The World of Cinema is History? Cineworld bids adieu, albeit temporarily

With the new James Bond film ‘No Time To Die’ getting shelved until 2021, the regressing question mark in front of the global film industry is bolstered. The bleak truth surrounding the cinema theatres forced S&P Global Ratings to slash its rating for AMC Entertainment Holdings Inc last week. Also, there are reports that Cineworld, UK’s biggest cinema chain, will be announcing the shut down of all its UK as well as US theatres thereby, putting around 5500 jobs at risk.

The moving decision of London-listed Cineworld Group came in just after the Metro-Goldwyn-Mayer, popularly known at the MGM Studios cancelled the November release of the new James Bond movie. Reportedly, Cineworld would be writing to Prime Minister Boris Johnson to alert him about how the frequent delays and cancellations of blockbuster films have made the industry impossible to sustain.  The Coronavirus has shattered the confidence of cinema going consumer and with the infections rising on a global level, the threat to public serving places like restaurants, pubs, cinema theatres, has deepened, slashing hopes for a rebound in the near future.

MGM’s ‘No Time To Die’ has been delayed for the second time and is now rescheduled for an April 2021 release. Prior to MGM’s decision, many other big production houses and studios have also pulled back.  

The industry had another setback when Disney announced that much awaited ‘Mulan’ would be screened on its own streaming service followed by Warner Bros.’s decision to withdraw the scheduled October release of Wonder Woman 1984.

The Showbiz saga

Films create value on a gigantic level. The year 2019 saw record-breaking global box office revenues worth US$42 billion – an all-time high. This contributed around one-third of the projected US$136 billion of the all-inclusive movie production and distribution.

Talk only about Hollywood, it alone is responsible for providing more than 2 million jobs and over 400,000 American small and large businesses. Talking about the UK, almost £60 million per day is contributed by films and TV alone.

OTT over cinema theatres

The Covid-19 induced pandemic has toppled the complete film industry but the fact that the industry was getting hit by the OTT platforms even before the pandemic, cannot be denied.  Current disturbances only accelerate the changes in film making, distribution and consumption. This transformation reflects the watcher’s inclination towards SVoD (streaming videos on demand) that increased manifold during the times of lockdown. These services are now either owned or financed by big movie studios. Well-sponsored SVoD suppliers like Amazon and Netflix procure movies, release them directly to the viewers and limit the share of films left for the distributors. Now, the obvious exhaustion of choice in movie theatres in comparison with the plethora of content offered by the OTT platforms is bound to put downward pressure on the overall film industry.

Also read: Government plans ‘SEAT out to help out’ scheme, Cineworld to be impacted positively

What might lie ahead!

The film industry is on the edge of one of the ‘biggest ever shifts in the history’. Firstly, the entire business paradigm is shifting from third-party distribution and single-ticket sales towards owned distribution and cyclical returns. Huge investments in SVoD platforms are a great example of the same. Here, a single movie or a series is hardly a revenue churner; rather, persistent subscriptions generate money.

Secondly, the OTT model promotes the release of movies directly to consumers, in their comfort areas, according to their time and availability. Due to this, theatres are at huge risk because, they claim up to 50% of the ticket sales and due to SVoD, this income is under threat.

Thirdly, the pandemic has, overall, made film financing more dangerous due to the rising health concerns and insurance expenses. Nonpartisan studios might find it tougher to build investment. This could result in a reduction in of type of content – like a concern that fostered after Disney bought Marvel in 2009.  Fourthly, on the distribution front, merging of the theatre operators could swell up the dependency of smaller studios on alternative platforms.

Conclusion

The stalwarts of the cinema industry are hopeful that the business of the showbiz would display a rebound towards the end of this year, backed by a handful of companies expressing confidence. However, the concern of catching Covid-19, social distancing guidelines and on and off lockdowns across the globe are all contributing towards keeping the cinema goers away. With fewer cinema devotees ready to hit the theatres, the studios seem unwilling to release the big budgeted 2020 movies. Walt Disney’s ‘Black Widow’ has also been pushed ahead due to the pandemic situation. All these conditions leaving the entertainment industry, particularly the film business in a rather tricky position – permitted to operate but have nothing to show!