Dwayne ‘The Rock’ Johnson is accustomed to playing the role of saviour: he rescued his on-screen family from an earthquake in San Andreas, pulled loved ones from a tower inferno in Skyscraper and saved drowning swimmers in Baywatch.
Now the cinema industry itself is hoping he will come to the rescue as it struggles to bounce back from the pandemic.
Johnson’s latest action film Black Adam is one of several hotly anticipated blockbusters that executives hope will help to reverse several months of slow trading as it launches this month.
A dearth of so-called tent-pole movies to attract audiences to the big screen means box office takings are further off pre-pandemic levels than originally hoped.
“Cinema is a momentum business and things have been sluggish lately,” said Paul Dergarabedian, senior media analyst at Comscore. “We had a bevy of riches earlier in summer with Top Gun and others . . . but we’ve been stuck in a bit of a drought.”
This threatens to derail a full recovery of the sector this winter. Gower Street Analytics, a film data company, recently cut its projections for 2022 revenues across the US and international markets, excluding China, by nearly 10 per cent to $21.8bn — just two-thirds of 2019 turnover. Meanwhile, Cineworld, which is in the middle of Chapter 11 bankruptcy proceedings, admitted its sales recovery would take at least two more years.
Industry observers believe competition from streaming services and a permanent shift in viewing habits, cemented by Covid lockdowns, will heap yet more misery on some operators.
In the early 2000s, multiplexes revolutionised the cinema industry. Now, there are signs of a “polarisation of demand” around smaller, boutique screens and premium, large-format screens, similar to Imax, argues David Hancock, who leads cinema research at technology consultancy Omdia.
“The middle ground — that standard screen with 125 seats, which has been the cinema of the past 25 years — has been squeezed as a result,” said Hancock. “That’s the sort of screen where someone might decide to just watch [the film] at home.”
Philip Knatchbull, chief executive of UK art house cinema chain Curzon, said he has long believed that the world is “over-screened” and he expects bigger rivals will have to close “a lot of cinemas that don’t really fit into the new business model”.
The “16-screen, out-of-town multiplexes” will become less and less relevant as demand dwindles, he added.
Smaller chains seem to have escaped the worst of the industry pressure. Curzon recorded a £4.7mn loss before tax in 2021 when it was forced to shut its doors, according to recent Companies House filings in the UK. It has swung back into the black, with its cinemas expected to make £2.3mn in pre-tax profits this year.
Premium, large-format screens, which include immersive sound or panoramic screens, have increasingly attracted a greater number of cinemagoers globally. Their number nearly doubled to just above 7,000 screens over the past five years to 2021 — around 3.4 per cent of the total, according to Omdia.
In the UK and US, high-end, dine-in cinemas have also rebounded faster than rivals. UK-based cinema brand Everyman, which offers plush sofa seating and a waiter service for food and drink, has increased its market share to 4.5 per cent, up from 3 per cent in the first half of 2019.
“Yes, Everyman is a cinema, but it’s the sum of all its parts,” said Alex Scrimgeour, Everyman Media Group chief executive. “We like to think we’re bringing people out for an evening of hospitality, food and drink and it’s not just a film, it’s more than that.”
He said that this factor — combined with the Everyman’s lesser reliance on blockbusters — explained why it was “outperforming the market”. Its losses before tax narrowed to £798,000 in the six months to June 30, down from a hefty £9.19mn loss in the same period a year earlier.
Similarly, Texas-headquartered Alamo Drafthouse Cinema, which serves full meals with screenings, is expanding to five new locations over the next 18 months across the US after emerging from Chapter 11 bankruptcy.
“Dine-in cinema is punching above its weight class,” said Shelli Taylor, Alamo chief executive, pointing to how it is the most rapidly growing type of movie theatre in the US.
But Tim Richards, chief executive of Vue, Europe’s biggest privately owned operator, which resorted to a debt-for-equity swap over summer to stay afloat, insists that the more traditional cinema industry is not in need of a “drastic overhaul” but it is in “waiting mode” for a raft of new blockbusters.
This winter should mark a turning point, said Comescore’s Dergarabedian. About 15 per cent of this year’s takings are riding on a winter film slate of Black Adam, Black Panther: Wakanda Forever and Avatar: The Way of Water, according to box office forecaster Cinelytics.
The number of films billed for release in more than 2,000 locations across the US next year is closer to the 2019 level of 112 wide releases, according to Comscore. There are currently 84 films scheduled in 2023, up from 73 movies this year, and the final figure is expected to be higher.
“This is a short term issue,” added Vue’s Richards. He said the movie studios had “without exception” supported the traditional business model of theatrical release windows before films move to streaming platforms and that they had “started to greenlight a glut of films a year ago”. “The problems will ease,” he stressed.
However, industry experts are more concerned over a lack of mid-budget movies that keep a constant flow of audiences coming into cinemas. In recent months, operators have had to buy film rights off streaming services to plug the shortfall.
Shawn Robbins, chief analyst at Box Office Pro, predicted it will take time before the total of yearly releases, which amounted to 792 titles in North America in 2019, reaches pre-pandemic levels. “We know the blockbusters — cash cows of the industry — are coming, but there needs to be more of the low to mid-tier releases, like adult-driven dramas, comedies and horror films,” said Robbins. “We really need to start seeing more of them before the recovery is anywhere near complete.”
Operators, meanwhile, stress they cannot afford to be complacent even as film production picks up. “It’s about how do we innovate, how do we engage and how do we entertain without standing still,” said Scrimgeour. Everyman has had a big push into live events cinema in recent years, he added.
In 2019, admissions figures were broadly flat compared with the early 2000s and instead all the growth in the cinema industry has been fuelled by price inflation. Tobias Queisser, Cinelytics CEO and co-founder, thinks pre-pandemic revenues “will take time to return”, predicting it may take until 2025 at the earliest.
“Year-by-year box office gains have all been ticket price inflation and after the pandemic there is even more distinction between what consumers want to see in theatres vs at home,” said Queisser.
“Cinemas’ main competition isn’t Netflix, it’s other out-of-home options, and there’s a lot of stuff you can do nowadays from laser quest to golf to escape rooms,” said Omdia’s Hancock. “You have to compete with all that on price and experience.”