Product Talk #14 – Hoyts Cinemas and Differentiation

Matthew Liebmann is the Chief Commercial & Development Officer at Hoyts Entertainment Group. We were lucky enough to have an hour with him at our latest Product Talk event talking about Product Differentiation and the innovations occurring at Hoyts. This is the first of a two part series, showcasing the interesting Product Talk panel that took place with Matthew.

Starting in cinema at the outset of his career, Matthew worked unpaid at the Dendy Cinema in Martin Place because of his love of cinema. He volunteered with their marketing as he felt passionate about cinema as the retail face of film. This enthusiasm and passion is still very much evidenced today as he talked about the market testing, product development and loyalty program initiatives that he is executing with the Hoyts Group.

“As a kid I remember sitting in the dark with my parents and grandparents, watching the latest movie and the awe of that experience. I’m now fortunate enough to be able to facilitate that and create those memories for others now and that’s what drives me.” On a career path that has taken him through Village Roadshow taking their unique cinema experience into all corners of the world, an entertainment and media consultant and author at PwC, to managing a SKYCITY Cinemas (now Event Cinemas) in New Zealand and now at Hoyts since 2008, he has been committed to the medium.

Differentiation in the cinema business is a difficult task given the commodity retail aspect of the product. With the prevalence of Multiplexes throughout shopping centres, the experience was initially less about the cinema ambiance and more about location, size and screen times. “Stadium seating, larger screens, premium auditoirums such as La Premiere and superior fit outs have been introduced in order to create a differentiated experience.”

“Hoyts has a strong track record of being innovative. We were the first to do mobile movie ticketing and social ticketing on Facebook. We were the world’s first to partner with Mastercard in order to launch their QkR mobile payments in cinema. Guests of our premium La Premiere cinema concept can now order anything from our food and wine menu from their seats using QR codes, their smart phone and mobile payment technology without leaving the auditorium mid-film. The order goes to the kitchen and the waiter will deliver it to your seat. ”

Historically, the key customer touch point outside of the cinema has been newspapers. “Our research has shown that today about as many people rock up to the cinema foyer to get session times as those checking in the newspaper. Newspapers are very expensive given their influence and number of eye-balls and so we are assessing how to match our resources to guests’ preferences – to engaging touchpoints like mobile and net. However I think the most important touchpoint is in cinema and it is our people.”

The feedback from the audience at this point was that the pricing of the movie and associated add-ons was too expensive.”That’s interesting because I think that cinema is a very cheap form of entertainment, where else can you get over 3 hours of entertainment for $18? You’d spend a lot more if you went to a pub for 3 hours or Laserzone. We have to listen to this feedback because I think we have let perception become reality. As an industry, we need to do a lot more work communicating that we have a variety of pricing options in order to save money. I don’t think the industry has stood up and said that there are options for price points and there are comparisons with other forms of entertainment that are actually more expensive.”

Hoyts also owns Oovie, the DVD rental kiosk that has a $3.50 price point. “It is about capturing that intersection of experiences where you can either go and have the full cinema experience with the big screen, best sound and the chairs or you are at home where you may be interrupted but you still really want to watch a movie. Oovie offers immedicy and genuine convenience; cinemas offers a big-screen experience. So it’s about having a solution for the different modes of movie consumption. To be able to satisfy a broad range of our customers’ occasions and needs.”

From a product management perspective, Hoyts is a classic example of how the competitive landscape has taken on a new dimension. Nick Coster, Head of Training for Brainmates and Host of the evening made a great point. “You now have to differentiate between your competitive options as well as your competitors. You have to look at anything that takes eyeballs and time from cinema such as Internet, restaurants, bowling, pubs as well as keeping across the activities of your competitors in your verticals. The challenge for everyone is getting greater because of this.”

Adrienne Tan, Chief Brainmate asked Matthew ; ” With the differentiation you are implementing in your cinemas such as new menus, beanbag cinemas, pricing options, why isn’t that message reaching me, why don’t I, as a consumer of your product, know about these things?”. Matthew was very honest about the opportunities they have in this area. “We are trying to address this right now. Historically, cinema exhibitors put pictures on a screen and sold you a ticket. It was transactional and procedural but we had enough structural improvements such as new multiplexes and 3D to make that compelling. The next stage of our evolution will be a more enhanced focus on the customer. These things are beginning to filter through now. If we can go from being a ticket merchant to providers of a truly entertaining experience we’ll minimise the transactional pain points and speed guests into the cinema – where the magic truly begins.”

In part 2 of the interview series we talk to Matthew about technology, the film industry itself and how that is changing and the successful adoption of their loyalty program