We believe many international markets for theatrical exhibition have historically been
underserved and that certain of these markets, especially those in Latin America, will continue to experience growth as new theatre concepts and platforms are introduced, film product offerings continue to expand and the local economies continue to
Drivers of Continued Industry Success
We believe the following market trends will drive the continued growth and strength of our industry:
Importance of Theatrical Success in Establishing Movie Brands and Subsequent Markets. Theatrical exhibition has long been the primary distribution channel for new motion picture releases. A
successful theatrical release which brands a film is one of the major contributors to its success in downstream markets, such as digital downloads, DVDs, network and syndicated television, video on-demand, pay-per-view
television and the Internet.
Increased Importance of International Markets for Box Office
Success. International markets continue to be an increasingly important component of the overall box office revenues generated by Hollywood films, accounting for $23.9 billion, or approximately 69% of 2012 total
worldwide box office revenues according to MPAA. (As of the date of this report, 2013 industry data was not yet available.) With the continued growth of the international motion picture exhibition industry, we believe the relative contribution of
markets outside North America will become even more significant. Many of the top U.S. films released recently also performed exceptionally well in international markets. Such films included Iron Man 3, which grossed approximately $806.3
million in international markets, or approximately 66% of its worldwide box office, and Despicable Me 2, which grossed approximately $567.1 million in international markets, or 61% of its worldwide box office.
Stable Long-Term Attendance Trends. We believe that long-term trends in motion picture attendance in the U.S. will continue
to benefit the industry. Even during the recent recessionary period, attendance levels remained stable as consumers selected the theatre as a preferred value for their discretionary income. With the motion picture exhibition industrys
transition to satellite digital technology, the products offered by motion picture exhibitors continue to expand, attracting a broader base of patrons. According to industry sources, box office growth for 2012 set an industry record and box office
during the 2013 summer season reached a four-year high.
Convenient and Affordable Form of Out-Of-Home Entertainment.
Movie going continues to be one of the most convenient and affordable forms of out-of-home entertainment, with an estimated average ticket price in the U.S. of $7.96 in 2012. Average prices in 2012 for other forms of out-of-home
entertainment in the U.S., including sporting events and theme parks, ranged from approximately $27.00 to $78.00 per ticket according to MPAA. (As of the date of this report, 2013 industry data was not yet available.)
Innovation with Digital and Satellite Technology. Our industry began converting to digital projection technology during
2009. Digital projection combined with satellite delivery allows exhibitors to expand their product offerings, including the presentation of 3-D content and alternative entertainment. Such alternative entertainment includes pre-recorded programs as
well as live sports programs, concert events, the MET opera and other special presentations. New and enhanced programming alternatives may expand the industrys customer base and increase patronage for exhibitors.
We believe the following strengths allow us to compete effectively:
Experienced Management. Led by Chairman and founder Lee Roy Mitchell, Chief Executive Officer Tim Warner, President, Chief
Operating Officer and Chief Financial Officer Robert Copple and President-International Valmir Fernandes, our management team has many years of theatre operating experience, ranging