Having slightly dreaded revisiting our cinema predictions from a year ago, we were pleasantly surprised to discover just how much we managed to get right. And this wasn’t just right in the way that even a clock that’s stopped shows the correct time twice a day. Heck, no! Sperling effectively predicted Kinepolis buying MJR cinemas, not to mention Cineworld’s move to buy Cineplex. Whether it was our take on Brexit, Cinépolis, movie stars, event cinema, slo-grow LED, dine-in, subscriptions, VR and “Roma” we feel that we get it pretty right. OK, so Fox Searchlight hasn’t been broken up (yet!), eSports is still struggling in cinemas and India didn’t overtake China in terms of focus. The jury is still out on several of these, which is why we could recycle last year’s predictions about cinema advertising, more post-VPF content and of course more cinema mergers. Instead CJ’s crack team of our four leading writers (Jim Amos, Helen Budge, J. Sperling Reich and Patrick von Sychowski) gaze into a brand new crystal ball to tell you what it is that we will be talking about a year from now.
Amazon or Apple Buys Either Sony or Paramount
Much like North American exhibition used to be the Big Four, Hollywood studios have been the Big Six (Disney, Fox, Universal, Paramount, Warner Brothers, and Sony) for decades. The last few years, however, have seen Sony and Paramount drop back and watch as Disney, Universal, and Warners grab the box office brass ring and now each of those conglomerates have a streaming channel to go along with a full-fledged movie studio. Sony and Paramount don’t have that and it has made them extremely vulnerable as we arrive at the new decade.
Enter Amazon or Apple. The bare knuckle brawl that is the fight for streaming content has driven home the point that content is once again king but now it’s imperative to have both quality and quantity. Having a studio pumping out product accompanied by a 75-year-old film library is essential for streaming success. Both Apple and Amazon certainly have the cash needed to buy a studio and this might be a good year for either Sony or Paramount to sell.
Sony has one of their better lineups set to roll in the coming year and in my recent Forbes column which predicts the top 20 films of 2020, Paramount has three entries on the list, which would be their best year since, gulp, 2014.
The lure of a studio lot, a massive film library, and the cache of having one of the Big Six studios in one’s holster is going to be too enticing for deep pocketed behemoths like Apple or Amazon looking to make a huge cannonball-like streaming splash. The guess here is that Tim Cook adapts the Apple vertical integration approach to the film business and takes the plunge. And won’t that turn Hollywood on its ear? – JA
China’s Box-office Still Won’t Overtake US’
Despite PwC having predicted for years that China’s boxoffice will overtake that of the United States, this prophecy still won’t come true for 2020. Yes, China did overtake the United States as the world’s largest cinema market in terms of screen count and is currently somewhere around 70,000 screens while still growing. But for box office? Not so fast. In 2016 PwC predicted that it would happen 2017. Except China’s box office came crashing to a virtual stand-still while the U.S. did quite well that year. So now PwC has changed the magic date to 2020. This will prove to be wrong as well.
The U.S. box office ended 2019 on around USD $11.4 billion, while China managed USD $9.2 billion, mainly on the strength of local titles. While exchange rates means that there are different levels of growth, it is international US Dollar-denominated box office that counts in this regards. China’s growth was 5.4%, which would be a great number for any Western market, but this is a country that until recently saw annual double-digit growth. That is now a thing of the past.
So if China grew this year by the same amount (5.4%) it would end up on USD $9.69 billion. Assuming that the U.S. market declined by the same amount, it would end the year on USD $10.78 billion, so they would still be more than a billion dollars apart. Even if we assume that China grows by 10% while U.S. receipts fall by 10% in the same year, we will still end up with USD $10.26 billion v. USD $10.12 billion, so the U.S. market would still be more than USD $100 million ahead of China. Such swings are simply not imaginable.
So PwC has cried wolf (and we don’t mean “Wolf Warrior 3”) yet again. Meanwhile it should have paid attention to Chinese commentators who said that 2019 might have been the worst year of the 2010s in terms of growth, but will be the best of the 2020s. – PvS
CineAsia Moves to Singapore
It is no small irony that the week CineAsia 2019 was due to take place was actually one of the most quiet and peaceful the Special Administrative Region (SAR) had seen in the past year (save for the Sunday prior). Having won the local elections, the protesters seemed stunned and unsure what to do with their victory. Yet nothing has been resolved and there is no guarantee that 2020 will be more peaceful than last year.
The decision to pull the plug on CineAsia was not an easy one as Film Expo Group found itself in an impossible situation. Yet studios and sponsors made it clear towards the end that they were not comfortable participating in an event in Hong Kong with tear gas protests on the doorstep. Yet companies need certainty and time to plan. As such no-one will forgive the organisers if it seems like they might have to cancel it a second year in a row.
Yet shifting a major international trade show in less than a year is not easy. While CineAsia has moved around a lot, deciding on a host city is never easy. Venues tend to get booked out years in advance as multi-year contracts are signed. The candidate city needs to have a direct flight connection to Los Angeles, a suitable conference venue with screening facilities, be interesting enough for people to want to visit and (perhaps most importantly) no rioting.
Bangkok is an attractive option, with some of the top cinemas in the world, but it too has seen its share of protests. Kuala Lumpur has evolved a lot when it comes to cinemas, but Malaysia’s national airline seems cursed with bad luck. Seoul and Tokyo are great but too expensive, plus tend to fall out of favour with China. Macau is a compromise, but it’s been tried already, while Shanghai and Beijing would require visas – plus the Chinese delegates like to get to travel abroad once a year.
This leaves Singapore as the only viable venue. But changing venue with less than a year’s notice might not be feasibly. So 2020 CineAsia might be cancelled, with the red carpet rolled out in Singapore in 2021 instead. [UPDATE: Well this one we got wrong pretty fast. It is now confirmed that CineAsia is moving to Bangkok in 2020. See you there instead – more fun than Singapore too.] – PvS
Event Cinema – Holding Firm
While not a wildly outrageous prediction to make, 2020 looks like event cinema could once again hold steady on its 3% of the United Kingdom and Ireland box office. Having just done the same for 2019, event cinema should benefit from the “regular” box office not seeing as many major titles in 2020 (apart from James Bond of course) and so will potentially hold onto a slightly increased box office share.
But we’ve yet to see any major event announcements which will command similar success to last year’s behemoths “Fleabag” (NT Live), “Les Miserables” (Cameron Mackintosh) or Korean boyband BTS’ “Bring The Soul: The Movie” (Trafalgar Releasing). As and when more 2020 announcements are made, look out for big names in the music arena, be it music concerts or musical theatre. This genre is just getting started. – HB
eSports – Celebrity Hosting
eSports didn’t quite set 2019 on fire and, to be honest, we think it’ll be a slow burner. Although one step forward at the end of 2019 was Pakistan’s Cinepax signing up to partner with Cineleague which could see further operators observing before jumping in themselves. Look out for more YouTube gaming personalities presenting interactive cinema events as a way of garnering more ticket sales and press attention. “DanTDM Presents The Contest” did just this in 2019 taking £280k of last year’s box office and making the only real significant dent from gaming. – HB
Streaming Wars Will Benefit Cinemas
Don’t expect to see headlines shouting “Disney+ Is Killing Cinema”, but the no-brainer-priced streaming alternative that brings together the combined archive of Disney, Pixar, Lucasfilm, Marvel and 20th Century Fox will start to have an impact on Netflix. No longer is the original couch potato’s favourite expected to grow from 160 million to 200 million global subscribers, but will be lucky if it’s growth slows rather than stops. There will be nine major streaming services fighting it out this time next year, with Amazon Prime, Apple TV+, HBO Max, Peacock, Hulu, CBS All Access and Quibi all wanting to be your unbundled bundles (and that’s just in the U.S.).
Each of these platforms will be spending a small fortune on original content. Yet the pool of talent and scripts for such proliferation of output is limited and however much you pay them, the key directors and actors still want to see their films on the big screen. With streamers making moves to buy into exhibition (think Netflix deal to run the Paris cinema in Manhattan), if not outright buying theatres, expect to see a lot more ownership and content crossing over between online platforms and physical theatres.
The interesting move to watch will be what Cohen Media Group does with UK’s Curzon, Curzon Home and Artificial Eye. Having also acquired a cinema in Paris, there is clearly a vision for a global platform for arthouse films that encompasses both the physical and online space. Don’t expect Cineworld et al to cave in on the window issue (and with a Cineplex ownership they will have even more say), but expect there to be a blurring that sees streamers compromise more than exhibitors in finding a window solution that works for (almost) everybody. Cinemas will come out stronger for it. – PvS
Premium and Immersive Format Cinemas Are In The Money
It seems with each passing year we inch closer to the premonitions of Steven Spielberg and George Lucas from 2013. In June of that year, during a panel discussion at the University of Southern California’s School for Cinematic Arts, Lucas stated, “You’re going to end up with fewer theaters, bigger theaters with a lot of nice things. Going to the movies will cost 50 bucks or 100 or 150 bucks—like what Broadway costs today, or a football game.”
Spielberg went on to lament, “What I fear about that day coming is that the experience will trump the story or the ability to compel people through a narrative. And it’s going to be more of a ride, a theme park, than it is going to be a story, and that’s what I hope doesn’t happen.”
Well, we haven’t yet gotten to the point where purchase a movie ticket requires pre-approval for a second mortgage, but ticket prices have been on a noticeable upward trend. This is especially true at cinemas that offer a premium format, upscale amenities or immersive experience. Anything to bump up the price of a ticket. Think giant screens like IMAX, which as always charged a higher ticket price, luxury recliners with comfy blankets and, of course, motion seats.
Whether it’s private label installs or branded offerings such as ScreenX, the move toward transforming at least one auditorium in a multiplex into a premium large format venue will continue unabated in 2020. There won’t exactly be a trend toward converting entire complexes to PLFs, but every cinema operator will want to try and capitalize on a floor-to-ceiling, wall-to-wall image. Not only because this helps differentiate them from the movie theatre down the street, but also because, to paraphrase a friendly neighborhood superhero, with bigger screens come higher ticket prices.
Another popular method of differentiation, at least from one’s living room, is plush amenities that go beyond rocker seating and perhaps even recliners. Cinépolis USA and iPic went all in on the upscale cinema-gong model and while the latter filed for bankruptcy this past year, that may have had more to do with the way that operator was handling their finances than audiences shunning the concept. Like with PLFs, rather than entire multiplexes, look for more cinema owners to figure out ways to update sections of their existing sites, or perhaps just a screen or two, into “fine viewing” arenas. (And yes, we may have just coined a new term; fine viewing.)
That brings us to immersive viewing experiences; that movement that Spielberg bemoaned. And we mean movement both figuratively and literally. We won’t see exhibitors race to equip every screen in all of their theatres with motion seats in 2020, but expect to read about additional screens being installed around the globe. The same will be true of CGR’s Immersive Cinema Experience (ICE), though its growth is less predictable. – JSR
Sustainability – A Gradual Move Towards Being Greener
We wish we could predict that this is the year that the cinema industry takes a significant leap towards being more sustainable and the challenges of shifting to a greener model become a thing of the past. Although this goal feels a long way off, many cinema operators, service providers and vendors are doing what they can, in both big and small ways.
From food and beverage packaging and produce, to green energy powering cinemas themselves or zero-to-waste disposal services being employed, there are many areas to examine and recalibrate on. And yes, of course, small changes are better than none. But overall, it’ll be these small changes that continue to happen, rather than anything that incites big, real change.
This is, however, an area that is garnering more and more public attention which can only be a good thing. Let’s just hope we don’t leave it too late. – HB
The Future of Cinemark Will Be the Exhibition Story in 2020
Take a good look at Cinemark this January and know that in all likelihood it probably won’t look the same when we close out the year in December. Not that long ago, the North American theater market consisted of The Big Four: AMC, Regal, Cinemark, and Cineplex. Fast forward and we see that AMC has grabbed a firm hold on the U.S. market share derby and Regal was bought by UK powerhouse Cineworld who in turn purchased Cineplex. The only one of the Big Four who are still in the same spot is Cinemark, which makes them the most interesting cinema chain in the world to watch in 2020.
Will they attempt to regain their share of the North American market by acquiring a chain such as Marcus, Harkins, or National Amusements? Each of those circuits is basically a family owned entity and have been so for decades so it’s unlikely they’d be posting a For Sale sign on their front lawns. Will Cinemark look to expand internationally? Or will they be a target for someone like Netflix or Amazon? It’s one thing for those streamers to buy a circuit like Landmark or the like, as had been rumored in the past, to try to plant a flag in the domestic exhibition landscape but those types of indie circuits won’t move the needle. Buying Cinemark would change all of that and would provide them access to most major U.S. cities. Here’s guessing that sometime in 2020 Netflix drives into Plano, Texas with a van overflowing with cash to buy Cinemark and changes North American exhibition forever. In one fell swoop Netflix can give potential A-list actors, producers and directors a real theatrical break, not the Land Of Misfit Toys one that films like Roma and The Irishman received. – JA
U.S. Exhibitors Shift Focus to Marketing Mid-Range Titles as Domestic Box Office Dips in 2020
Without entries in the Star Wars or Avengers series or another Pixar sequel, 2020 doesn’t appear to have any sure-fire $1 billion films unless the Wonder Woman or Minions sequels are runaway hits. What it will have, however, is a greater number of potential $100 million movies than 2019 did and that will ultimately determine success or failure at the box office in 2020.
This past year has given us 28 films that have reached that mark but 2020 could produce 32-35 that could possibly hit that level, but they will need help from the exhibition world in order to do so and that will come in the form of increased exhibitor marketing.
Theater owners have taken a you-want-it-you-pay-for-it approach to marketing over the past decade or so, selling their trailer space, website and social media platforms to studios but if they want to pump up these mid-range titles, which will need the boost from exhibition, look for cinema chains to start spending real advertising dollars to reach an audience which is constantly reading stories about how moviegoing is a dying medium. Cinema owners will need to be more creative in 2020. – JA
Vue’s Sale Will Be A Black Swan Event
2020 will be the year that Vue can officially be on the chopping block. With the conclusion of the CineStar acquisition in Germany (watch out for a surprise buyer of the cinemas it is forced to sell off), there is no legal obstacle for the European cinema major to either IPO or go for an outright sale. Yet with an asking price of two billion dollar there is a limited pool of potential buyers, even more so since AMC/Odeon or Cineworld cannot buy it as it is.
There is of course the possibility of a non-European cinema owner, such as Cinepolis CJ CGV or a Chinese cinema chain (not Wanda, because of Odeon, and most likely not Dadi). Yet the price tag is probably too much for the Mexicans, while problems in Turkey have forced CJ CGV to postpone the IPO of its Asian cinema operations while getting a cash infusion from a Korean investor.
This means that the purchase of Vue will not be anything like what happened with Odeon, which is the closest similarity. There could be a reverse takeover by a smaller operator, similar to what Regal did with Cineworld. So theoretically Kinepolis could buy it, for example. Alternatively an investment company could buy the circuit and combine it with UGC, Cinemark (see above) and Everyman too for good measure to create a mega-chain that would be the equal of Cineworld and Wanda/AMC/Odeon in Europe.
Yet if Vue is sold (and we estimate it is only a 50-50% chance given that 2020 is as a challenging cinema year at the global box office), we predict that it will be a very out-of-the-ordinary buyer. Black swan events are by definition impossible to predict, but if we had to pick a possible candidate it would be this one: China’s Alibaba. – PvS
More Exhibitors Take A Bite Out of Dine-In Cinemas
Whether its compressed occupancy issues, labor costs, unpredictable product quality or competing market disruptors, what business could be more difficult than running a movie theatre these days? Try running a restaurant, which must overcome a few of these very same obstacles. Combine the two and you’ve either got a recipe for big profits or a surefire way to increase your stress levels. (Perhaps both, as neither is mutually exclusive and one often does come with the other.)
Yet, the trend that pioneers like Alamo Drafthouse helped spark – serving restaurant quality food and alcohol in auditoriums and cinemas – has been adopted by a multitude of theatre owners with varying degrees of success. Take the Star Cinema Grill, our Cinema of the Month from December 2019, as an example of an exhibitor that has a winning formula for dine-in cinema. AMC, Cinépolis USA, Movie Tavern and now even Cinemark with Cut are also in the dine-in space to name just a few additional players.
Look for more cinema chains to dip their toes into the dine-in pond over 2020. That said, we expect to see more companies launching family entertainment centers such as those operated by Cinergy, EVO Entertainment and Strike + Reel. Incidentally, all of those are Texas-based companies. What is it with that state and unique cinema-going concepts?
These venues combine restaurants, movie theatres, arcades and sometimes even bowling alleys and obstacle courses. Because of the massive footprint these facilities require, this is a model more suited to geographic areas with lots of space to spare like… well, Texas. – JSR
Yet Again, International Saves the Box Office
As mentioned previously it appears that 2020 might be a down year at the domestic box office, possibly by as much 4-5%. But if you understand the global movie business you know that domestic only accounts for anywhere between 25-40% of a film’s worldwide box office total and that percentage continues to decrease.
Too frequently a film is labeled a “failure” by the media based on North American revenue, only to have it become a hit thanks to its international take. Contrary to what the 1985 USA For Africa song suggests, we are NOT the world and, buoyed by emerging markets such as the Middle East and Africa along with a welcome array of new cinema options in established markets such as the European Union and the UK, global box office in 2020 looks like it will do just fine, thank you. It won’t be a record year but there’s no reason why global box office can’t finish 2020 up a percentage point or two from 2019. – JA
And the Best Picture Oscar Goes Too… Not Netflix
One of the disadvantages of going last in any predictions column is that many of the significant and meaty topics have already been discussed. However, this year going last also meant that one of my predictions came partially true even while it was still being drafted.
There has been no end to the pontificating about how Netflix is going to destroy moviegoing and lead to the death of cinemas. Yet, cinemas still exist and as has been noted above, filmmakers, actors and creatives love to see their work projected onto a big screen in a dark room (preferably one with an audience). To those born before streaming content was an option, such a presentation is what defines a movie and differentiates it from television.
As such, there is a reluctance to reward movies made by Netflix, no matter how good they may be, which are distributed primarily through its streaming platform. This was seen last year when “Green Book” beat out Netflix’s “Roma” for the Best Picture Academy Award. This year, though Martin Scorsese’s Netflix produced “The Irishman” played in cinemas and has been lauded by those that count, I predict the same will hold true. That last sentence was written before the heavily favourited film garnered 10 Oscar nominations, including Best Picture.
Sure, the industry’s elite might honor such films with nominations and the award itself in major categories such as Best Actor or Best Director, when it comes to Best Picture, they will be more hesitant. This is especially true in a year which has quality movies that serve as viable alternatives like “1917” “Joker,” “Once Upon a Time… In Hollywood” and “Parasite.” – JSR
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- The Hollywood Studio Release Schedule Shuffle: Where It’s Been and Where It’s Going - April 20, 2020