The impact of COVID-19 on the global cinema business (as at 16/7/20)

Cinemas have been closed for four months in most parts of the world, and studio titles understandably dried up when screens began to close. Since then, cinemas have begun to open in many countries (and shut again in a few). The first half box office in 14 territories tracked by OMDIA was down 72.4% on last year’s numbers, with China the largest drop at -92% and USA down by 68.3%.

Where they have opened, cinemas have been working with older titles or some local films. The results show some encouraging trends. France attracted 1m admissions in the first nine days of opening. In South Korea, local title Alive was released on 24 June on a maximum of nearly 2,000 screens and took $8.3m (1.2m admissions) in a week.

Ultimately, cinemas won’t attract the volume of cinemagoers they need to break even (I don’t think many are expecting to make any profit for the time being). For this to happen, studios need to start the release of their major unreleased titles. China and the USA account for 55% of the world’s screens and with one shut and the other suffering major markets closing cinemas down again, the outlook was more negative than positive. The Chinese government has now provided some hope that the summer season may get off the ground by the end of the month, and the major titles that cinemas need to attract will maintain their release dates.

China has released a four-page document listing the conditions under which cinemas in low-risk regions of China may re-open from 20th July. They did produce something similar back in May, but gave no date. The criteria are quite stringent, with capacity set at 30% of the auditorium, a maximum of half the usual number of screenings, no concessions to be sold and no screening may be more than two hours in length. We don’t currently know which regions may open up again.

In the USA, California has had to shut all cinemas down, adding to last week’s partial closure.

In Hong Kong, not only has Disneyland shut again due to a local spike, but cinemas are also shut again from 15th July.

This uncertainty seems likely to last for a while, as countries battle with localised spikes and the prospect of a second wave later in the year is still a possibility.  OMDIA data forecasts that 45% of the world’s screens will be allowed to open by 1st August, not including the China announcement, which could theoretically increase this number to 80%.

However, the release dance taking place between cinemas and Tenet/Mulan can’t go on forever, and at some point both parties will need to take the plunge into opening/releasing. There are ways that exhibitors can maximise the revenues for major films outside of the usual model. This may re-assure studios that enough revenues would be earned for their title to justify a release in a phased way around the world.

  • One way would be to focus all or a majority of its screens on one big title and use staggered start times to manage the flow of customers for this title. This may limit the screens available for non-studio titles, but in the current environment, generating revenues is of greater importance. Exclusively using advance ticketing would allow exhibitors to manage staffing requirements.
  • A second strategy could be to drive customers to come to the cinema at what are traditionally off-peak times. Limiting capacity at off-peak times is almost irrelevant to the attendance levels on a Tuesday afternoon, whereas it cuts potential revenue dramatically on a Friday night. Using marketing messages and promotional tool to try and time-shift demand into lesser attended times would enable the exhibitor to drive admissions up over the week as a whole.