THE IMPACT OF COVID-19 ON CINEMAS

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On an unprecedented level, the COVID-19 pandemic has forced cinemas around the world to close their doors, and the consequences of this international standstill are likely to ripple well beyond the current lockdown.

Widespread Closures

It was back in January when the Chinese government first ordered a shutdown of movie theatres across the country, leading to an estimated loss of $1 billion in box office revenue over the Lunar New Year holiday. While China had reopened about 500 of these cinemas by March 23rd, attendance remained low, and by the 27th, they were once again closed.

The lockdown in the ‘Middle Kingdom’ was a sign of things to come in Europe, where the vast majority of cinemas in most countries were closed by mid-March. According to a report published by the International Union of Cinemas (UNIC), less than 2% of the 42,000-plus screens in Europe were open by April 1st, a figure that goes up to 4% on a global level.

Cinemas across China were ordered to close mere days after getting the go-ahead to reopen. (CREDIT: Weibo)
Cinemas across China were ordered to close mere days after getting the go-ahead to reopen. (CREDIT: Weibo)

Impact on Businesses

Needless to say, these shutdowns have served as a huge blow to Europe’s cinema industry. In the United Kingdom, for instance, the sector is expected to lose £400 million in ticket sales compared to the equivalent figures from last year, as 52 million moviegoers remain indoors. To make matters worse, most exhibitors in Europe are still expected to pay rent and service charges during the lockdown, though an increasing number of governments have started introducing measures allowing businesses to delay the payment of rent.

The mood is similarly apprehensive over in the United States, where theatres across the country have been closed since mid-March. In the coming months, big chains such as Cineworld and AMC Entertainment are at risk of filing for bankruptcy, potentially leading to the permanent closure of hundreds or even thousands of cinemas. In a note to investors released earlier this month, Loop Capital analyst Alan Gould wrote that he expected as many as one quarter of the country’s country’s 40,000-plus screens to close for good in the wake of the coronavirus pandemic.

Though governments around the world have offered varying forms of support for groups and businesses worst-hit by the COVID-19 crisis, there remains widespread concern about the financial wellbeing of workers in the coming weeks and beyond. In a survey recently published by the UK’s Independent Cinema Office (ICO), it was found that 37% of cinema employers had made or expected to make redundancies. Out of the workers surveyed, 21% had already had their contracts terminated and 24% had no income.

In the same survey, the majority of independent cinemas estimated that they could only pay their staff at the current level for another two to three months, and while 69% of commercial cinemas are continuing to pay their salaried staff, only 31% are still paying their freelancers and casual staff.

The Shift to VOD

As we outlined in a series of articles earlier this month, the lack of cinemas is prompting many distributors to release their latest features early on VOD, one of the few sectors of the entertainment industry that seems to be thriving off the international lockdown. However, there remains some resistance from groups hoping to preserve the immersive and communal experience of seeing a film in theatres.

UNIC, for example, argued in a statement published last month that this shift in release strategy is not “in the interest of either the sector or audience,” arguing, “With the financial impacts of this unprecedented crisis on our industry still not fully clear, now is not the time to seek short-term financial gains at the expense of the sector as a whole.”

Nonetheless, even before the crisis took effect, record-breaking box office figures and studies demonstrating a positive correlation between cinema attendance and hours spent streaming helped pose a challenge to the old narrative that VOD is harming theatres, and as cinema owners begin to fret about the future, we can assume more and more of them will begin to see an upside to the rise of streaming services.

Cary Joji Fukunaga's No Time to Die is among the delayed blockbusters that could bring audiences back to theatres later this year.
Cary Joji Fukunaga’s No Time to Die is among the delayed blockbusters that could bring audiences back to theatres later this year.

What Comes Next?

Whether theatres and festivals should or shouldn’t embrace the “virtual cinema” model that some exhibitors are currently trying out is a matter that we’ve discussed in greater detail elsewhere, but either way, the task of bringing moviegoers back into cinemas once the lockdown has eased up may well prove a challenge in its own right.

In the aforementioned ICO survey, the need to re-attract audiences when cinemas reopen is ranked as one of the main concerns of exhibitors, second only to loss of revenue. While some industry chiefs are relying on the appeal of delayed blockbusters like No Time to Die and Wonder Woman 1984 to fill seats, the idea of sitting down in a room full of strangers after months of social distancing is likely to give many moviegoers pause.

Speaking to the New York Post, Wedbush Securities analyst Michael Pachter warned, “Even if we put the virus behind us, lots of people are going to avoid retail and movie theatres till they are comfortable that they are inoculated against the next iteration of the virus.” We can therefore expect to see some precautionary measures in place once cinemas open their doors, whether it’s shortened hours, or staggered seating arrangements to allow more space between audience members.

For now, however, it remains unclear when exactly most theatres will be open again to the general public, leaving the sector in an ongoing state of limbo. And while we look forward to the day when the big screen experience becomes a viable option once more, the current pandemic could well prove a pivotal moment in reshaping the role played by cinemas in the ever-changing film industry.

 

This article was published as part of an ongoing series on the impact and long-term effects of COVID-19 on the film industry.

 

Cover image: Shutterstock

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