Hope floats for the global box office

The exhibition sector will lose about $47 billion in box office revenues between 2020 and 2022. This does not include the loss of revenue from food and beverage, and advertising, both of which are profit drivers. More than $22 billion has already been wiped out from the global box office in 2020 over 2019. That is a fall of 71 per cent, from $26 billion to $3.7 billion.

Yet exhibitors (theatres) have remained resilient. Other than single sites in various countries, New Vision Theatres, MBO in Malaysia and UA Cinemas in Hong Kong were the only ones to go out of business. Over the years, the number of cinema screens has been rising consistently — from 150,000 in 2015 to over 210,000 currently. The sharpest rise came not just from China but also from Mexico, Brazil, Russia, Colombia, Indonesia and Turkey.

This resilience is the first big takeaway from Omdia’s report on Cinema Landscape in 2021 by David Hancock, chief analyst, media and entertainment, at the Uk-based media analytics firm.

The second is the strong line-up of big-ticket films awaiting release in the second half of 2021. There is Top Gun: Maverick, No Time to Die, Spider Man and Thematrix4 among 54 others. That is a bulk of the 84 films that the big studios released or will release in 2021. “Year 2022 will have a hangover, but 2023 should be the first full year of normalcy,” says Hancock.

The third key point that Hancock makes is on the changes that both the pandemic and OTT have forced on the business. These include a questioning of the gap between the release of a film in a theatre and on different formats like OTT and TV. The case for reducing this window from about 90 days (in the US) just got stronger as studios like Disney themselves move to OTT.

“Covid-19 has changed the balance of power and a more flexible windowing system will be a long-lasting effect. Digital releasing will become more widespread, including some dayand-date with cinemas,” says Hancock. But this does not mean that windows are dead or undesirable, he adds. “The theatrical experience sits above the others in impact and global clout. Theatrical exclusives will push higher resonance and revenues.”

Will there be consolidation? “Most cinema chains are using debt financing. There might be no consolidation because nobody has any money. Share prices are down, cinemas have lost value,” says Hancock.

Hope floats.