With 17.4 million tickets sold in 2003, the Republic has the second-highest rate of cinema going in Europe

Even allowing that financial data on the Irish cinema sector is rarely available, newly published research suggests that the cinema trade in the Republic is highly profitable.

The report from leading cinema business analysts Dodona Research into the Irish cinema trade states that 17.4 million people bought tickets to Irish cinemas in 2003, five million more than in 1998. At 4.4 visits per head of population per year, the Republic has now the second-highest rate of cinema going in Europe. Only Icelanders visit cinemas more often.

The Republic was one of the few states in Europe to record an increase in admissions in 2003 and, while the rise was a modest 0.6 per cent, gross box office revenues rose by 7 per cent to €97.5 million.

The average ticket price continued to rise, to €5.59 per ticket, with the highest ticket price being €8.50 for a Saturday night seat at the Ster Century cinema. The rise in the VAT rate last year, from 12 per cent to 13.5 per cent, has reduced exhibitors' net revenue, according to the report.

Average film rentals, the proportion of box office revenue going to film distributors, rose to 42 per cent in 2003. Buena Vista International (Ireland) dominated Irish distribution during the year, with a box office share of 30 per cent, releasing 37 films, including five of the top 10 films of the year.

Tracked over the five-year period from 1998 to 2003, net revenue from concession sales of soft drinks and confectionery grew by 82 per cent to €31.7 million from €17.4 million. Gross advertising revenue rose to €10 million, mostly booked through Carlton Screen, the dominant force in cinema advertising in the State.

Dodona reports total exhibition revenue increasing to €120.8 million in 2003, but its analysis suggests that gross margins continued to decline, dropping below 63 per cent.

"These high returns, combined with low interest rates are leading to what could be a multiplex building boom in the country, with new complexes planned in Dublin, Cork, Galway and Limerick," Dodona says.

"In addition, plans for smaller cinemas continue to come forward, including a number for art-house cinemas."

Notwithstanding the strong performance of the international multiplex sites - UCI, UGC and Ster Century - it is Irish companies that are driving the new developments. According to the report, they are mostly local independent cinema operators.

"Where operators have been attached to these projects, they are invariably Irish exhibitors, and mostly independents, which play an important part in the industry in Ireland, where most towns are simply not large enough to support the kind of large multiplexes that form the foundation of major international exhibitors' business models."

The new multiplex developments cited in the report are in Cork, at Mahon and Blackpool; in Galway, at Salthill; in Limerick, at Coonagh Cross, Castletroy and the Ballysimon Road; and in Dublin, at Rathmines, Dundrum and Swords.

The biggest local operator with 130 screens, amounting to 39 per cent of the State's total, is the Ward Anderson group of companies, which includes Irish Multiplex Cinemas (IMC), Omniplex Holdings and the Dublin Cinema Group.

Smaller local companies such as Storm Cinemas, Cork's Reel Picture Cinemas, Diamond Cinemas, and the O'Gorman and Spurling family holdings have been expanding in recent years.

The multinational exhibitors UCI, UGC and Ster Century operate at five sites with 62 screens between them.

According to Dodona, UGC's recently expanded site in Parnell Street, Dublin is its most profitable outlet in the UK and Ireland. Turnover at Parnell Street rose to £4.4 million sterling (€6.5 million), an increase of 14 per cent in 2002, the latest year for which figures are available, with profits also substantially up. Latest year EBITDA (earnings before interest, tax, depreciation and amortisation) figures for UCI's three Irish sites passed €6million in 2002, from revenues of €21.5million.

There is also an increasing number of local film groups and arts venues that screen films part-time, often on a non-commercial basis.

In support of cultural diversity in film exhibition, two cinemas have been offered €750,000 in first-round capital funding from the Cultural Cinema Consortium. The recipients are the Kino cinema in Cork and the Limerick Filmhouse project being developed by the Belltable Arts Centre.

The Arts Council recently announced details of a second funding round process.

Pointing to the under-performance of some major film releases in 2003 as having been responsible for a softening of admissions results for the year, Dodona predicts a return to stronger growth in the Irish cinema market in the medium term.

"Strong demographics and still low ticket prices can be expected to continue to underpin growth in this very dynamic market. A target of 20 million admissions by 2008 looks eminently reachable and, if it is reached, moderate growth in ticket prices will be enough to carry national box office past €120 million."