Why TVOD is needed to revolutionise the cinema loyalty program
I have always found it strange how history has a habit of repeating itself.
In 1977 the first Star Wars movie was released. Fast forward 40 years and history has repeated itself eight times with the launch of The Last Jedi, the eighth film in the Star Wars trilogies. And don’t forget about all the other epic space adventure movies inspired by Star Wars. You might be thinking what does this repetition have to do with cinema loyalty programs? Well currently the answer is not so much, but with TVOD the answer becomes everything.
Here is why. As cinemas operate now, their scope is limited to the theatrical window, meaning they only generate revenue from screening the latest movies. Once a movie has generated it’s box office revenue it then leaves the theatrical window and progresses to the home distribution windows, where it is available on TVOD platforms like iTunes, SVOD platforms like Netflix, or in the DVD store of old. Cinemas orientate their loyalty programs around the sale of tickets and confectionaries because they only have access to a limited window of content. To put this model simply, the more you spend the more you get rewarded. This isn’t a bad thing at all, it generates a certain amount of customer lock-in, which is extremely valuable when you’re selling the exact same movies as other cinema chains. But what it doesn’t do is incentivise a lot more movie watching.
That’s where data and analytics come in to provide important audience insights. Cinema’s can establish each customer’s identity by analysing their transaction data to establish a profile of what movies they like watching and what confectionary items they like consuming. With these data driven insights they can send targeted messages that further drive engagement. For a simple example, they will often send emails that recommend movies the customer is likely to watch based on previous viewing. The general theory behind this is that by targeting a moviegoer with the right information at the right time it is possible to fast track their buyer decision making process and create a more personalised and efficient cycle of moviegoing. These audience insights have proven to be extremely valuable for cinemas, so much so that there are now companies like Movio that specialise in marketing data analytics services. Movio uses smart algorithms that take targeting to the next level! You might be thinking this all sounds pretty good for cinemas, but there is a speed bump in play.
Most moviegoers watch a limited number of movies in theatre; a number believed to be as low as five movies a year. With limited moviegoing there is less data to analyse, making it hard for cinemas to adopt a customer centric approach and engage audiences with data driven insights. There is also less spending to reward through loyalty programs. It’s fair to say that this restricts the cinemas ability to market to their audience. Fortunately, like with most issues there is also an opportunity. Moviegoers have been demanding instant access to movies right from their homes. With people watching more content at home across online streaming platforms, like Netflix and iTunes, this is where audience data is piling up.
What if Cinemas could capture a large proportion of this in-home viewing data and use it to drive audiences back to cinema?
Well they can, by launching their own exhibitor led TVOD service, exhibitors will have a duel marketing and sales platform. They would give a new marketing initiative to drive cinema ticket sales and a new revenue stream through digital rentals, a move that would position them as the DVD store of new.
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Here is why this would work. You’ll remember at the beginning of this article I mentioned how history has a strange way of repeating itself. This is a key phenomenom that powers the value of data driven insights. What I mean is that moviegoers are likely to repeat enjoyable behaviours. For example, if you enjoyed watching Star Wars: The Force Awakens you’ll likely enjoy watching Star Wars: The last Jedi, and also likely enjoy watching other space adventure movies. So it’s fair to say within the context of movie watching history does repeat itself. What this leads to is, if Cinemas were to launch their own TVOD service they would be able to expand their scope of operation into the home distribution window and sell movies that have already past through the theatrical window. By doing so they will have access to sell sequel, franchise, and other trending content. This would give them more data to direct customer centric experiences and also open up a larger selection of audience engagement tactics that would bolster their loyalty programs. To illustrate just two of these tactics consider the examples below.
Example 1
Maze Runner: The Death Cure, the third Maze Runner movie has been released in cinemas. Exhibitors would be able to sell the first two Maze Runner movies as a bundle to boost the theatrical sales of the latest Maze Runner. Fans can catch up or recap in time for the theatrical debut. Rewards such as advanced screenings or premier invites could be included.
Example 2
Black Panther, a film produced by Marvel Studios has also just been released. Exhibitors would be able to sell other superhero films on their TVOD service made by Marvel Studios and reward customers who watch, with let’s say confectionary items, for when they next watch a movie in cinemas, which would likely end up being Black Panther.
What these two examples illustrate is an improved and more personalised audience experience created by combining theatrical film distribution with home film distribution. There is no doubt that audiences behaviour is changing and cinemas must be willing to change too, to stay ahead of the curve. Will this exhibitor-led TVOD model be the marketing initiative that drives cinema ticket sales to a new level? Will it act as an added revenue stream that boosts cinema profits?
We will see.
