Are Cineworld, Picturehouse, Vue, and Odeon soon going to be things of the past? Will cinemas as we know them, soon be an extinct species?
The world’s second biggest cinema chain, Cineworld filed for bankruptcy protection in the US back in September of this year in order to undergo major restructuring. Shares in the company plummeted in that same month, down 87% from the start of the year. Picturehouse, a newer ‘independent-style’ chain, also owned by Cineworld, will likely be affected by their financial difficulties.
It’s not just Cineworld. Bloomberg UK also reported that Vue Cinemas was taken over by lenders for restructuring back in July – they cited a £700 million debt for the company – considerable.
AMC, owners of Odeon cinemas, has also only just managed to survive due to the creation of ‘meme stock status’ – essentially a cleverly managed shareholder experience involving the issuing of millions of dollars in equity. But, as the Financial Times reports, box office receipts have not reached the levels of 2019 and may not for years; AMC is still $9.5 million in net debt.
Things are not looking good for cinemas.
As Cat Rutter Pooley reports for the Financial Times, ‘Cinema can’t shake its case of long Covid-19.’ But, it’s not just covid of course that has been causing the near extinction of cinemas. Streaming giants like Netflix and Amazon Prime Video have been transforming our cinema habits since pre-Covid-19 – more and more now, we watch ‘cinema’ from the comfort of our sofas than from the popcorn-crunching seats of our local Odeon, or Vue.
Through proving the financial viability of this new business model (at least for now), the creators of traditional film studios are being forced to join in too – Disney+, for instance, entered the streaming market in 2019.
It’s clear then that cinema is now a more brutal industry than ever before; the conglomerates are fighting for your attention, and fighting hard.
The question is, does this mean an end to traditional cinema? Is the convenience of sofa-watching films spelling out an indefinite end to cinemas? The answer is, reassuringly, a probably not.
The Uncertainty of the Streaming Business
Whilst debts are piling high for cinema chains around the world, the streaming giants aren’t exactly in the most stable financial position either.
Netflix, Time reported, have lost over one million subscribers this year. Shares were down 65% in their last quarter, as of July. Shareholders even filed a lawsuit in the US over the giant allegedly misleading investors about subscriber numbers.
Competition between streaming giants is now brutal– everyone is involed, from Amazon, HBO, Hulu, Paramount (with Paramount +) and even Apple. There are also major players such as Tencent Video and iQIYI competing for viewers in Asia and elsewhere around the world.
So, streaming is tough business. For any streaming company, they’re just one poor financial decision away from a major shakeup of the market, a depletion of subscribers, the crash and burning of their service.
The financial instability of this market is mainly down to the subscription model for services. After all, it seems to me far too little for all of us to be paying, say, £10/month to gain access to a seemingly infinite library of new films that all had budgets exceeding £100 million each. Even if we are subscribing to multiple services at once – the deal is too good to be true on paper.
Analysts are also pointing this out, noting that services are unlikely to be making money ‘anytime soon’. So, perhaps the instability of the streaming market subscriber model is the one thing saving cinemas right now. After all, there is the simplicity and ‘know-what-you’re-going-to-get-ness’ of paying to watch a film at your local cinema, instead of paying for a subscription to a service offering an enticing but disorienting number of different films that may, or may not, disappear at any moment with the emergence of another new streaming competitor pulling its stuff off the platform.
The History of Cinema Prevailing…
The clarity of the cinema service isn’t the only thing in cinema’s favour – it also has a historical record. Don’t forget it has also weathered the storm of the video and DVD industry, the Blockbusters and HMVs of the 2000s. The sale of these physical forms of films direct to customers could well have threatened the existence of cinemas as, like streaming now, it enabled the watching of films from the comfort of your own television set at home. However, as history proves, VHS and DVDs did not end cinema. Cinema has always prevailed and continued.
Cinema has the undeniable advantage of being more of an ‘experience’ for customers: it offers the cranky escalators, the predictably overpriced popcorn and slushy, the pick and mix, the muddle of trying to find your seat and accidentally sitting in the VIP section. It also has the important human touches – the person behind the counter serving you the predictably overpriced popcorn, the one checking your tickets and ID at the door. It has the carpet with the familiar smell, the coolness of the dark theatre, the crunch of stray popcorn underfoot, the lights dimming, the ads and trailers. It has, most reassuringly, the communal experience – sitting in a room with your friends or family, a bunch of strangers. We can’t forget also, the after-film experience – that leaving-the-cinema ecstasy – the what-did-I-just-watch? or the that-was-incredible as you step out into the cool night.
Despite all the temptation and allure that streaming services offer, the unlimited library of films just can’t match the simplicity and satisfaction of going to the cinema to watch a film.
Despite this though, cinemas are undoubtedly still in trouble. The figures don’t lie. Many cinemas will likely close, especially if present trends continue and numbers don’t significantly rise in the next decade. Streaming, however unstable it is as a market, has certainly changed the game. It has changed how films are made, the relationship between studios and customers, and, potentially, what films actually get made in the first place.
It is also unlikely our sofa-film-watching habits will unfurl. This doesn’t mean a total extinction of cinemas though, rather, it is more likely that there will be a smaller, but perhaps, more treasured and used population of them.