Media Mayhem: Damian Keogh – ‘Government in Australia is not making business easier’
In this week's Media Mayhem column, we chat to the CEO of HOYTS, Damian Keogh.
How is the operating environment impacting your team, clients and partners?
I think everyone recognises that times are challenging. Reporting season backed that up. While we are at nearly full employment the impact of inflation is eroding margins so most businesses such as ours and people we deal with are in strong cost control mode.
From a HOYTS Group perspective, we are in the discretional household entertainment budget sector with our cinemas and the media advertising space with Val Morgan. With HOYTS, we have seen continuous market share growth over a sustained period and for Val Morgan, we have double digit growth in 2024 in a subdued market. So, we are getting a lot of things right.
What changes are you seeing in consumer behaviour and preferences?
Discretionary spending is interesting at the moment. With high interest rates people are evaluating their own return on investment for personal experiences. We are seeing with big movies such as Barbie last year and Deadpool and Wolverine this year do incredible box office business.
Likewise, must-see sport events and things like the Taylor Swift concerts are getting people spending big on experiences.
There is a real nostalgia kick in cinemas at present with breakout content such as Mario Brothers, Inside Out 2 and even Top Gun Maverick from a few years ago. We recently saw the 15th anniversary of Coraline in 3D take $1.6 million at the Australian box office.
How are you meeting those expectations?
At HOYTS we are continuing to invest in great customer experiences primarily through the ongoing renovation program we started back in 2024. Since then we have invested over $300 million in building new cinemas and renovating old ones. Late this year we will open a newly refurbished cinema in Ipswich and also finish an upgrade to the Midland Gate site in Perth. The recliner seats we have put in general admission have made the cinema experience better for our customers and have grown market share.
How are you using technology to your advantage?
Digital transformation has been a work in progress for all businesses and now cyber security and AI has intensified the focus. What we have learnt is that you cannot leave technology to the IT department – everyone has to be on the journey and ultimately it is worthless if it does not improve customer experience.
We are really excited about the new data play for Val Morgan the team has been working on for some time now. It will combine first party data with a range of complementary data sources to improve targeting across our cinema, outdoor and digital networks. It is being called Validate (not surprisingly) and will help clients maximise their ROI across our network.
At HOYTS, we are on the cusp of launching a new native app that has been in the works for over 12 months. This will also take customer experience to a new level utilising personalised preferences and notifications of great deals.
How are you using generative artificial intelligence?
We are integrating AI into various areas in the business. At this stage the biggest early wins will be in increased automation of various functions that will help with improvements in velocity of output and less reliance on human data entry.
Our studio across the group is integrating AI into production requirements and our editorial teams are utilising AI for Val Morgan Digital.
This is an area where the pace of change will increase in coming years but we feel we right now it is still in exploratory stage.
When you lift your eyes from the screen to the media and marketing horizon, how are you planning?
Fragmentation of media consumption will continue to increase and agencies will want to automate as much of their buying as they can. We are getting ready for that with projects across the Val Morgan business on data, programmatic and automation.
While we are facing a lot of change, primarily through content and distribution, the fundamentals of media sales remain the same. It is about being able to demonstrate that your media sources reach eyeballs and impact consumer decisions. The complexity is that consumer behaviour is increasingly fragmenting therefore the attribution models of how various media work together is becoming key.
We feel positive about cinema and our outdoor and digital assets that they provide good reach and strong impact in each of their own ways.
What proposals for legislative change would you prioritise, or are there areas you would like government assistance on?
I could provide a pretty big list on this one. Overall, government in Australia is not making business easier with the amount of compliance they demand. I would reduce that significantly and get rid of old taxes and red tape.
On the media front, more traditional media continues to be hamstrung by old rules that don’t apply to the new digital counterparts. It should at least be a level playing field.
Cinema is Australia’s number one out of home cultural activity. It employs thousands of people, provides a strong community focus in many towns and yet gets no government support.
Box office from Australian made movies is about 3% of total box office. Government must start finding a way to stimulate more local, well funded and well developed movies.
What opportunities do you see, and how are you positioning your organisation to exploit them?
After a few challenging years in cinema we are seeing a return to what we are referring to as the ‘new normal’. Within that we are looking to continue to be brave and invest in future growth.
We remain bullish on the cinema business and particularly where HOYTS sits in it. We will do around 30% of admits this year in Australian cinema and undoubtedly there are advantages in scale. We continue to explore sensible investments to improve customer experiences.
On the media front, scale is also becoming increasingly important to ensure you are a transactional partner with the bigger media agencies. We will continue to look at ways to grow the reach of our outdoor and digital networks with capital investment.
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Neil Griffiths is the Managing Editor of Mumbrella. He joined the company in October 2023.
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