Western Europe b.o. revenue set for spike

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LONDON -- Boxoffice revenue in Western Europe is forecast to increase by 17% over the next five years, according to a report released Thursday by industry analysts Dodona Research.

But the growth won't come as the result of expanding theater chains, the report argues. Rather, the revenue hike will be driven by the rollout of digital cinema and expanding local film industries.

"Following a number of difficult years, the Western European market is fundamentally saturated and can no longer be expanded by building new cinemas. That is not to say that there is no call for some new screens in selected locations and ongoing upgrading is always necessary," report author Karsten Grummitt said. "However, there will be new drivers of growth including conversion to digital cinema and the expansion of domestic film industries, which will take the industry into the next phase of its evolution."

The report, "Cinemagoing Western Europe 2007," forecasts that the aggregate boxoffice for 13 countries: Austria, Belgium, Cyprus, France, Germany, Greece, Italy, Luxembourg, Malta, Netherlands, Portugal, Spain and Switzerland will reach €4.7 billion ($6.4 billion) by 2011. The fastest-growing markets will be Greece, the Netherlands and Spain, while Malta, Germany and Belgium will see steadier increases.

Dodona's research shows that admissions have actually fallen across Western Europe by almost 10% since 2001, with Germany and Spain recording declines of 23% and 17%, respectively. "The rise in boxoffice over the last few years has been almost wholly due to rises in ticket prices, rather than increasing admissions," the report states.

Dodona identifies the Belgian Kinepolis Group and Luxembourg-based Utopia Group as the two companies leading the rollout of digital cinema in Europe.

Meanwhile, local film industries are expected to benefit from the increased market segmentation and programming flexibility that digital cinema will provide even as the exhibition side becomes increasingly consolidated in the coming years.

"Financial and economic conditions permitting, we anticipate that there are more deals to be done resulting in an increasingly simpler exhibition sector," Grummitt said.
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