WORLDWIDE THEATRICAL MARKETING & DISTRIBUTION FEBRUARY 27, 2013.
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Transcript of WORLDWIDE THEATRICAL MARKETING & DISTRIBUTION FEBRUARY 27, 2013.
WORLDWIDE THEATRICAL MARKETING & DISTRIBUTION
FEBRUARY 27, 2013
• FY14 Budget Cost Saving Initiatives
• Theatrical Market Update– Domestic– International– State of 3D– Top 10 International Markets– 2012 Summer & Holiday Hits & Misses– 5 Keys to Success
• Domestic Media Highlights• Summary
Agenda
COST SAVING INITIATIVES
• At MRP, reduced worldwide print and advertising expenses by roughly $90MM; Since then, identified savings initiatives to cut P&A by an additional $85MM
• Eliminated most Newspaper and Outdoor, and applied a 5% Marketing Challenge to all film budgets, cutting Domestic Media by $31MM.
• Anticipated savings from appointing new media agencies and audit firms for Latin America (UM) and Japan (Dentsu), along with a 5% Marketing Challenge applied to six major territories, reduces International Media by $22MM.
• Cuts in Creative, Publicity, Research and Freight reduces Basics by $22MM.
• Further worldwide expansion of the digital cinema footprint since MRP, will reduce the FY14 Prints budget by about $10MM.
• SPE continues to fully leverage our media relationships and partnerships, increasing the total number of promotional deals, including in-show integration, over the past year, and delivering extra media exposure of $40MM-$50MM annually
• Overhead initiatives total $14MM in savings primarily from pursuing joint venture and sub-distribution arrangements internationally
COST SAVING INITIATIVES
THEATRICAL MARKET HIGHLIGHTS
2003 2004 2005 2006 2007 2008 2009 2010 2011 20120
2,000
4,000
6,000
8,000
10,000
12,000
1,100
1,200
1,300
1,400
1,500
1,600
$9,200$9,400
$8,800$9,200
$9,700 $9,600
$10,600$10,600$10,200
$10,800
3D Box Office Box Office Tickets Sold($Million) (Million)
• Domestic box office (DBO) grew 6.5% in 2012, surpassing the record $10.6 billion box office years in 2009 and 2010, driven by the success of AVENGERS, HUNGER GAMES and DARK KNIGHT RISES.
• Admissions in 2012 were up 6% to 1.36 billion tickets sold, the highest level in over three years.
• Launch of 3D in 2009 reinvigorated DBO, generating $1B in box office and representing 10% of DBO. 3D grew to over $2B and 21% of 2010 DBO and dropped to 18% and $1.8B in 2011. In 2012, 3D remained flat at 18% of DBO.
• Average ticket price has increased 32% over the past ten years at $7.96 in 2012 compared to $6.02 in 2003.
Theatrical Market Highlights Domestic Box Office Industry Data
1%
10%
2%
21%18%
18%
Source: MPAA “Theatrical Market Statistics 2011” Report, issued February 24, 2012
1%
North America admissions rose in 2012 for first time since 2009
2008 2009 2010 2011 2012$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$1
$9,670 $9,943$10,421 $10,800 $10,400
$6,781$7,169
$8,456$9,000
$10,062
$1,605 $1,663$2,074
$2,600 $2,681
International Box Office by Region
EMEA Asia Pacific Latin America
US
$ M
illions
+1.5% CAGR
+8.2% CAGR
+10.8% CAGR
• International box office is up 28% over five years ago, driven by growth in emerging markets, especially Asia, as well as a relatively healthy 3D market internationally.
• EMEA grew only 7.5% over the past 5 years with the lowest CAGR (1.5%) of the 3 regions. Box office dropped 4% in 2012, driven by France, Spain and Italy offsetting growth in Russia.
• Asia box office grew 48% over the past 5 years with 12% growth in 2012. This is largely due to 34% growth in China, which became the #1 international market, surpassing Japan. At over 8%, Asia’s CAGR is second to LatAm.
• LatAm box office has grown an impressive 67% over the past 5 years due to Brazil and Mexico. This translates to a nearly 11% CAGR. Following strong growth in 2011, Latin America box office only grew 3% in 2012 due to a decline in Brazil based on the absence of local blockbuster releases.Source: Rentrak; Screen Digest reports dated February 21, 2013 (Includes Hollywood and Local product)
Theatrical Market Highlights International Box Office Industry Data
Worldwide box office growth is driven by international
• 3D as a percentage of box office has declined since its peak in 2010
• In the U.S., 3D as a percentage of total box office is declining across all genres
• Family/animation has decreased from about 55% in 2011 to about 40% in 2012; this decline is driven by price sensitivity as well as children struggling with 3D effects, and the comfort and size of glasses
• Live action/adult-oriented content is also declining from about 65-70% in 2011 to about 50% in 2012; within this category, action films are now at around 45% and rated-R/horror is at about 60%
• Over the next year the action genre is expected to remain flat while family and R/horror are more likely to decline a bit further
• The international market is experiencing similar 3D erosion to the U.S., but is trailing the Domestic market; thus, international percentages remain higher for now
• Responding to these trends, Sony has reduced our 3D offerings from 6 films in FY12 to 4 in FY13 to 2 in FY14
Theatrical Market Highlights State of 3D
10 Year
% Change
1. J apan $1.753 1. China $2.706 +2140%
2. UK $1.213 2. J apan $2.446 +40%
3. France $1.127 3. UK $1.743 +44%
4. Germany $0.962 4. France $1.691 +50%
5. Spain $0.724 5. India $1.377 +91%
6. India $0.722 6. Germany $1.325 +38%
7. South Korea $0.602 7. South Korea $1.293 +215%
8. Italy $0.592 8. Russia $1.280 +644%
9. Australia $0.564 9. Australia $1.165 +106%
10. Mexico $0.435 10. Brazil $0.819 +289%
11. Brazil $0.210 11. Mexico $0.812 +87%
14. Russia $0.172 12. Italy $0.783 +132%
17. China $0.121 13. Spain $0.765 +6%
Top 10 International Box Office Markets
2003 2012
Source: Screen Digest Cinema Intelligence Report dated February 21, 2013Includes Hollywood and Local product
Theatrical Market Highlights Top 10 International Markets
International market dynamics over the past 10 years
• China grew from the #17 to #1 market as its box office grew over 20-fold from $120 million to $2.7 billion
• Japan dropped from #1 to #2 and had the second lowest growth rate of the 10 top markets
• Russia climbed from #14 to #8 as box office grew over six times to almost $1.3 billion
• Brazil also entered the Top 10, with their box office quadrupling to almost $820 million
• UK and France each dropped one spot to #3 and #4, and Germany dropped two spots to #6. Germany had the lowest growth rate of the top 10 markets, while UK and France were third and fourth lowest, respectively.
• Italy and Mexico dropped out of the Top 10, despite strong growth in each market (132% and 87%, respectively)
• Spain, with the lowest growth rate at only 6%, also dropped out of the Top 10
• India moved from #6 to #5, but remains a local film powerhouse, with Hollywood films making up less than 10% of total box office
• In addition to India, local product in China, France, Italy, Korea and Japan is strong competition to Hollywood product, as these markets’ local product represents 35-55% of all box office.
• Emerging international box office growth markets, particularly Russia, Brazil and China, don’t translate to higher ancillary revenue.
Theatrical Market Highlights Top 10 International Markets
Major Success
Success
Minor Miss
Big Miss
Other Distributo
rs
The Amazing Spider-Man
Skyfall
Zero Dark Thirty
The Dark Knight Rises
Hobbit: The Unexpected
Journey
Ice Age: Continental Drift
Life of Pi
The Avengers
LincolnMadagascar 3: Europe's Most
Wanted
Ted
Men in Black 3
Django Unchained (Int’l)
Total Recall
That’s My Boy
Premium Rush
Snow White and the Huntsman
The Bourne Legacy
Safe House
Battleship
Savages
Brave
Wreck-it Ralph
The Odd Life of Timothy Green
Frankenweenie
Prometheus
Best Exotic Marigold Hotel
Parental Guidance
Abraham Lincoln: Vampire
Hunter
The Watch
Wimpy Kid: Dog Days
Magic Mike
Argo
Dark Shadows
The Campaign
Rock of Ages
Cloud Atlas
Katy Perry: Part of Me 3D
Source: Sony Pictures ReleasingNotes: Includes films with more than $25M DBO; Measure of success relative to film cost
Paranorman
Moonrise Kingdom
The Expendables 2
Step Up Revolution
Arbitrage
Silver Linings Playbook
What to Expect When You’re…
Madea’s Witness Protection
The Possession
Lawless
Motion Picture MarketSummer and Holiday 2012 Hits & Misses
All studios experienced mixed results with their 2012 summer and holiday release slates
The Dictator
A Thousand Words
Flight
Hunger Games
The Paperboy
5 Key Ingredients to Success
BALANCE – Everything at the right price: production, participation and marketing.
DIVERSITY – both in our own slate and where we date our movies, we must give the consumer distinct options with a defined audience.
ORIGINALITY – be different and be rewarded. Easier said than done, but the tendency to being too risk adverse can, by definition, be risky.
QUALITY – whereas years ago we could stuff the machine with less discerning content and it would invariably spit out ancillaries downstream to keep us financially buoyant, volume is no longer our friend. We have to pick our spots and do each movie extremely well. This doesn’t mean critical acclaim necessarily, but a financially worthy value proposition for the audience it was made for.
VIRALITY – taking into account the aforementioned three, virality can either make you a global phenomenon, or fundamentally rejected, in a blink of an eye.
Theatrical Market Highlights
DOMESTIC MEDIA HIGHLIGHTS
Industry Trends:U.S. TV consumption continues to increase
Source: BMO Capital Markets.
Total Household Hours of TV Viewing Per Day – U.S.
TV remains a popular and growing medium
7.7
7.9 8.0
8.1 8.2 8.2
8.3 8.4
8.6
8.8
7.0
7.5
8.0
8.5
9.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Sources of Movie Awareness
Sources of Awareness 2012 Average 2011 Average 2010 Average 2009 AverageTelevision 83 84 87 84Trailer 76 65 53 56Online/Web/Mobile 52 49 57 53In-Theatre 40 42 53 56Around Town 30 28 32 28Radio 11 13 23 26Magazine/Newspaper 13 18 19 18Mobile Device 15 10 NA NA
TV Remains the highest driver of movie awareness
Source: Exit surveys, 2009-2012
2010 Top 10 SpendersPre-Opening Media Spend
No Sony film shows up in Top 10
Source: Kantar Media Research ; gross dollars
First Sony films are Grown Ups at #20
and The Karate Kid at #36
2011 Top 10 SpendersPre-Opening Media Spend
No Sony film shows up in Top 10
Source: Kantar Media Research; gross dollars
First Sony film is Arthur Christmas at #15
Highest-grossing Sony film, Smurfs, at #48
2012 Top 10 Spenders (Jan–Jun)Pre-Opening Media Spend
No Sony film shows up in Top 10
Source: Kantar Media Research; gross dollars
First Sony films in this period are
MIB3 at #14 and 21 Jump Street at #18
Source: Kantar Media Research
2314Broad
Family
Female
Targeted
2835
2115
1594
2452
3182
1969
1913
2158
3554
1927
1440
2408
2784
1822
1223
1893
2378
1598
1675
1835
1994
1509
1080
2010 TV GRPs – Average by Genre
TV GRP average usage by studio/by genre in 2010• The high-usage pack is led by Warner Bros., Universal & Paramount• FOX the lowest, with Sony close behind in most cases
Sony film examples by category include Grown Ups, Salt, The Social Network (Broad), The Karate Kid (Family), Dear John, Easy A, Eat Pray Love (Female), Death at a Funeral, Legion, Takers, Resident Evil (Targeted)
2452 1835
Source: Kantar Media Research
2105Broad
Family
Female
Targeted
2319
2009
1959
2271
3812
2073
1825
1985
3115
1740
1972
2277
NA
NA
1894
2546
1634
1500
1651
1765
1200
1420
2011 TV GRPs – Average by Genre
TV GRP average usage by studio/by genre in 2011• Universal leads the pack in all genres except targeted• FOX is generally the lowest, with Sony a close second except in Family
fare (with Arthur Christmas and Smurfs driving the numbers)
Sony film examples by category include Battle LA, Green Hornet (Broad), Arthur Christmas, Smurfs (Family), Roommate, Friends with Benefits (Female), 30 Mins or Less, Colombiana, Priest (Targeted)
16512271
1056
Source: Kantar Media Research
2246Broad
Family
Female
Targeted
NA
1867
1543
2327
NA
1578
1656
1650
3580
NA
1198
2247
2074
NA
NA
1752
1944
1537
1477
1913
NA
1635
1329
2012 TV GRPs – Average by Genre
TV GRP average usage by studio/by genre in 2012 (through June)
• Variations by studio with partial film slate• Sony (close to or) the lowest in most genres
Sony film examples by category include MIB3, 21 Jump Street (Broad), The Pirates (Family), The Vow (Female), Think Like A Man, Underworld (Targeted)
2327 1650 1752
1944
2012 Additional Media Findings
Ancillary media reportingKantar Reported Figures (Average Film Spending)
2012 To Date
Newspaper Outdoor Radio
Sony Average $926,900 (-20%)
$359,172 $458,198
2012 To Date
Newspaper Outdoor Radio
Studio Average
$1,376,034 $572,095 $304,004
2010-2012 Support MediaSony’s Support Media Spend is Half of 2010 Levels
• In 2010, Sony in mid-pack of average support spending/film, and -12% below studio average
• In 2011, Sony in mid-pack for average support, and -6% below studio average• In 2012, Sony falls second to last in average spend ranking, and -35% below
studio average• Sony’s use of overall media support is declining over the years
Studio Post Support Average Spend
Buena Vista $4.8MM
Paramount $3.6MM
Universal $2.2MM
Warner Bros $2.1MM
Sony $1.7MM
FOX $0.9MM
Studio Average
$2.6MM
Studio Post Support Average Spend
Paramount $5.6MM
Buena Vista $3.9MM
Sony $3.3MM
Universal $3.1MM
Warner Bros $3.0MM
FOX $2.0MM
Studio Average
$3.5MM
Studio Post Support Average Spend
Paramount $7.3MM
Buena Vista $5.0MM
Sony $3.8MM
Warner Bros $3.5MM
Universal $3.3MM
FOX $2.6MM
Studio Average
$4.3MM
2012 2011 2010
-19%-26%
Source: Kantar Media Research
SUMMARY
• North American and International box office are healthy but international offers real growth potential
• 2012 showed us that North American admissions can grow if good product is offered
• 3D is not the magic bullet for growth• TV remains the dominant (but costly) source of
movie awareness• Sony continues to cut spending relative to all
studios but trails Fox• Must continue to focus on bottom line and
margins at greenlight - challenge marketing group to spend less on each new film
• Work with marketing to implement and monitor cost saving initiatives
Summary