CINEMA: Navigating Beyond Uncertainty

Cinema global is reopening. But the uncertainty prevails and the biggest risk comes from the Consumers. Will they return.? and When?

Cinema Global

Global box office revenues amounted to the US $42 billion last year, an all-time high.

By May 2020 cinema has resulted in an enormous loss estimated at US$ 17 billion.

Divesting the industry of films that could have brought momentous returns at the box office. Especially during the summer months when schools are closed. How many more billions lost for June and July are worth speculating.

North America

World’s largest box office market worth US$ 11.4 billion in 2019 is still struggling. Hollywood supports more than 2 million jobs. A key driver of the US economy. As a result of the “new normal” brought about by the COVID-19 pandemic. Major blockbuster movies continue to be delayed with no end in sight while film production and overall business are operating on a day-to-day basis.

Financial ramifications will likely be felt by studios, filmmakers, theater owners, for months or even years. Disney making sweeping changes also owns 20th Century Films and Searchlight Films. Sony delaying nearly all its movies until 2021. NBC Universal to release major films digitally. Paramount changing dates.

Disney moved its upcoming trio of Star Wars movies forward by one year; they’re now slated to release in cinema by 2023, 2025, and 2027. And James Cameron’s Avatar sequels were moved back by a year as well, with the first set to premiere in cinema by December 2022. While Tom Cruise’s Top Gun Maverick shift to 2021 was among the biggest news.

China

Where audiences grew over 860% from 2009-2019 ( source: wef ) –the world’s second-largest market with US$9.2 billion.

More than 70,000 screens in 10,000 theatres stopped operating before opening back partially in March.

A loss of US$ 1.36 billion as reported in May by Forbes.

This action had a tremendous impact on the release schedules of theaters, as many film production companies struggled with liquidity challenges largely as a result of the plunge in box office revenue. A total of 64% was generated by domestic movies.

India

Demand for the quality theatrical experience was at an all-time high before the COVID-19 surfaced.

The lockdown has led to losses of over US$133.7 million, the worst for the first 6 months.

Add to that a relative dearth of screens on the supply side. Furthermore, in India, the pandemic has altered the consumption pattern. By shifting eyeballs in favor of TV and Online. India has one of the fastest-growing streaming markets projected to be worth US$ 2.4 billion by 2030.

East Asia

In Japan, the drop is 46% from $2.4 billion and for South Korea, it is 65% from $1.6 billion in 2019. In Southeast Asia, Singapore, Indonesia, Vietnam, Thailand, and Malaysia have been the 5 major markets. Boosting expansion prior to Covid-19. Their film industries have lost enormous revenues due to the closure of theatres to the extent that it may take 3-5 years for recovery.

New Normal

In Asia, theatre chains have already invested in safety and hygiene protocols. adhering to guidelines that ensure the safety of patrons. For instance:

• Attendance is mostly limited by 30%-50% of capacity. Age restrictions below 12 and above 55-60 years. Generally not allowed.
• Physical body checks have also been done away with. The theatre’s entrance is adapted with sensors. Followed by temperature checks.
• Comprehensively contactless transaction system. The customer has to scan QR codes. Available at multiple touch points through phone camera. This is to book tickets and then order food and beverage.
• Only in the notable case where a customer is either not carrying a phone or does not want to make digital payment will cash be accepted. Either way, no physical tickets will be sold anymore.
• Washroom taps have also been equipped with sensors and operate at 50% of their capacity.

Despite the hardship experienced by global film industries. It is their faith that the theatres will survive. Cinema takes up to 50% share of ticket sales. And yet, the show must go on.

Long before COVID-19, consumers increasingly favor streaming video-on-demand (SVoD). Therefore, worsening attendance at the box office. As a result of the change in consumption patterns.

Cinema admissions have been in decline for most countries except China. In the USA the number of tickets sold has not increased for 25 years. Even in India per capita admission has fallen by more than 30%. Between them are two of the world’s largest producing film industries.

The reduction of content in contrast to the variety available via the SVoD model is expected to continue. Worsening the prospects for theatres in the backdrop of charging 50% of the ticket sales.

Cinema: Theatrical Window

The quantity of films in theatres is declining for almost two decades now. So is the amount of time (two months) for showing movies exclusively in cinemas.

Netflix had its best-ever film slate in 2019, including two of the nine “Best Picture” nominees. Both of these films actually avoided theatrical releases.

Studio invested and owned services platforms are a new reality. When content creators go direct to digital, they reduce box office collections and revenue from satellite rights. An enormous source for the producers.

Cinema vs. The Rise Of SVOD

Perhaps the most notable shift the industry has ever seen. In favor of owned distribution and recurring revenue.

The launch of Disney Plus in November 2019 has only confirmed this. Well-funded SVoD providers with momentous budgets are shifting the balance.

Amazon Studios announced in 2019 that it would be shifting some features to direct-to-SVOD releases, while others would have only a few weeks of exclusivity in theaters.

Tencent’s recent purchases of iQIYI and Iflix is the latest edition of this trend.

A single Movie or TV release is not profitable but subscriptions and advertising are valuable.

As a result, entertainment companies no longer realize fixed schedules, primetime, or popular holiday weekends.

Instead, the goal is increasing engagement, thereby improving user retention and data on content popularity. 

As For Cinema

The SVoD model is disintegrating the market for theatres. 50% of ticket sales income is clearly under threat.

With fewer films available, blockbuster franchises take a growing share of box office revenue.

For two decades, the share of box office revenues taken by the big studios has grown over 10%; Disney’s share in the same period has more than doubled.

Filmmakers may still take advantage of a theatrical release, but they’re likely to be exceptions.

Growth

There’s plenty of room for growth – especially new revenue.

Releasing movies directly to consumers and further limiting the pool available to brick-and-mortar distributors.

In addition to SVoD services, gaming com\panies are also sensing an opportunity. For instance. Fortnite hosting an in-game Christopher Nolan-themed movie screening.

Remember! Netflix and Amazon are largely unaffected by the COVID crisis.

Therefore! Think Movies and Not Just Cinema

Useful References :

Title Image Credits: https://unsplash.com/ | Also available on Medium

Source: Variety

Source: https://www.weforum.org/

CINEMA Global: Navigating Beyond Uncertainty (Part 1)

Asim Qureshi is the Founder of Starring Brands. A pioneer in marketing movies and cinemas in Pakistan