Following the recent announcement that Cineworld will be closing down its US and UK cinema locations, the cinema industry’s future looks bleak. GlobalData has long held a negative stance on cinema’s long-term future, highlighted in the GlobalData 2020 Internet TV report. However, Covid-19 has accelerated the industry’s decline.
In the GlobalData music, film, and TV thematic scorecard, Cineworld scores 1 out of 5 for the Covid-19 theme and sits at the bottom of the overall rankings. Covid-19 has stifled blockbuster production, and fear of contracting the virus has discouraged people from visiting cinemas. Technology has also made home consumption an attractive alternative to cinema.
Postponements drove Cineworld closures
The Cineworld closures were driven by the new James Bond film’s postponement from November 2020 to April 2021. The movie had already been pushed back once, from an initial release date in April 2020. Blockbuster content is vital for selling movie tickets. Without it, there is little incentive to spend money on something you could otherwise watch at home. This has never been truer than during the last seven months when Covid-19 has forced cinemas to shut and, once they re-opened, discouraged viewers from putting themselves in an enclosed room full of strangers for two hours.
In addition to James Bond, a whole host of blockbusters have been postponed this year, including Fast 9, Venom: Let There Be Carnage, Top Gun: Maverick, Godzilla vs Kong, and many more. There has not been a major cinema release since Tenet hit screens in late August and, despite a large amount of hype, box office results for that release were disappointing.
A lack of new content has made it difficult for cinemas to fill their schedules and justify remaining open. Their woes have been compounded by production firms using streaming services to deliver blockbuster content direct to consumers. For example, Disney released Mulan through its Disney+ service for a $30 fee. Not only is this an appealing proposition for risk-averse consumers, but it allows producers to increase their profits by cutting out the cinematic middleman.
Direct to consumer is gaining ground
Even without full supply chain integration, the direct-to-consumer model is on the rise. Greyhound, Tom Hanks’s latest release, was made available exclusively on Apple TV+ following the sale of distribution rights by Sony Pictures Entertainment. The availability of streaming services on every connected device makes it easy for consumers to shun the cinema. Alongside this, consumers have access to sophisticated and immersive home TV and audio set-ups that can come close to replicating the cinema experience. However, die-hard cinephiles will remain unwavering in their support for the traditional cinematic experience.
Although Cineworld is initially closing only temporarily in the US and UK, those markets make up 90% of its revenues. It seems feasible that, if blockbuster production does not speed up and producers become more willing to license their content to digital streaming services, these cinemas will not re-open. The next year could witness the end of the cinema industry as we know it.