Covid-19: The End for Cinema?

What was the last film that you saw at the cinema? For many, the answer won't easily be recalled. For myself, it took a few minutes of deep thought to remember - a late-night showing in Leeds in December of Star Wars: The Rise of Skywalker - the last title in the infamous nine-pronged sci-fi saga. Unfortunately, I never got the chance to go to a movie theatre during my six months in Madrid, preferring rather to spend my free time in one of the most impressive sporting [amphi]theatres in the world - the Santiago Bernabéu stadium!

Covid-19 has wreaked havoc on the movie industry. There are no two ways about it. Cinemas around the world have been forced to close their doors to the public since March, and many are yet to reopen. It's probably a sensible move - popcorn-covered recliners and rows of sticky, dark seats aren't typically associated with high standards of hygiene. Yet, when we're talking about Covid-19 and movies, it's important to remember that we're not just talking about closed cinema complexes; ice-cream and popcorn companies will have taken large revenue hits in the last six months; awards ceremonies have been cancelled or postponed; restaurants and arcade operators in cinema complexes have gone out of business, and many movies and TV shows have had to halt production indefinitely.

For the time being, let's focus on the cinema industry in the U.K. In a survey conducted by the Independent Cinema Office, 37 per cent of respondents (exhibitors within the U.K. film industry) stated that they had made, or expect to make redundancies due to Covid-19. Many independent cinemas were concerned that, with public funding, they would not be able to sustainably continue to pay their staff if cinemas were forced to remain shut for more than two months. Among the principal concerns for commercial cinemas were a loss of revenue, and difficulty in being able to re-attract audiences to cinemas when they reopen.

Cinemas in the U.K. officially were allowed to reopen from July 4th. However, as aforementioned, in many regions across the world, movie theatres remain closed. And safety protocols "vary from country to country – social distancing is obligatory in Rome, but advised in Paris; masks are required at all times in Hong Kong, and not at all in Denmark."

Case Study: Cineworld Group PLC

If you live in the U.K., the U.S., or in mainland Europe, the chances are that you've visited at least one of Cineworld's 787 cinemas. At the beginning of January, the group's share price sat consistently at around 220p, but now, it lingers around the 50p mark. What has changed in this time? Well, on the back of a very successful trading year in 2019, Cineworld was forced to close all of its cinema complexes, meaning that revenue for H1 2020 quickly dried up. With no one buying their tickets or [overpriced] nachos sharing platters, Cineworld's 2020 earnings and revenue will surely fall way below initial guidance.

The outlook remains gloomy - while cinemas have begun to reopen in various global regions, audiences have been less enthusiastic in rushing back to the big screen. Covid-19 has highlighted an increasing consciousness among the general public about hygiene, and many believe that a grubby, understaffed cineplex, is a red-flag establishment in the cautious current climate.

However, while production has been required to pause over the last months, and cinemas across the world have shut shop, it's not been all doom and gloom for the industry. Two trends have emerged that have demonstrated impressive momentum - the rise of Netflix and Disney+, and the re-emergence of Drive-in cinema experiences. Netflix has proven itself over the last few coronavirus-stricken months to be a tour-de-force - its share price is about 47 per cent up YTD (year-to-date), and its unlimited movie and TV streaming subscription service is at the peak of popularity. In fact, since the turn of the calendar year, Netflix has amassed over 25 million new subscribers on its platform, taking its total viewership past the 190m mark!

Disney+ has had similar success. While it is a newcomer to the digital film and TV revolution, its family-friendly feature films and exclusive television programmes have won over the hearts of many, both young and old. In fact, in many aspects, it already has one over cinema companies - its online release of Hamilton: The Musical, that was supposed to be released in cinemas at a later date, captured the attention of millions of global viewers.

The benefits of online streaming services such as Netflix and Disney+ are clear - why pay £10 for a cinema ticket (and undoubtedly a further £25 on popcorn, a slushie, and all the other overpriced extras you can buy), when you can sit at home or on-the-go, wherever and whenever you like, for a fraction of the cost? Sure, there's a certain thrill about going to a movie premiere at a cinema, or going to your local cineplex with friends, but, in an era where there is an abundance of choice online, why pose a risk to your health when you can stay at home and binge-watch an unlimited amount of films or TV shows. In my opinion, the Covid-19 pandemic has highlighted our desire for convenience - Netflix has become a consumer staple, and I expect this trend to continue in the long-term. The thrill of the cinema is dying, and it will surely take a lot of time, investment, and change, for that excitement to be revived.

As aforementioned, while Netflix and Disney+ have been rolling in revenue and receipts at the expense of cinemas, Drive-in movies have also been rejuvenated. Generally considered a thing of the past, this summer has seen the re-popularisation of drive-ins. In the U.K., many have sought to take advantage of the unusually good weather by going to their nearest drive-in venue to watch a classic film in their cars - a novelty when considering that drive-ins have traditionally been limited to U.S. audiences. While the entry fees were hefty, venues and screenings were quick to sell out, and, from personal experience, the cost was justified by the unique, novel experience of watching a film from the [dis]comfort of my car.

So, with people flocking in their cars to see re-runs of Love Actually or The Incredibles at their local Drive-in, is it possible that big-screen cinema isn't dead just yet? The answer is as follows...

Cinema is a dying past time. Consumers are increasingly evaluating whether paying an extortionate amount for a ticket and food at their local Odeon or Cineworld complex outweighs unlimited digital film and TV streaming for generally less than £10 per month. The success of Netflix and Disney+, and the struggle of cinemas to regain audiences amid the backdrop of a global pandemic, only emphasises this. Furthermore, the Drive-in movie trend doesn't suggest that we were so desperate to go to a cinema again that we were willing to pay £40 to watch a film on the big screen through our car windshields. In truth, in a depressing time with little socialising, limited consumer experiences available, and a need to keep families occupied and engaged, perhaps the Drive-in movement was fuelled by a desire for a unique, novel experience, that helped many recapture their youthful side and the wave of excitement felt upon entering a cinema for the first time.

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