can, in many cases, become empty and unsafe after shopping hours, preventing locals from wanting to spend time there without a family-friendly leisure activity. This is, quite demonstrably, a lost opportunity, especially where there is a solid case for the addition of a cinema and the surrounding business it can attract.
In large part, the dynamic that drove the commercial angle of a flourishing local economy used to rely on a variety of restaurants to attract customers. Nowadays this approach is coming under renewed consideration, as many of the bigger restaurant chains have failed through overdevelopment and mediocre offers. The scramble by many of these restaurant groups to inhabit a prime location, and their enthusiasm to pay ever-increasing rents, is now fading. However, there is an emerging market of restaurant companies that are still doing well and growing in this climate.
The appetite of consumers for quality out-of-home dining is still very much alive, that hasn’t changed. But the rents of the last five years were unrealistic - and still are to this day. Instead, food halls such as Altrincham Market (Manchester, UK) and Box Parks (various locations in London) along with innovative restaurant brands, council initiatives and community needs are becoming the new forces to be reckoned with in this area. With the right approach and focus the hospitality trade is still the perfect partner for a cinema development.
As a shopping centre owner, a cinema development is a particularly desirable addition to your business. The presence of a cinema brings 18-hour vibrancy to a centre, increases overall footfall and dwell time in your mall. This leads to further spend in surrounding retail units and food and beverage (F&B) destinations.
At The Big Picture, we’ve worked with multiple local authorities in their quest to develop a cinema site. While it’s true that a cinema can attract more footfall and encourage people to spend more time in a shopping centre, it also does the same for a town centre. A local community can share a sense of society and unity if there is a common space to spend time in with a positive, vibrant atmosphere.
In the 1990s, the UK and the rest of Europe was considered, globally, to be the emerging cinema market. Over the last seven or eight years, advanced cinema markets have started going through a redevelopment phase that we refer to as “repainting the bridge”. This analogy likens the redevelopment of cinemas to painting one side of the Forth Bridge - it takes so long to paint one side that when you finish you have to go back to the beginning and start again!
The above analogy refers to Europe and how it is now considered to be a globally mature market. Sites that were developed and built 30 years ago are now being transformed to create a new wave of updated, modernised cinemas. Regions such as the UK, America and Australia are exploring new cinema models and trying to break ground in innovative ways. This is, however, met with some resistance from incumbent operators due to the large investment previously made into the current spaces and systems.
At The Big Picture we’re able to break this cycle of resistance by offering alternate operational support which, in turn, encourages a more forward-thinking approach. We do this by performing detailed feasibility studies which are then used to give financial credibility to schemes that would otherwise be risky.
The UK as a market in particular has, over the last few years, received a significant amount of investment in new formats and approaches. This has been proven in the emergence of companies such as The Light Cinemas, Everyman, Curzon and the ODEON Luxe model and their success in the industry. There are indications that the rest of Western Europe will follow in the UK’s footsteps.
The current emerging markets are now predominantly in the MENA region (Middle East and Northern Africa). In these new markets, cinema developers have to cater to the desire for a vibrant cinema-going culture. But development in this instance is often dictated by ticket price.
Of the emerging markets, there are two clear subsets: the “budget” market and the “premium” market.
Two examples of the “budget” market are Indonesia and Northern Africa. Development here is dictated by a lower ticket price - around USD $5 - and means that the developers and subsequent operators will be looking at a more streamlined operation, resulting in the use of more basic cinema technology.
On the converse side, an example of a “premium” market is the Kingdom of Saudi Arabia. After a 35 year ban on cinema in the Kingdom ended, operators flooded the market to try and obtain one of the few highly coveted operating licences that were up for grabs.
The development of cinemas in this region is fiercely competitive and popular for two reasons. One is due to the late arrival of this market to the global stage and the big opportunity it presents to some of the best operators in the world (who then implement the best in technology and design). And number two is down to the affluence of the population - a higher disposable income means a higher ticket price of around USD $10-15 that customers can easily afford.
Cinema development is always driven by the right location. As we touched on earlier, the heart of cinema development is often to regenerate an empty, unattractive town centre, transforming it into an atmospheric "place to be". And without a suitable site (suitable being the operative word), the business case will be a non-starter.
Once a potential location is identified, TBP carry out a detailed feasibility study to thoroughly analyse and confirm if the site is right before investment is made into the project and development begins. As the developer, you need to know how much scope the site has for reinvention and how you can make it into a place people want to be - hence the term ‘placemaking’.
The main problems you’ll face as a cinema developer usually fall into two categories. One is how economically viable your proposed site is. Number two is obtaining the required planning permission you’ll need.
Proving economic viability is done through the meticulous due diligence that we carry out, through our methodology that we’ve refined over years of experience. We can provide this for you, so that you have a full armoury of evidence when it comes to putting forward your development case.
We have previously assisted many companies with demonstrating that a particular cinema site is viable. But we’ve provided carefully quantified specifics too, on which type of cinema would be right for the area, how many screens would be appropriate and what the capacity could or should be.
An additional consideration is that if a particularly desirable location already has a cinema, that shouldn’t necessarily be a deterrent to the case for a new cinema model because we’re also particularly adept at attacking (or defending) an existing site.
Our expertise lies within the detailed analyses and SWOT testing (Strengths, Weaknesses, Opportunities, Threats) that we carry out in order to support your business case for a potential cinema development. When we’ve gathered our information, we’ll advise you on the best approach to moving forward and if you face any risks or problems.
In addition to advising on the business dynamics of cinema development, TBP will create for you and/or your agents a comprehensive business plan. This will contain the insightful intelligence you need to negotiate a long term lease position.
To clarify: we are not agents and we don’t directly approach operators on your behalf. But our knowledge and experience mean we can thoroughly prepare you and your agent before you take the next steps. Our studies will be unique to your case and unbiased towards any particular operator.
There are, of course, times when after carrying out our analyses, a business case for a cinema may not make financial or developmental sense. In this instance we will honestly and openly advise you on the best course of action. But rest assured that in spite of certain past predicted adversities - for example, the rise of VCRs in 80s/90s - cinema is an industry that consistently performs well and still enjoys continued huge success.