National CineMedia – Movie Theatre Advertising Recovery Expectations – 28 September 2021

SP: Yes. It’s the damn Delta variant, obviously, because I think we were all feeling pretty optimistic, those of  us that care about this business, when we saw that Fast & Furious 9 had a good opening, a few other films did  as well. It should have really been a roar back at the end of the summer going into August and September, but  unfortunately, a lot of people got nervous again and that impacted a variety of things, including pushing a  couple of films further back. As far as whether it will ever get back to what it was before, it certainly has the  potential to. I think we’ll touch on some of those other topics later. It has the potential to because there are a  variety of things that have changed with the advent of more streaming services and the studios’ new form of  distribution or new strategies for distribution, but there are always enough impressions to bring a company  like an NCM back to its former level of revenue. It doesn’t have to be the same amount of attendance, it has to  be enough sellable impressions and enough market demand for cinema in the media marketplace to bring it  back. That’s an overall answer, but I think we’ll get into more specifics later.

SP: In the 20 years I was there so much of the business was driven by young adult consumers anyway,  anywhere really from 14-15 up to 30, and that demographic, as we know, they consider themselves pretty  resilient, pretty invulnerable and were some of the first to come back when Kong vs Godzilla and Fast &  Furious came into the theatres. The product is still directed at that young audience. That young audience has  always made up the bulk of movie going and will continue to, so I don’t really see any demographic changes.  The only thing I think you could argue is that those that were 40-plus who had started to drift away from  moviegoing anyway, now that they have more streaming options and more original content going straight to  streaming, will be even probably more hesitant to make the schlep out to the movie theatre, but they weren’t  the driving force behind most of these tentpole pictures anyway.

SP: When it comes to shortening windows, it’s always going to be the circuits that get hurt more. That said,  what happens to the circuits has a trickle-down effect to NCM for sure. It’s a matter of the circuits having  enough good content coming in on a regular basis more than it is a matter of how long they have that content  in an exclusive window. While there was a lot of fight about never shortening that window, pre-pandemic, the  reality is and you and your attendees on this conference know this, the vast majority of the revenue that the  theatres are making on any big release is made in the first 3-4 weeks anyway so very few films have that long  tail that used to be a big deal behind the windows. Back to the earlier point, though, I think it affects the  theatre circuits more than it does NCM because of my earlier point, NCM’s business is made up really over  three things, the attendance that’s in the movie theatre, obviously butts in seats are critical to having  something to sell, the amount of ads that they can run in that pre-show and the CPM they can get for those  ads, and the media demand, the brand demand in the media marketplace for cinema as a media option. With  NCM having all three of those things to work on, the shortening window isn’t a critical issue for NCM as long  as the studios are putting enough regular content to the theatres. 

SP: Obviously, in terms of the negotiations with the studios, that’s a tool that the circuits have that NCM  doesn’t. NCM has other tools which are part of what we had been expanding when I was still there, which are  expanding our digital business, opening up the opportunities to go into other areas where we could leverage  our infrastructure, like digital out-of-home partnerships that they’ve created over the past couple of years.  NCM is looking for alternative revenue sources for sure. I think the key difference between the circuits who  rely on, obviously, ticket sales and concession revenue, let me give you the clearest example. When I left NCM  I think we were doing somewhere around 705 million ticket sales a year across the NCM network, AMC, Regal,  Cinemark and the affiliates. Let’s say for the sake of argument that never comes back and it ends up settling down to 500 million tickets sold in the NCM network annually, that’s fine because 700 million attendees is  just the amount of tickets sold. If NCM is selling 25 units, then you obviously had billions of impressions to  sell and the network is almost never sold out, with the exception of some very few very high-profile holidays  where brands all want to come in. There’s plenty of potential for NCM to still grow its revenue as long as the  marketplace demand is there, even with lower attendance, which could be a factor of some of the shrinking  windows.

SP: Sure, yes. The maths would suggest that there is a number where, even as I mentioned, with 10, 15, 20  units to sell in each pre-show there certainly could be a number where there’s just not enough demand to  make it up if the attendance is cut by more than 50%. The second thought on that is that’s hard to imagine  from my seat because as you look at this year in the midst of COVID, in the midst of the Delta variant, you had  five or I’m going to say six, I believe, films that did over USD 100m at the box office. You had three or four,  which were Fast & Furious, with Black Widow, with A Quiet Place, maybe even Jungle Cruise that did almost  USD 200m. The studios recognise that in the midst of the Delta variant people were still coming out and they  were still able to leverage that kind of revenue at the box office. That suggests to me very strongly that the  studios, while looking for better terms with the circuits, they’re going to keep putting new content inside movie  theatres and that will drive the attendance so it never goes below those terrible levels we just talked about.

SP: When the circuits were closed during the beginning of the pandemic and then the period afterwards  when they were struggling to reopen, but they weren’t open in major metros, obviously they had no leverage.  The circuits, I believe, will regain some of their leverage, though never to the extent that they had in the past,  and I think that that will continue to yield a healthy competitive relationship between the studios and the  circuits. The studios want to launch on the big screen, directors and artists want to launch on the big screen.  There’s a lot of financial benefit to launching on the big screen, and as long as the circuits have a little bit of  say in keeping that symbiotic relationship going, I don’t see it moving to a place, at least not in our near future,  where there’s a complete elimination of a theatrical window. Even Black Widow and you’d have to check me  on this one, I don’t remember if HBO Max had a slight delay because there was the whole Scarlett Johansson  thing or whether it was the same air date on HBO Max with a premium as it was in theatrical, but even with  that Black Widow did close to USD 200m at the box. That’s proof right there, you can actually have it on  multiple platforms and people still want to see it in the theatre, as they will with No Time To Die, as they will  with Dune, as they will with a variety of other things that kind of demand that big-screen presentation. 

TB: It will be interesting if we return to a normalised period, maybe 2023 or 2024, where blockbuster movies  are once again making USD 1bn-plus gross receipts and if that impacts studio decisions.

SP: The term “competition” is sort of a funky one. If you say, “Who is the competitor to NCM in the cinema  marketplace?” then, yes, it would be Screenvision, but we decided when I was still there, probably 10 years  into my tenure, that if we didn’t start taking money from other video outlets, at that point primarily television  but other video outlets, even including digital video, that the cinema business was not going to be a growth  model. I would not say that NCM really considers Screenvision a competitor because there’s more than  enough, billions and billions of dollars out there to chase in other video outlets without worrying about  whether Screenvision gets a deal that NCM doesn’t get. I’d say that term doesn’t really apply to them so much,  again unless you’re specifically referring to the cinema advertising marketplace, which is a tiny marketplace. If  I can just expand on that a little bit. As far as other competition, that’s the really interesting part. The  competition that we focused on when I was there, as I mentioned, was anything that was video, and as  broadcast has devolved so dramatically and rating points have gone down so dramatically, even before the  pandemic they were crashing and burning. It’s harder and harder for brands to find the GRPs that they want  and that they need to fit into their media modelling through their traditional outlets, and yet tons of that has  gone to digital, no question about it, but not that much of it is going to the ad-supported streaming services.  That puts cinema in a position with sights on emotion and obviously a lot of other things that cinema has  preached for a long time, big screen, captive audience, young demographic, etc. It puts you in a really good  position to hold its own against what I would call the competition, other video outlets.

SP: As we know, size matters and the bigger footprint is always a good thing. To the extent that NCM can  continue to bring circuits onboard that will come at the expense of Screenvision’s attendance, that’s always a  good thing. More impressions to sell, an even bigger footprint, an even more dominant footprint in the  marketplace. If I were there, I would say it’s still part of the strategy for NCM is to continue to build their  footprint, which in the cinema space has to come at the expense of Screenvision because all the major and  minor circuits are spoken for pretty much between those two operations, other than Spotlight which has some  smaller art house circuits.

SP: I really can’t see why. It’s so much easier for the circuits who don’t have the infrastructure nor the  manpower to do advertising on their own. It’s so much easier for them to just take a nice cut of the revenue  from an NCM or a Screenvision, which is the way those relationships are set up.

SP: It’s so hard to know. From President Biden on down, we’re all trying to guess what the hell is going to  happen with the variants and with the population and their attitudes. That said, I think that what we would  have hoped, those that care about the business, what we would have hoped would start to come back to those  levels by the end of Q3 and certainly in Q4 when big holiday films come out. I probably feel like that’s looking  more like a Q1 sometime in 2022 thing. That would be my personal guess just based on the fact that the  variant caused so many people, just as they were surging back, to start to be hesitant. That said, as you look at  other businesses, you look at some of the restaurant traffic and stuff, there’s also a huge amount of the  population is just sick and tired of being inside and sick and tired of wearing masks and sick and tired of  everything else that we all are. It will be interesting to see with Dune, with No Time To Die, with a few other  films, it will be interesting to see if we really do start to get a surge going into the holiday season and then  maybe the prognosticators in NCM’s management team, maybe they’ll be a little closer to home. I would  venture to guess closer to ’22 before we start to see a real return to something that feels that good again.

SP: Yes, I think you’ll definitely continue to see gradual recovery. As we’re seeing now with Shang-Chi, that’s  been out for the last several weeks and has continued to do very well at the box office, there is still a lot of  desire, a lot of pent-up demand, and so as we continue and we’ll see vaccination rates go up, we’ll see a variety  of other things, we’ll see some people with boosters, etc, so there will definitely be a continual increase. It  doesn’t make sense to me, flatlining and then start to surge, so I think we’ll continue to see an increase. 

SP: As I mentioned earlier, if attendance directly correlated with revenue and there weren’t of a variety of  other variables, then that would make sense, as the attendance starts to rise we’re going to see the NCM and  the overall cinema advertising revenue rise. However, as I mentioned earlier, attendance is critical, but so is  the ad load, so is the sell-through, so are the CPMs and how brands are feeling about cinema as part of their  media mix. There are just a lot of factors that kick back in to NCM’s revenue growth beyond just attendance. If  attendance is at any significant percentage, 50% of what it was in 2019, then there’s a potential for NCM to  make some significant revenue growth and try to get back to some pre-pandemic levels, or else learn a lot in  the upfront marketplace. While the television upfronts tend to happen from the summer through Q3, the  cinema upfronts were always being completed more towards the end of the calendar year, and so a lot will be  determined in terms of the health of 2022 in this marketplace over the next three months. There are some big  players that NCM will need to renew.

SP: I think that a lot of the advertisers who were believers in cinema before the pandemic have seen enough  from, as I mentioned, five or six films breaking the USD 100m mark, a few being up towards USD 200m. I  think that’s more than enough proof to say, “Okay, cinema didn’t go away.” It did go away during COVID, the  very heart of COVID, “But it didn’t go away post-COVID, it hasn’t gone away during the Delta variant’s surge,”  and so if you’re any of those big upfront advertisers and you want to make sure that you hold onto those more  advantageous upfront rates and upfront packages, then I would say that it will be a very small fraction that  would say, “I’m concerned that cinema, quote, unquote, won’t be back in ’22 or won’t be back to anything  meaningful.” It would be very hard to say that just on the basis of the last two or three big films, like Shang Chi alone. I think advertisers, they’ll lean hard on the negotiations, of course, because they’ll feel like they have  some extra leverage in a weak marketplace, but I think the upfront will be fairly strong because they need  those GRPs, as I mentioned earlier.

SP: I think the best answer to the question is that the advertisers will feel like they have a lot of leverage  because cinema was so weakened over the last year, but the reality is that whatever they’re paying in other  video marketplaces is going to determine what they’re going to pay in cinema. They can beat up on cinema as a  place that was crippled by closed doors in a way that television obviously was not and digital was not, but if at  the end of the day they’re going to pay USD 45 CPM for a premium video option in other video, then that gives  the cinema advertising companies the ability to say, “It’s still a valuable impression, albeit perhaps fewer of  them than we had when attendance was stronger, and why should we be screwed on the pricing for selling you  maybe fewer eyeballs but still incredibly valuable eyeballs?” I’m sure that that’s the approach that NCM will  take, and Screenvision, and I think there’s a good argument there because, again, cinema is not competing  with cinema. Cinema is competing with other video options, so why should cinema sit back and take a huge  CPM reduction if broadcast TV, for example, or digital video has not?

SP: I really do think it’s going to drive the cinema upfront. I don’t mean to be repetitive, it all comes back to  the same thing, which is where do you find the eyeballs? It’s great that there are streaming services in  abundance right now and the pandemic certainly accelerated all the new launches, but two-thirds of the  streaming service viewership is still on the non-ad-supported networks and versions. That’s not an option for  Toyota or Ford. With anything in broadcast television a fraction of the ratings that it was even four or five  years ago, and double-digit decreases again, where the hell do you go to get your GRPs? All of a sudden,  cinema becomes one of the other few mass video mediums out there in addition to digital video. Yes, the  success of the TV upfronts almost always correlated with a successful cinema upfront and that was a big part  of a strategic change in moving into the upfront marketplace a dozen years ago for cinema. I would say the shortage of TV ratings and the fact that advertisers are paying more and more on a CPM basis for smaller and  smaller programme ratings, that’s good for cinema and digital.

SP: The combination of things that go into the revenue, as you just mentioned, are the attendance, the  percent utilisation and the CPMs, and those are pretty much the only three metrics that matter. Without  having direct access to the numbers, I would have to assume that the utilisation was down in significant ways,  in addition to some reduction in CPMs because they were dealing from a wounded position and in addition to,  certainly in the heart of the pandemic, much lower attendance than was expected. When the theatres reopened  and there was expectation for attendance coming back at significant levels, you had New York and LA and San  Francisco refusing to open their doors when the rest of the theatres were opening. That really drove down  attendance and that definitely impacted revenue. All three have been impacted, I’m sure. Probably the least so  is CPMs because, again, at the end of the day a warm body sitting in front of a 50-foot screen watching your ad  still has tremendous value to a brand, so just because the cinemas are down on their luck, I would not expect  that CPMs would be slaughtered in the process, but utilisation and attendance certainly were in the heart of  the pandemic.

SP: Not really. The platinum inventory is very, very limited, as you guys know, and so while it does drive a  much higher CPM and that would be great for the overall weighting of the CPM success, the bulk of the  business is still going to have to be advertisers running in the regular segments of the Noovie pre-show  because there’s just not enough inventory in platinum, lights down, to make up the gap. There’s also, in the  competitive world there are going to be people at brands that just won’t be able to justify the higher per CPM  for platinum and lights down and they would much rather have good strong cinema impression that are five  minutes before showtime as opposed to four minutes after. I think that those premium units will help bring  some clients back, those premium units will help drive up the overall CPM rates a little bit, but they’re still  going to have to rely on the core part of the show to succeed as well.

SP: I don’t think the new product thing was so key as much as it was the very limited amount of real estate.  When platinum was introduced, and it was, I believe, at the beginning only 60 seconds that was appearing  post showtime, then it had a very exclusive feel. You would be one of only one or two brands that were in that  pod in a unique position that ran after a few trailers. That’s what created the aura around it more so than it  just being new, as it was penthouse real estate.

SP: The reductions to be less in magnitude than the pre-show stuff? Yes and, again, I wouldn’t expect there to  be a major downfall in the CPMs because, as I said, it has to do with what the other video channels are  charging and what NCM can hold up as comparable video CPMs. The other reason why platinum will not be  impacted quite as much is there is a relationship between NCM and the circuits in terms of platinum and  platinum revenue, and so that comes with other expectations. When you’re not keeping 100% of the revenue  yourself and you’ve got to share it, etc, it’s a different model and doesn’t allow as much pricing flexibility.

SP: I think that the national inventory will, I believe, come back. I think it’ll come back at around the same  time as regional, but regionals can be impacted by other things, regional is very reliant on tier 2 automotive  dollars, and as we know, the chip shortage has really impacted auto inventory available. That business is  hurting, that will hurt regional. A lot of businesses, regional businesses were severely hurt during the  pandemic, some never recovered, so that probably will hurt the pool of clients in regional business. I don’t  know that the pace was different, but I think the importance of national, which has always driven three quarters and sometimes more of NCM’s revenue, I think the importance of national will probably only grow in  the short term because regional is just going to have a few more obstacles to overcome. 

TB: That doesn’t necessarily mean we’re getting back to industry-healthy utilisation at a different time.

SP: Yes, and again, automotive is one thing that’s impacting the regional business. I think that, as I  mentioned, other businesses have greatly reduced or gone out of business on a regional standpoint. There’s  also the national team, the national sales team has maintained its size and depth while there have been more  cutbacks on the regional team. All three of those things will have some impact on how quickly and how broadly  the regional business comes back. Of course, the upfront marketplace is always a key factor because your  regional business really doesn’t have an upfront marketplace, so the national business has the ability to lay in a  very significant foundation of their overall revenue goals in this upfront window, which the regional team does  not.

SP: Political is a tough one. The cinema, the circuits have really stayed away from political advertising, so  when all that money came into the marketplace and into spot TV and other formats, the theatres were unable  to take advantage of that. I’m not sure if anything has changed on that front, but my understanding, and  certainly in the time that I was there, is that political dollars didn’t help the revenue on the cinema side. As far  as other categories, yes, automotive is a huge one, so whatever time it takes to get that chip shortage under  control, that will impact national and regional. There are a number of other categories that are very important  to cinema. Video games very, very important and obviously they continue to explode in a positive way through  the pandemic as people are home. I’d say that video category would be very strong. The telco category has  always been very strong and they have a combination of companies which we didn’t have a year-and-a-half  ago, with Sprint and T-Mobile, so that reduces one player, but that was already coming into account before the  pandemic, so that will still be a strong category. 

The streamers, that’s an interesting one. An Amazon, a Netflix, etc, have been big players in cinema and while  there is certainly more of a competitive nature with the streaming services having more original content  released directly to streaming that might have gone into theatres in the past, it behoves both sides to maintain  a friendly posture, so I think that the streamers will still want cinema for all the obvious reasons, a highly  entertainment-focused audience and a young adult audience that they can’t get in other places to be able to  push their content. I think that they’ll continue to find a friendly way to work together, but yes, there will be  some elevated levels of competitiveness as the streaming services became much stronger and much more  direct competitors to the circuits than they were in two years ago. Other than as we mentioned, the automotive  thing, I don’t see any other categories that I’d be particularly worried about. Cinema had done a good job  expanding to CPG, QSR and other areas like that, and as all those continue to bounce back, as I said, they’ll  still need the GRPs that cinema provides.

SP: A lot will come down to what it is that streaming services want to promote, so if Netflix is promoting a  nine-episode mini series that they’re showing that never would have been a theatrical release to begin with,  like The Undoing or something like that, Nine Perfect Strangers, something like that the circuits will have no  issue with. There’s something else that would have probably been in the world of a couple of years ago a  theatrical release that maybe is going directly to streaming and it feels like a steaming service is promoting  content that is directly competitive to bring people into movie theatres, that’ll be an issue and that was always  an issue. I know there are a lot more streaming services, but that was always an issue before the pandemic as  well. The circuits and their relationship with NCM is that they do have some veto ability. The creative has to be  approved by the circuits, so it’s generally not an issue because the circuits are looking to generate as much  money from NCM as they possibly can, but yes. It’s certainly something that NCM has to be aware of that the  content doesn’t just, for lack of a better term, throw it right in the face of the circuits because it’s a theatrical  type of piece of content that the streaming service is promoting.

SP: I think that gets to your earlier question, right? You’re saying if Disney+ wanted to promote something,  let’s say Black Widow was not screened in theatres and Disney+ was going to only show it on their streaming  service. I don’t know if there would be a CPM that would be high enough that would not make the NCM circuit  partners pissed off at that because that really would feel like you’re trying to eat our lunch by promoting  something that tells people to stay home and don’t go to the theatre. That’s where I don’t think CPMs will be  the issue. I think the content will have to be something that feels like streaming entertainment content that’s  not subtly or directly telling people to stay home and don’t go to the movie theatre.

SP: As we all know, every business, once it learns to operate with less talent, is tempted to stay at that level  and feel like, “Maybe we can continue to operate this way.” When I look at the NCM scenario, the desire was to  keep onboard as many of the sales people as possible because a sales organisation that cuts its sales team is  doomed. For the most part they did that and reduced salaries and obviously reduced a whole lot of back-office  stuff. Some of that back-office stuff won’t come back to its full capacity and there are a variety of reasons for  that. Can you get by with four people in your events department as opposed to six? Can you get by with a  couple fewer marketing or research people? I would say there’s always the potential that you learn to live with  a little bit less and still get the job done. There will be another factor that comes into play and that’s obviously  the technology that they’ve invested in in their AA management system and their Unique X partnership, and  that was always designed to make things more automated, which inherently is going to reduce body count.  Some of those positions won’t come back and weren’t designed to come back anyway in the automation of  some of the back end. Coming back to full capacity, it doesn’t seem logical to me that everything would come  back to full capacity, certainly not in the back-office stuff. Sales team, yes. Full capacity and very few  reductions certainly on the national team even during the pandemic, and you have to get those people back up  to their salary and their commission levels or else they’ll be flight risks.

SP: As I said, there’s no question that the automation of that part of the business was going to result in fewer  bodies needed to do the work. It has been a very manual and a physical labour to run the Noovie pre-show, it  required a tremendous amount of people in the back office, and so that will absolutely be reduced by virtue of  automation. 

SP: Human beings are great because they’re super flexible, and systems aren’t always as much. The thing  with the Unique X system, though, was that it was designed to really accomplish two things. Rather than  having to sell cinema inventory in set chunks, you can buy a full network or you can buy a half network, those  were your two options, the Unique X system says, “You can buy cinema in any chunk size you want, just tell us  what your budget is and we’ll build a plan and we’ll drop inventory into the pre-show to fulfil your impression  needs.” That kind of automation with Unique X is very important. The second thing is it allows you to have  less waste, so if a specific brand buys a certain amount of cinema inventory, maybe they want to buy certain  markets or maybe they want to buy just two ratings, PG-13 and R, Unique X allows you to take other  advertisers who don’t have those qualifiers and fill in the gaps. If you will, you have less Swiss cheese because  you’re able to fill in the holes that were left by one brand with another brand that doesn’t have a stricter  requirement. Those are the two things that Unique X, I think, will do that I think will be very helpful. Like all  new automations, I’m sure there will be some growing pains, too, as I said, because a human being can be  called on the phone and change something and reschedule something, but that kind of manual system is just  not going to work as cinema got bigger and bigger. They needed to go this automated route, and if they want to  play more on the programmatic spaces as the media world continues to go that route, then they’ll need it as  well.

SP: I really couldn’t even guess on that one. The only thing I would say, though, because you just referenced  the sales team, just to reiterate, even in the worst of the pandemic when the theatre doors were shut, we didn’t  let go of the national sales team. There was some trimming on local and regional, and the reason why was  obvious. As I said, you can’t lose the only source of revenue that you have as a sales company, so there really  was no loss of significance on the sales force, and for me to try to comment on how much of the 40% reduction  in back office will come back, all I can offer is what I have. I would guess that there will be some places where  they find a way to continue to do their work with a couple fewer people than they had before the pandemic. 

TB: It seems you’re referencing the voluntary reductions on NCM’s national sales team, but since we’re down  90% on 2019 number, the commission environment for sales execs is not ideal. 

SP: The good thing they’ve got going for them is the management team is pretty solidly in place. You still  have the same people running Chicago and LA nationally that were there for a number of years. They have a  new person in New York because of some management promotions, you’ve still got Scott Felenstein running it,  so there’s a lot of good consistency there in terms of the strategy and the relationships. I don’t see any  concerns at this point in time, moving forward, because the bad time, the worst of the bad time, has passed.  Those on the sales team who said, “I just can’t live for the next 12 months with a fraction of my commissions,”  if they could find something else during the pandemic, they did. Those that chose to stay, which was a very  significant portion of the national team, they’re certainly not going anywhere now because now they can see  not just the light at the end of the tunnel, they’re already in the light with some of the blockbuster films that  have dropped over the past several months. No, I’d say that those relationships and the strategic continuity,  you’ve got that pretty solidly in place from both a national and regional perspective.

SP: The most exciting thing that we saw as an opportunity in digital was the ability to reach moviegoers after  they leave the theatre. Because there is the ability to geofence them, and we don’t need to get into the  technology, but because there are ways to deliver messaging to moviegoers who are inside an NCM theatre  after they leave, that was always the most exciting part to take to market because that’s the one-two punch,  that’s the frequency argument. “Let us reach the same person, Ford, let us reach them in the theatre and let us  reach them afterwards on mobile device.” The challenge is that in the digital space, which has not just grown  but obviously surpassed television and everything else in terms of the number one revenue generator in media  space, there’s just massive support behind the biggest players, as all of us on this call know, and so it becomes  harder and harder to find the scrap of what’s left for digital players that aren’t in the top four. I think that that  will continue to be a challenge for NCM and the more they can build their strategy around how do you enhance  the moviegoing experience with things like Noovie, whether it’s Noovie Trivia or movies that can continue on  in an app in your phone. The more they can do things that make your moviegoing experience better as  opposed to trying to compete as a free-standing digital product, the better. I don’t think there’s an approach  that works unless you completely tie it back to the NCM moviegoing experience and delivering something that  feels beneficial to customers when they’re not sitting in the theatre.

SP: I’m going to punt on that one, only because a lot has changed in the trackability and how you can deliver  multiple messages to the same person on a mobile device. I’m afraid I’m not as close to how that’s advanced  and how it’s going to impact NCM’s ability to retarget movie goers. I can certainly tell you that as the data  becomes more sophisticated and there are many more sources of it, I expect that they will be able to continue  to fine tune that delivery and be able to really ascertain to a brand that they are delivering multiple messages  to the same person, but I’m just not as close to it over the past couple of years.

SP: I would just reiterate that the ability to reach significant levels of GRPs in television advertising continues  to collapse rapidly. I think it bodes very well for, as I said, cinema especially as it returns to what feels much  more like a mass-reach medium, which it certainly is. Then as far as how things are going to shake out over the  next couple of years, we have seen that the studios are going to, and have, they’ve re-evaluated their  distribution model. What we’ve also seen, as any of us that have been trying to figure out what to watch on  streaming services alone, is that the amount of content has exploded. If there’s that much great content out there, then it’s a matter of figuring out the right balance for the studios on how much gets distributed  theatrically, how much gets distributed in a dual model, a hybrid model and how much gets distributed to  streaming services alone. The burst of content that we’re seeing right now, and the money that’s going behind all of it, leads me to believe that the model is going to change, and has already changed dramatically, of how  many films would go straight to theatrical and have the window, but I actually am pretty optimistic that there’s  an abundance of content that’s going to help fuel cinema attendance as well as streaming services and the  continued growth of those. The amount of content they have out there, it’s 10-fold vs what we remember from  10 years ago.

SP: Yes, that’s exactly what I would see. I think that there’s going to be a hangover effect for a little while  because it was scary as shit, pardon me. It was scary as shit to have the doors of theatres shut, that was  something that none of us have ever experienced. None of us in the population, forget those of us in the  cinema ad business. To see a business shut down like that and then open and open in fits and starts, especially  in the major markets, that’s got a long-term, as I say, hangover effect on brands, and once that’s gone and once  there is truly a sense that we have learned how to live with and manage our lifestyles and be safe, then I think  the decimation of TV rating points continues to be an even more powerful driver for where cinema could go.  There’s only so much that people want to continue to funnel brands or continue on and funnel into digital and  it won’t be enough that they can gain out of television, and that once again puts another mass video in a good  position. I think you’ve just got to get past all the delayed fretting and concerns about people going back into  enclosed buildings. If you go into any restaurant in a major city right now, you can see that people are getting  past that pretty quickly, so brands just need to see that and get past it, too.

SP: First question is, will it push utilisation levels even higher? It’s possible. It’s hard to imagine cinema  being 100% sold out all the time just because there are ebbs and flows to the ad business in the months and  the quarters where brands tend to spend most of their money. As far as the potential to get back to those  levels, yes, if the marketplace continues to grow, and you probably all saw the recent Magna numbers, they’re  looking at now even more dramatic growth for 2022 in the advertising marketplace, but the brands are back in  a big way and all the major categories are back to spending. They’re going to need the impressions, so it bodes  very well in the next 12 months and certainly in 24-36.