Growth forecast for U.K. cinema market

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LONDON -- British cinemagoers are forecast to spend nearly £1.1 billion ($2.2 billion) on movie tickets in 2011, according to a report published Thursday by exhibition specialist Dodona Research.

The report, titled "Cinemagoing 16," cites strong upcoming film product, benefits from digital projection and a turn in the investment cycle in new theaters as the drivers for growth.

While boxoffice in most markets lags growth in gross domestic product, U.K. boxoffice has grown 2.6% a year faster, a figure that compares with a downturn of 1.1% in the U.S., Dodona says.

This growth potential is now being recognized by the industry's private equity owners.

After a number of smaller circuit acquisitions, the industry is dominated by a trio of theater circuits: Odeon, Cineworld and Vue. These and their two smaller rivals -- the Showcase circuit owned by National Amusements and the Ward Anderson group -- are now turning to physical expansion in pursuit of growth.

With independents investing in cinemas in smaller towns, too, Dodona forecast that more than 300 screens will be added to the 3,440 operating in 2006 by 2011.

The report also covers the fast-growing Irish market and points out that much of growth has been because of the general rise in prosperity in the country.

Irish boxoffice has grown 0.6% a year slower than GDP. But cinema admissions are expected to pass 20 million in 2011, a figure that compares with the 190 million predicted for the U.K., when the Irish will spend €156.6 million ($210 million) at the boxoffice.

And growth in screen numbers is expected to exceed that in the U.K., with 460 screens operating by 2011 compared with just over 400 currently, though the analysts question whether all these property investments will be profitable.

The long-awaited conversion to digital projection is now under way in both countries. Ireland has about 26 digital screens, and the 137 screens listed as converted as part of the U.K. Film Council's Digital Screen Network by February 2007 is already out of date.

The reluctance of the Hollywood studios to participate in schemes to finance a more widespread conversion is forming an obstacle to a faster changeover, Dodona says, before adding that it is likely to be temporary.

The report predicts that extra features such as 3-D and lower projector prices will lead to a tipping point and a rush to convert within three to five years.

Dodona managing director Karsten Grummitt said: "Digital technology doesn't mean everybody is going to retreat in to their bedroom and watch 'content' on their phone. The movie business is, at its heart, one of the most opportunistic businesses the world has ever seen, and out of the threats and opportunities presented by digital technology, the latter will predominate. Digital is going to be a catalyst for significant growth."
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