The death of the cinema? Adrian Weckler on an industry hit hard by streaming and a pandemic
FROM Monday, cinemas will reopen in Ireland. But will people go? Even when things fully return to normal, will our mass adoption of streaming services and giant, cheap televisions mean less regular visits to the local multiplex?
More immediately, how will cinemas handle distancing regulations or deal with challenges to food sales, a central part of how they make money?
On the face of it, the cinema economy is in reasonably good health. Before the lockdown, both admissions and box office receipts across Europe were close to historic highs.
Ireland is particularly strong, with the most frequent cinema attendance and the most cinemas per head of population in the continent.
But there are warnings from the one key market that traditionally sets the entertainment and technological agenda.
In the US, cinema attendance has been shrinking solidly for the last two decades. Last year, ticket sales were 25pc down on their peak in 2002, despite a 15pc increase in population over the same period. This is down to factors that the US adopted early but which may now be rolling out to Ireland and other countries – strong take-up of new streaming services, fancier home entertainment systems and increased studio control over the distribution of their own films.
“I think cinemas are among those businesses that are going to feel the effects the longest and hardest from the pandemic,” says Andrew Lowe, co-founder of the Irish movie company Element Pictures and co-owner of Dublin’s Lighthouse cinema and Galway’s Pálás cinema.
“Having said that, surveys show that returning to cinemas is one of the most anticipated things on people’s minds, after visiting friends and going to restaurants. I think most people can’t wait to get back in a darkened room with that special atmosphere.”
Mr Lowe sees the equation from several sides, as a producer, distributor and cinema (or “exhibition”) proprietor.
For others, such as Graham Spurling, it’s a more singular mission. Mr Spurling owns multiplex cinemas in Dundrum, Swords and elsewhere, which cumulatively see about 1.5 million admissions during the year. He has little time for streaming services such as Netflix, calling them “shite”.
He believes that cinemas will soon regain their pre-eminent position in Irish recreational habits.
“Netflix and Disney Plus and HBO Max have been given a window of opportunity that they never would have foreseen having,” he says. “But I don’t see that situation staying going forward. Once we return to some form of normality, people will be back in the cinemas.”
His ‘Movies@’ cinemas in Dundrum and Swords are expected to be the only ones in Dublin to reopen next Monday, with others due to open next month.
He’s not quite sure yet how it will go.
“You’ll be booking online,” he says. “You’ll see availability for numbers of seats in groups of one, two, three or whatever. In
‘Surveys show that returning to cinemas is one of the most anticipated things’
some cases if you’re a bigger group, you might be split up. To be honest, we’re all sort of making this up as we go along.”
Mr Spurling expects the two-metre distancing rule to be relaxed down to one metre by the end of July, which would allow his cinemas to get at least 25pc occupancy that he needs to get back into business. He says that the current Government guideline of a 50-person maximum attendance for indoor gatherings isn’t feasible for any cinema.
“Fifty seats is a killer for us,” he says.
Element Pictures and Lighthouse proprietor Mr Lowe agrees on the challenges of social-distancing.
“A two-metre social distancing rule would mean that no cinema would be profitable,” he says. “It simply wouldn’t be possible.”
According to the most recent industry figures, an Irish person goes to the pictures 3.3 times a year, more than twice the European average. We also have more cinema screens (108) here per million residents than any other European country. Only France (91) and Norway (89) come close.
There is more investment planned, too. The Omniplex chain is due to expand its cinema numbers in Ireland, with others such as the UK-based Everyman cinema chain due to open in Dublin.
Gnawing at this is Ireland’s status as having a higher-than-average broadband buildout under way due to a combination of the National Broadband Plan and private operators laying down fibre. This has contributed to almost one million Netflix subscriptions here, with more expected in the next year.
If there is a European country at a visible intersection of technologies and which might be studied as a testbed for movie-viewing habits, it’s us.
“Cinema faces a threat, because the power of the streamers is increasing,” says John Kelleher, a prominent Irish film and television producer who oversaw eight movies including ‘Eat The Peach’ in the 1980s.
“But it’s a really resilient business. For a long, long time, people have been predicting the death of cinema.”
Those warning of unprecedented pressure on cinemas point to studios chipping away at the exclusive “windows” of a few months that cinemas have to show a film before on-demand internet services and streaming platforms get hold of it.
If parents know that ‘Frozen 2’ will be on Disney Plus within three months instead of six months from the cinema release, or is available for a single €20 download, some will naturally be less inclined to shell out up to €100 for a family cinema outing. This is exactly what has happened with a string of big kids’
movies.
Within the last week, the new Spongebob Squarepants movie – originally billed as a heavily-marketed cinema release – was put out instead as an on-demand internet rental. It now won’t get a cinema release until 2021. It’s the second time in a month that a huge film has broken faith with the cinema ‘window’ cycle in favour of streaming or on-demand. In late May, Universal released its ‘Trolls World Tour’ as an internet rental, cutting cinemas out of the action. It claimed to have made $100m (€88.5m) in its first three weeks, adding that this was ahead of what it made in the first five months of the original 2016 ‘Trolls’ cinema run. What’s more, instead of splitting that with cinema chains, it got to keep 80pc of the haul.
“The results for ‘Trolls World Tour’ have exceeded our expectations and demonstrated the viability of PVOD,” NBCUniversal CEO Jeff Shell said at the time. “As soon as theatres movies per se, goes into effect today and as our theatres reopen, and is not some hollow or ill-considered threat. This policy… also extends to any movie maker who unilaterally abandons current windowing practices absent good faith negotiations between us.”
Mr Aron’s announcement has been somewhat backed up by the CEOs of other cinema chains, with some promising that they will not show any movie that is first made available to on-demand or streaming services.
But not everyone believes they’ll follow it through.
“Do you really think that they [AMC] are not going to show [Universal’s] James Bond ‘No Time to Die’ later this year?” says Mr Spurling of the controversy.
“No way. That’s just a negotiating tactic.”
Others think it’s a turning point.
“The most likely outcome of the coronavirus crisis is the acceleration of trends that were already under way and the demise of the cinema window is surely one of those trends,” noted Ben Thompson in his ‘Stratechery’ newsletter. “Implied in Disney’s tentpole strategy is that a huge portion of what used to be small and mid-size films are now sold to Netflix or other streaming services. That is abandoning the cinema window. Meanwhile, tentpole film makers know they own the customer more than cinemas anyway, so they are squeezing more and more profit out of that window.”
Those who commercially sit adjacent to cinemas, such as media-buyers, acknowledge the issue.
“That whole window is a concern for the exhibitors and it always has been,” says Eoin Wrixon, CEO of Wide Eye Media, which sells advertising into cinema screens.
So what of the actual threat that streaming services such as Netflix pose? In Ireland, we don’t know exactly how many Netflix subscribers there are, but sources say it’s close to one million.
The last major survey on the subject, a 2018 study from Comreg, reported more than 500,000 likely subscriptions in the country. That’s a penetration of between 30pc and 40pc here, depending on how you judge the number of homes.
From its own reported figures, we know that global Netflix subscriptions have increased by half in the last two years, from 125 million to 182 million. But European subscriptions have doubled in the same period, according to Comparitech, from 29 million to 58 million. The UK alone now supports 13 million Netflix subscriptions, according to these figures. Netflix has said before that Irish per-capita subscription levels are around the same as the UK. This would put the Irish subscription figure at somewhere around one million, in line with a growth curve from Comreg’s 2018 figures to today. Netflix, as it always does, declined to comment on the exact Irish figures. However, people with knowledge of the figures say that the number is closer to one million than 500,000.
One of the biggest immediate problems that cinemas have is title availability. While Disney’s ‘Mulan’ and Christopher Nolan’s ‘Tenet’ are expected to attract a lot of attention when released in late July, almost all of the rest of the big releases have been delayed until later this year or 2021. That includes the Marvel title ‘Black Widow’, the new Wonder Woman film (‘1984’), the new James Bond movie and others. Mr Spurling isn’t letting that stop his cinemas in Dundrum and Swords.
“We’ll be running a number of older films,” he says. “There’s a whole generation who have never seen ‘Dirty Dancing’ and we’ll have it in Dundrum from next week.”
Even still, he says, “we’ll have a pretty awful year compared to last year. Next year we’ll also be down maybe 25pc on last year. I see our opening 11 days as being a bit of a honeymoon period. But the honeymoon period won’t last. So when we hit the week of the third of July, we are back in the realm of having no new product.”
Running a cinema is mostly a cash business.
The two most important revenue streams for most cinemas are ticket sales and food sales. A blockbuster, or “tentpole”, movie will make a fortune for the cinema from sales of popcorn, ice-cream and fizzy drinks alone, with a price of €8 or €9 for a (cost-price 50c) ‘combo’ deal fairly common.
The ‘Movies@’ cinemas in Dundrum and Swords will be serving their usual food and snacks, Mr Spurling says.
“We’ll observe the same precautions that anyone in any other food service sector is taking,” he says.
Globally, cinema chains are warning of hard times ahead. Earlier this month, the world’s largest cinema chain, AMC Theatres, said that it has “substantial doubt” about its viability.
Those who think cinema attendances have peaked argue that film studios are now diluting the exclusive ‘windows’ that cinemas get ahead of on-demand services and streaming platforms. They also point out that ubiquitous broadband, 60-inch tellies and mass take-up of new services like Netflix must logically shave off a portion of cinema-goers.
But those who say attendances will gradually return to normal say that cinema endures because it is a theatrical experience unmatched by anything at home. They also say that it is somewhere to physically go, a factor that will always appeal to people looking for a few hours away from their house.
“I don’t think we will ultimately have a drop off in cinema attendance,” says Ed Guiney, who runs Element Pictures with Mr Lowe. “I think if the films are good enough, we’ll have an increase in cinema attendances.
“The death of cinema has been foretold many times at different phases. I do think it will have to adjust. But ultimately I think cinemas themselves will become nicer, more special places to visit.”
‘It’s resilient. For a long time people have been predicting the death of cinema’
‘I think cinemas will become nicer, more special places to visit’