Digitization nears completion: the data as at 1 January 2016

During the course of 2015 the number of digital screens continued to rise: the first statistics available show that Europe starts 2016 with 36,200 digital projectors, around 95% of the total, with a 6% increase over 1 January 2015.

In 2015, over the twelve-month period, a clear acceleration in the rate of conversion to the new technology was to be found in some of the (now few) countries that have not yet digitized all their screens. This is the case, for example, of a large market such as Turkey, where the rate of digitization rose from 55% to over 80%, with a particularly significant rise in the first half of 2015. A similar increase to also to be seen on a smaller market, like Latvia, where it grew from 69% to over 90%. Estonia, too, recorded considerable growth: digital screens, which represented 49% of the total at the start of 2015, now touch on 70%. This level has now also been reached by Greece, where digital projectors had been installed on 46% of screens at the beginning of 2015.

Amongst the Continent's six largest markets Russia (approx. 99.9%), closely followed by Italy (approx. 97%) and Spain (approx. 92%), is now aligned with France, the United Kingdom and Germany, which already boasted almost 100% digitization.

To sum up, with its 36,200 digital screens, Europe is the third largest world market after North America, which counts around 43,000 digital projectors, and Asia and the Pacific area, which sprang into the lead in 2015, with over 46,000 units.

Screens and population in Europe in the digital era

Paola Bensi
Statistician and Senior Research Analyst at the Catholic University in Milan

Screens and population in Europe in the digital era
In Europe 91% of cinema screens had concluded the digitization process by the start of 2015, which makes it possible to analyze their distribution throughout the territory, thanks to data collected by MEDIA Salles on individual towns and cities, highlighting the differences between countries.

Screen density in Western Europe
In Western Europe where, at January 2015, 95.9% of screens proved to be digital, there is an average of 63 digital screens per million inhabitants. The greatest screen density is to be found in smaller countries, such as Iceland (118.5 digital screens per million inhabitants) and Ireland (101.4) as well as in Scandinavia, with Norway recording 82.9 digital screens per million inhabitants, Sweden 77, Denmark 73.3 and Finland 53.7. On the leading markets, the highest figures for digital screen density are recorded in France (86.2 digital screens per million inhabitants), higher than those of countries at the end of the digitalization process, like the United Kingdom (60.9) and Germany (56), as well as those of Spain (68) and Italy (56.3), countries where overall density could reach respectively 76.7 and 60 screens per million inhabitants, if digital technology were adopted on all screens operating at the end of 2015. The country with lowest screen density is Greece which, at the end of 2014, counted a total of 482 screens (i.e. 44.6 screens per million inhabitants), around 220 of which have digitized (20.3). In Greece the digitization process, which had regarded only 46% of screens by the end of 2014, is gradually continuing in multiplexes, too, where, by the same date, only 27% of screens had adopted digital technology.

Screen concentration in the largest cities
Alongside the concept of average screen density in relation to the overall population of a given area, to better understand how easy it is to access cinema-going, it is useful to analyze the concentration of screens in the biggest cities, in view of the fact that large metropolitan areas attract a growing number of inhabitants. According to MEDIA Salles’ initial studies, in 2014 the concentration of screens in the five biggest cities of every Western European country proved to be particularly high in Portugal (64.4% of total screens in cities that represent 11.7% of the Country’s population) and in Austria (41.7% of screens in relation to 29.6% of the population). The biggest five towns record an average level of concentration in Switzerland (28.5% of screens and 12% of the population), in Finland (27.2% of screens and 27.7% of the population), in Sweden (26.1% of screens and 21.8% of the population) and in the Netherlands (22.4% of screens and 14.1% of the population). Far lower levels of concentration are to be found, for example, in Italy, where the five biggest cities represent 14.5% of screens and 10.6% of the population of the whole country and above all in Norway, where the cities with the largest number of screens record a concentration of screens (19.2%) that is lower than that of the population (25.6%).

The number of screens has remained basically stable
Taken as a whole, during the process of digitization in Western Europe, the total number of screens has remained basically stable and at the end of 2014 only 137 fewer screens were in operation compared to 2010. In individual countries, however, considerable differences can be found even on the bigger markets: alongside the Netherlands, the United Kingdom and France, where, in the 2010-2014 period, total screens increased respectively by 10.8%, 6.5% and 3.4%, come Germany, Italy and Spain, where total screen numbers experienced dips, sometimes even sharp ones: Germany lost 1.3% of screens, Italy 4.2% and Spain 9.3%. Other considerable drops were to be found in Austria (-4.8%) and in Sweden (-7.9%).
In Spain, where populations in municipalities with at least one cinema represent 62% of the total, the reduction in screen numbers implied a decided increase in the incidence of multiplexes where, in 2014, 72.5% of total screens were concentrated, as against 64.2% of 2008.
Instead, the concentration of screens in multiplexes remains relatively low in France (38%), Italy (35.7%) and, most of all, in Germany (27.8%).

The number of cinema has decreased
Decreases have mostly involved sites, which in the lasts years decreased by 6.6% (616 fewer cinemas).
Closures, which in the past had regarded mainly smaller structures, have more recently been affecting medium-sized complexes as well, as a consequence of the fierce competition or the need for restructuring, in order to offer more screens and seats.
In the 2010-2014 period in particular, Spain and Sweden lost 17.4% of their total cinemas, Italy 14.2%, Austria 13.8% and Germany 4.9%. In France the percentage was lower, coming to 1.3%, and in 2014 42% of French towns had at least one cinema.

Less tickets per screens
It should be pointed out that investments in the digitization of movie theatres were supported at the same time as a dip was being experienced in the number of tickets sold per screen, which in the 2010-2014 period came to -6.4% in Western Europe as a whole, but reached -14.7% in Italy and -12.6% in the United Kingdom.

Screen density in Eastern and Central Europe and on the Mediterranean Rim
In Eastern and Central Europe and on the Mediterranean Rim where, at January 2015, 78.5% of screens proved to be digital, there is an average of 23.2 screens per million inhabitants. This density is decidedly lower than that in Western Europe and would be even lower, if countries such as Belarus, Albania, Bosnia-Herzegovina, Georgia, Macedonia and Montenegro were taken into account, where there are even fewer than 10 digital screens per million inhabitants¹.
The greatest screen density was recorded in smaller countries like Malta (76.9 digital screens per million inhabitants) and Cyprus (41.3). On the leading markets the screen density recorded in the Czech Republic (42.6 digital screens per million inhabitants) is greater than that in other, larger countries with ample opportunities for development, such as Russia (25.4), Poland (25.9) and Turkey (16.2).

More screens
During the process of digitization in Eastern and Central Europe, and on the Mediterranean Rim as a whole, the total number of screens grew considerably, thanks to growth recorded in Russia (+57.9% in the 2010-2014 period), Turkey (+31.3%) and Poland (+17.1%).

More tickets per screen
In the same period this growth was accompanied by an increase in the number of tickets sold per screen, which came to an average of 5.4%.

A weak offer of screens, often highly concentrated in the main cities
As to the distribution of screens over the territory recorded in 2014 in individual countries, the relative lack of screens in Hungary, Bulgaria and, above all, Romania has frequently been emphasized, particularly when compared to the situation in Western Europe.
Hungary, with a total of 33 screens per million inhabitants (a screen density that drops to 30.4 screens per million inhabitants, if digital screens only are considered), together with Poland, is one of the countries in Central and Eastern Europe with the largest number of screens in relation to its population.
Despite this, there is some cause for concern in Hungary if we consider that, compared to 2010, total screen numbers have dropped by 17.7% and only 78 municipalities out of a total 3,178 have at least one cinema (2.5%). The considerable territorial concentration is also demonstrated by the fact that the leading five towns in terms of screen numbers, which represent 24% of the population, offer 59.4% of total screens. Moreover in the capital city alone, 45.5% of the Country’s cinemas are concentrated.
In Bulgaria there are 27.4 screens per million inhabitants (27.1 digital screens) and the offer of movie theatres proves to be concentrated in only a few towns - only 20 out of 5,266 -, to the extent that the 5 biggest cities, where 31.3% of the population is concentrated, offer 72.6% of total screens and the capital city alone 44.2% (17% of the population). Nonetheless, over the past few years screen numbers have been growing on the whole (+37.1% between 2010-2015) thanks to an increase in the number of multiplexes, which, at the end of 2015, represented 69.3% of total screens (64.3% in 2010). Screens are concentrated in the hands of only few exhibition companies: at the end of 2014 the leading two companies (Kino Arena VT EOOD and Cinema City²) controlled 74.3% of the Country’s screens.
In the whole of Europe Romania is the country with the lowest screen density in relation to population (14.7 screens per million inhabitants). In terms of digital screens, density in Romania (13.2 screens per million inhabitants) is superior only to that of Serbia (6 screens per million inhabitants) where only 38% of screens prove to be digitized. In Romania 1.3% of municipalities (39 out of a total 3,181) have at least one cinema and in the biggest five, representing 14.5% of the Country’s population, 52.7% of total screens are concentrated. It should be noted that, compared to 2010, total screen numbers have grown by 50.5% and their concentration has increased in multiplexes, which, at the end of 2015 housed 55.8% of all screens. There is an extremely high concentration in terms of exhibition companies, so much so that in 2014 Cinema City Romania controlled 44.8% of overall screens, with 56.7% of all the Country’s admissions and 58.9% of total box-office.
Amongst the larger countries in Central and Eastern Europe, Poland is the one with the lowest concentration of screens over its territory, with 14.8% of municipalities having at least one cinema and only 11.8% of total screens situated in the capital city. Concentration in terms of exhibition companies does not appear to be particularly high, either, since the leading three (Cinema City, Multikino and Helios) control 59.6% of total screens.
In Russia, where, at the end of 2015 there were 1,205 cinemas (for a total of 4,026 screens, 99.9% of which digital), the concentration of cinemas throughout the territory is similar to the situation in Poland, since at the end of 2014 14.2% of large or small towns had at least one cinema.
The Republic of Belarus has a small and rather young cinema market. As at June 30, 2015 it counted 107 screens in 69 cinemas, of which 101 screens in 68 cinemas were digital (94.4% of screens). The large majority of digital screens were capable of showing 3D films (95, i.e. 88.8%). The main feature of the Belarusian cinema market is the dominance of state-owned property. There are only 7 cinemas (22 screens) operated by private owners within the Country.
In the Balkan countries, Slovenia and Croatia, both member states of the European Union, have developed the sector of cinema exhibition more than other countries, such as Serbia, Montenegro and Macedonia. In Macedonia, Bosnia-Herzegovina and Montenegro the number of tickets sold is still relatively low, though compared to 2010 it has recorded considerable increases, amounting respectively to 168.8%, 142.1% and 16.5%. Development has been due, in particular, to new multiplex sites opening and to competition between companies such as Cineplexx³ and CineStar. At the end of 2015 the percentage of screens situated in multiplexes amounted to 9.3% in Serbia, 27% in Macedonia, 58% in Albania and 35% in Bosnia- Herzegovina.
In Croatia, where, at the end of 2014, 88% of screens had been digitized, 9.5% of municipalities had at least one cinema; 30.8% of total screens is also situated in cinemas with 8 or more screens.
In Slovenia the digital roll-out has been slower than that of Croatia and, at the end of 2014, 79% of total screens had shifted to the new technology and only 47% of screens were to be found in multiplexes.
The digitization of screens is happening even more slowly in the Czech Republic, where, at the end of 2015, digital screen penetration proved to come to only 66.5%.
We have however to keep in mind that the Czech Republic records one of the highest screen density in Central and Eastern Europe: 65.6 screens per million inhabitants.

In conclusion, the initial results of the survey carried out by MEDIA Salles on the location of screens throughout Europe would seem to confirm that the model for the development of the offer in cinemas, which had been characterized up until 2004 by the appearance of the multiplexes, with a large increase in total screen numbers, has remained basically unaltered during the digital transition, with the closure of many single-screen cinemas, the re-structuring of cinemas to incorporate several smaller theatres and the consequent rise in the average number of screens per cinema.

In the next few years this model may well reinforce its presence in Eastern and Central Europe, especially in areas with a particularly low screen density in proportion to the population. This process will probably determine a rise in the concentration of screens and admissions in the hands of only a few exhibition companies with a possible increase of market shares by US productions; thus suitable strategies will have to be developed for broadening the offer of European films, as well as making room for the various types of added content which represent the real opportunity offered by the digitization of movie theatres.

Notes:
1 Cfr. State of the Region, European Film Forum in Sarajevo, August 2015. At the end of 2014 in the Balkans the process of digitization proved to have been completed in Albania (a total of 12 screens) and Kosovo (2); the penetration of digital screens came to 33.3% in Montenegro (out of a total 18 screens), 39.4% in Macedonia (33), 71% in Bosnia-Herzegovina (31), 93.3% in Georgia (15) and 93.9% in Belarus (99), where at June 2015 it reached 94.4% (out of a total of 101 screens).

2 The company Cinema City International N.V. merged in 2014 with Cineworld Group to constitute the company Global City Holdings N.V. which, with a total of 1,875 screens, is the second largest Company in Europe after Odeon (2,236 screens). For coming years the company has planned to open 504 screens, 328 of which in Eastern and Central Europe and 176 in the United Kingdom.

3 In 2014 the Austrian company Cineplexx managed 5 cinemas in Slovenia, where it was the leading exhibitor, 4 in Croatia, 2 in Serbia and 1 in Montenegro, in Macedonia and in Albania.

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