Another ‘death knell’ for movies
AUCKLAND: Movie theatres are dead. That is the umpteenth time in recent memory the industry’s death knell has been sounded, this time because of the coronavirus crisis, which has forced the closure of cinemas around the world.
The chief analyst at USbased research firm RiskHedge, Stephen McBride, has declared Covid19 will wipe out several industries, not just for the duration of the crisis, but for good.
‘‘Filmmaker Universal detonated a nuclear bomb in Hollywood’’ when its children’s film, Trolls 2, became the first mainstream movie to be released online, skipping movie theatres, Mr McBride said.
‘‘Families can stream it at home for 20 bucks. Disney followed suit, releasing its latest hit, Onward, digitally. This is far more disruptive than most folks realise,’’ he said.
‘‘Movie theatres have always held an exclusive window for film releases. They demand 90day exclusive rights before the movie can be shown elsewhere. In short, this is how they make money.’’
Mr McBride said while filmmakers had often toyed with releasing films online, theatres had always blocked that.
He cited the case of
Universal trying to release the film Tower Heist online in 2011 when it was still in theatres — the filmmaker had wanted to release it online three weeks after it went into cinemas.
Backdown
That provoked Cinemark, America’s secondlargest theatre chain, to say it would not book the movie if Universal went ahead, and Universal backed down.
‘‘With movie theatres shut down across the country, it has forced filmmakers to pull the rip cord and release movies online. And this isn’t a oneoff. Universal said it would no longer give theatres an exclusive period after the lockdown ends,’’ Mr McBride said.
By country, he meant the United States.
‘‘My friends, this is the end for most movie theatres.’’
The evidence from China does not bode well.
The BBC reports that after explosive growth to the point at which February 2019 Chinese audiences spent $US1.63 billion ($NZ2.7 billion) on tickets, a record for a single month anywhere in the world, Chinese theatres tried to reopen in midMarch after that country passed the worst of its crisis, only to find distributors refused to release new films and audiences stayed home.
Nearly 500 theatres in China tried to reopen and then shut down again as it became plain that cinemagoers were not comfortable with visiting them, when it was safer to watch movies at home.
Just over a century ago, when the Spanish flu was sweeping the world, taking the lives of at least 50 million people, experts were predicting the demise of movie theatres as many across the world closed for the duration.
But the industry went on to flourish through the Great Depression of the 1930s and thrived through World War 2.
Then came the advent of television, and again the pundits hailed the demise of cinemas, as they did after VHS cassette tapes became ubiquitous and when they were supplanted by DVDs and when streaming took over.
Vista Group International is taking a keen interest in the industry’s outlook, given that it is the world’s largest supplier of technology used to run cinemas, market and distribute movies, claiming 51% of cinemas with 20 or more screens outside of China.
Its founder, Murray Holdaway, said Mr McBride was taking ‘‘a typically American view’’ of the industry.
‘‘When I started in this industry in the early 1990s, box office was split about 7030
North America’’, including Canada, versus the international industry.
‘‘Today, that has completely reversed and is now 7030 in favour of international.’’
Mr McBride pointedout ‘‘the world’s largest theatre company, AMC, entered bankruptcy talks
. . . AMC and its competitors have all plunged 75%plus in the past few years’’.
However, AMC has since raised $US500 million from selling bonds to help it stay afloat through the crisis.
Fisher Funds equities manager Sam Dickie said that excluding the Covid19 effect, the share prices of listed movie theatre operators shows that, of total returns in the five years ended June 2019, AMC’s share price fared the worst, dropping 50%, followed by Cineplex shares, down 30%.
However, Cineworld Group’s shares rose 119%, Event Hospitality’s were up 77% and Cinemark Holdings’ rose 20%.
Mr Dickie, whose funds include a 12.2% stake in Vista — before its recent placement and rights issue of $65 million — noted AMC had said it now had enough cash to last through to November, assuming a partial reopening of cinemas.
‘‘Digital streaming is eating physical rental and sales of videos, not box office,’’ he said. — BusinessDesk