Cinema is stuck in the past and it’s dying on its feet.

While 2017 represented the third highest grossing box office of all time (not adjusting for inflation) ticket sales were dismal. In the US cinema ticket sales peaked in 2003 and have been slipping since, according to Box Office Mojo. Cinemas are charging customers more and more just to keep the box office afloat.

Meanwhile streaming services like Amazon and Netflix are nipping at their heels. The former just announced a bold new television series that’s set to drive subscriptions, and the latter recently posted record earnings.

At some point something’s got to give.

The trouble, according to Sarah Lewthwaite, Managing Director & Senior Vice President, EMEA of Movio is that studios have no idea who is watching their films. On top of that, cinemas have no idea how to bring those who aren’t into the building.

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She told Verdict:

Film studios actually know very little about their end audience. In some cinema chains you’ll have a film studio rep standing at the exit with a clipboard finding out who actually watched their films. It’s quite an antiquated way of understanding the end audience.

So what’s the solution to this fundamental communication breakdown? Movio thinks it’s data, which it wants to use to change the cinema experience.

Movio operates in the US, the UK, and in 35 other countries around the world. The tool gathers data from the cinemas themselves by integrating into any relationship the cinema has formed with the customer. This might include online ticketing accounts, membership schemes, or loyalty programmes.

All the data is fed into Movio’s Audience Insights engine. The machine-learning algorithm is able to pick out difference audiences and what films they’re most likely to go and see.

Cinema chains then target their marketing to appeal to certain audience segments.

Lewthwaite said:

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What we’re able to do with Audience Insights, instead of guessing who the target audience for a particular film is we’re actually looking at the likelihood that an individual is going to go see a particular film. So we can not see beyond whether a person is going to see a film, yes or no, but we can understand how interested I am in a film.

And maybe it’s not just one film, it’s in comparison to all the films being released on any given week. We believe that there is a best film out there for every single moviegoer on any given week. We look at every single moviegoer and what’s playing and how to marry that up.

She pointed to recent tests Movio has conducted with the recent Peter Rabbit film.

Looking at the total population of moviegoers, the tool identified the 1.2% most likely to go to see the film. By targeting their marketing towards that specific niche the cinema chain Movio worked with was able to directly speak to those who were most interested in the film.

That 1.2% of people interested in Peter Rabbit were 13% of the people who attended the cinema chain that weekend.

Even a small audience can mean a big boost in ticket sales if targeted correctly.

Lewthwaite said:

We’re able to find those niche groups of people who may not need persuading because they’re already going to come or may be on the fence and we need to incentivise a little bit more, or are least likely to come and maybe for those we don’t want to recommend Peter Rabbit at all and maybe there’s another film suited for them that week.

Because we’re able to find this ‘likelihood to see’ the marketing message can be really appropriately tailored. Maybe my film is not Peter Rabbit, maybe it’s the final week of Black Panther. So it’s finding that one-to-one communication rather than that mass scatter and spray targeting of ‘everybody should see this one film’.

Knowing that you’re only going see adverts for films which interest you makes receiving a weekly newsletter from your local cinema much more appealing.

Once Movio has the data it works with the cinema chain to get people into the theatre.

In the UK, targeted marketing is about as far as it goes.

However, in the US and Australia where customer loyalty schemes are widely used, it gets more interesting. Cinema chains are able to provide incentives for customers to return to the cinema.

For example, take a customer on the fence about seeing a certain film. The idea of a discount or reward points might tempt them to go and see it.

Of course, in the wake of the recent Facebook/Cambridge Analytica scandal people are feeling wary of what can be done with their personal data.

Cambridge Analytica actually shared a similar concept at the Event Cinema Association’s annual conference this year.

However, Movio has safeguards in place to keep customers’ data secure. In addition, unlike Cambridge Analytica, Movio’s data comes from the cinemas themselves, not through innocuous-looking social media accounts.

Lewthwaite explains that the kind of granular data that Cambridge Analytica traffics in is almost entirely useless to film studios.

We take their customer data by territory, we anonymise it, we strip all the personal data away, we encrypt it, and we put it in a separate vault where it’s aggregated by country. So film studios can access the data points they need for the insight without putting any specific customer data or any cinema-specific data at risk…

The film studios aren’t interested in knowing that one person went to see one particular film. They want to look at the total audience, they want to understand insights and how to move around the audience.

Movio goes to Hollywood

While Movio began as a tool for cinemas to tailor their marketing message, the company has grander plans.

The next big step for Movio will be to help film studios with the production process.

In the future, Lewthwaite hopes a tool like Movio could analyse trends and calculate whether there’s an audience for a film before studios even get to work on it:

I do think that getting the studios and cinema chains heads around some of the more creative uses of data at all stages of a film’s lifecycle. That could be at some of the earlier stages such as when a film is getting greenlit for production all the way down to consumption down the road…

We just haven’t had that insight available. The reason, probably, why over the last two decades we’ve had so many franchise films and sequels being made is because studios are relying on the data points they do have which is box office. They think ‘This film is doing well so let’s make another one’.

Understandably, this might be a cause for concern among film fans. A film like Call Me By Your Name was an Oscar-winning work of art and critically-acclaimed.

Unfortunately, it didn’t find a huge audience and made by far the least of all 2018’s Oscar Best Picture-nominated films. If an algorithm could have calculated Call Me By Your Name being a comparative box-office flop, would the studio have funded the project?

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On the other hand, Warner Bros.’ Batman Vs Superman made $873.6 million at the box office. However, critics lambasted the film.

Its approval score on review aggregate Rotten Tomatoes is a paltry 27%. Still, based on its financial performance, would an algorithm recommend the studio continue to churn out the same kind of film?

The benefits of using algorithms in the movie business

Lewthwaite has an optimistic view, however.

I think… being able to understand the audience and the tastes of the audience better is going to help some of these smaller more independent films to thrive. I think it’s really tough for some of the independent sector to break through to the audience. They don’t have the marketing budgets that the big Hollywood movies and there’s so much clutter.

So I really think that the whole point of using a tool like ours is to grow audiences for every film. Not just the big ones. It’s not just to go to Hollywood and say ‘you should be making more Avengers’.

Let’s find audiences that have been under-tapped. We can get them to come more often. The US audience has been declining, well how can we get them to come more? What will bring them out?

What films will resonate with them? It’s certainly not just the big blockbusters. There’s certainly amazing art and some real gems out there that we really want to support.

… We can help to identify the audience that is coming, and gaps in the audience that isn’t being served. We’ve got a number of white papers around segments in the audience that haven’t been addressed by Hollywood studios that maybe we should be making more movies for.

If Lewthwaite has it right, a tool like Movio could help a smaller film find an audience. It could even draw new audiences to cinemas for specific film.

Take the success of Mavel’s latest super hero blockbuster Black Panther — if movies target specific audience sub-sections, it can mean sales traditional generic marketing struggles to match.