Let’s go to the Movies!

After a dip in 2003, the movie business in Mexico has been growing steadily and looks to be on the way to a record year in 2007. Attendance reached 165 million tickets sold in 2006 and is expected to top 180 million this year, according to AC Nielsen. It is estimated that nearly 10% of Mexican middle class adults (over 18) can be classified as “frequent moviegoers”, i.e. go to the movies at least once a month. That’s a lot of popcorn! It is also an opportunity for innovative marketing in the growing area of brand entertainment.

The growth in Mexican box office receipts can be attributed the success of the modern multiplex theatres that arrived in the mid nineties and now number over 200, with over 3,200 screens. The leading exhibiter is Cinéopolis with 49% of ticket sales in 2006, according to AC Nielsen, followed by Cinemex with 17%, MMC, Cinemark and the independent exhibiters.

Cine complexes have become a major component in urban retail development, due to their proven ability to generate traffic. The busiest multiplex in 2006, according to A.C. Nielsen, was the Cinéopolis at Universidad 19, in Mexico City, with 2.2 million visitors. As malls and modern commercial centers continue to expand in the major cities and to outlying provincial markets, the multiplexes are involved in all major development projects. So the total number of screens could pass 4,000 by 2010.

Film production is now approaching 500 titles a year and 2007 has been a good year for hit movies in Mexico, the top ten summer releases so far grossing 189 million dollars up to September (according to Variety - Nielsen data): Spiderman 3 grossed $35.3 million dollars; Ice Age 2, $29.2 million; Harry Potter $24.9 million, closely followed by Pirates of the Caribbean and Shrek the 3^rd; Transformers; The Fantastic 4; Ratatouille; The Simpson’s and KM 31 rounding out the top ten. It is interesting to note the number of sequels in the list. It used to be that sequels rarely matched the gross of the original title, today most sequels gross higher with each release.

Movies and multiplex theatres now offer a significant audience to marketers through a number of channels: traditional on screen advertising; product placement in the movie itself; in theatre promotions and free tickets as promotions, rewards and incentives.

Hollywood Movie Money is a company that specializes in movie ticket promotions and branding programs. Utilizing new technologies, HMM has recently announced a number of product innovations and branding platforms which include prepaid plastic cards, print at home tickets via the internet and cellular telephone ticketing.

With DVD sales and rentals now accounting for more than half of total industry revenues, the main threat facing the movie industry all over the world is piracy. According to the MPA (the Motion Picture Association) in 2006 producers lost approximately $483 million dollars of DVD and VHS revenue to piracy in Mexico, or 61% of potential revenue. Things are a lot worse in China and Russia, where loses to piracy have reached 90% and 79% respectively.

One response to the piracy threat to DVD revenues could be to reduce prices and attract brand partners and sponsors, as television does. Meanwhile: Lights! Sound! Roll ‘em! and keep the popcorn coming this way please!