Does Cineworld’s temporary closure in the UK mean curtains for the film industry as we know it?

Business School (formerly Cass) Professor explains the reasons for Cineworld’s decision to temporarily close its UK cinemas and how the pandemic could reshape the entertainment industry

Cineworld has announced plans to close all of its UK cinemas in the coming weeks, putting more than 5,500 jobs at risk. In September, the company reported a £1.3 billion loss for the six months to June 2020 with enforced closures due to coronavirus lockdowns. Reports also suggest that the industry as a whole has suffered losses of up to 60 or 70 per cent in the first half of the year.

The final nail in the coffin for Cineworld, it seems, was the delay of the eagerly anticipated James Bond movie, No Time to Die.

So why has this happened? Can cinemas and theatres be saved? And what does the future of entertainment look like? Professor Simone Ferriani from the Business School (formerly Cass) predicts difficult times ahead but believes the pandemic offers a chance for the sector to evolve:

“At the start of the pandemic nobody had any clear sense of how severe or lasting lockdown measures would be, or indeed how keen moviegoers would be to return to theatres.

“There was an expectation – or at least a hope – that after several weeks of self-isolation people would strive for collective entertainment experiences. Unfortunately, this expectation turned out to be wrong despite the array of safety procedures such as attendance caps, improved air filtration and aggressive cleaning.

“The economics of big movies like James Bond only work if lots of people leave their houses and buy tickets to see them in cinemas – but this is just not happening. The limited evidence we have so far suggests that blockbusters are not enough to lure people back into theatres.

“Christopher Nolan’s Tenet was expected by many to send people cascading back into seats. Instead it has shown just how much trouble the industry is in, with sluggish sales and a bleak projection of breaking even at best.

“Few consumer-facing businesses can cope with months of shutdown, especially those with staggering leases, depreciations, expenses and tight margins.

“Whether or not Cineworld’s competitors follow suit, it is likely that the pandemic will trigger cost-saving programmes such as reduced reinvestments in theatre enhancements or, more radically, the shutting down of poorly-performing outlets.

“I don’t believe the pandemic will change the industry per se, but it could accelerate transformations that are already happening. This includes significant reduction in Major Studio releases and a more rapid shift towards direct-to-subscription-video-on-demand.

“The big question is whether theatrical exhibitors survive these incredibly challenging times and transformations. I am optimistic that they will bounce back with vigour if they plan accordingly.

“Chairman of Sony Pictures Tom Rothman says that people will be desperate for communal entertainment experiences, and this is what movies in theatres can offer. However, cinema operators will have to find new ways to address consumer concerns, sensitivities and habits.

“Throughout the course of time theatres have withstood plague outbreaks and wars, but have always come back stronger. I like to think this pandemic will also be a catalyst for innovation and renewal.”

All quotes can be attributed to Professor Simone Ferriani, Professor at the Business School (formerly Cass) and University of Bologna.