Our 85th CJ Cinema Summit will be held July 6th and we’ll be joined by Nick Gault, European Away From Home Director at the Coca-Cola Company. He’ll tell us all about the company’s sustainability efforts in the cinema space and during CineEurope. If you can’t attend or missed the live session, don’t forget you can always catch up on-demand. Register for free or view on-demand here.
Clouds persisted unseasonably over Barcelona up until the last day of CineEurope, when the sun finally made an appearance. So too the question of when European cinema will return to pre-pandemic level hung heavy over the annual industry gathering. There was a cautious optimism in the air, just a year after the last COVID cinema restrictions were lifted on the continent – in Italy, which was first to be hit and the last to emerge. But were the right questions being asked about the future of our business?
The positives were accentuated at CineEurope 2023 during the opening executive round table panel as well as in the keynote delivered by both Phil Clapp, President, and Laura Houlgatte, CEO of the International Union of Cinemas (UNIC). They noted that the first quarter of the year had already matched the average of 2017-2019 throughout the region, while a handfull of countries recorded particularly stellar growth: Austria up 96%, Lithuania 133.5% and Slovenia 182%. It is thus not a question of when, not if, 2019 box office will be exceeded. Recovery, alongside inflation and a focus on premium formats, will see to it, whether it is in 2024 or 2025. As noted by a recent PwC report admissions will take longer to recover.
A better question than “when” is “what,” specifically what type of cinema will emerge post-pandemic. CineEurope offered a few clues, both on-stage and in conversations off-stage.
Premium will continue to drive growth across a multiple of formats and propositions. IMAX may lead, but there is plenty of scope for competition and the likes of ICE, 4DX, Dolby and others stand to benefit. Even as some audience segments continue to be reluctant to return, the latest CAIC study in the United Kingdom those that have returned are spending more than before.
Content (i.e. films) will surprisingly not be what gets people back to the cinema. There were strong slate presentations from the studios, though having signed no less than three NDAs, we couldn’t possibly say which ones left audiences a bit excited or underwhelmed. There was, however, a variety of genres on display with everything from adult-oriented comedies to family animation and horror to historic epics set to play out over cinema screens in the next year and beyond.
The “threat” from streamers and day-and-date releases seems to have receded from exhibitors’ minds. Not just because it’s been tested and found wanting, but because the likes of Apple TV+ is releasing three of its films in cinemas with three different studios to boot. Netflix might still be holding out, but Amazon’s release of “Air” through Warner Bros. was deemed a success and “Trolls 3: Band Together” will most definitely, absolutely, certainly, specifically premiere in cinemas only – before popping up on PVoD less than three weeks later, but that is now tolerated, if not necessarily applauded by anyone in Barcelona.
Sustainability will be a feature of the cinema-going experience, whether cinemas like it or not. The Coca-Cola Company made a bold push towards “do as we say AND do,” with the reusable cups serving drinks at the slate presentations and film screenings largely judged a success. There was also a welcome return to popcorn in paper cups rather than plastic bags inside paper cups. The seminar on sustainability, put on by Coke, had practical examples from the likes of Kinopolis and statistics that pushed home the message. Financial sustainability, however, is at the forefront of most cinemas’ minds as debt needs to get under control while banks and equity funds need to be convinced that the cinema industry is worth lending to and investing in.
Consolidation will continue and nobody knows what the cinema or studio constellations will look like next year. Mooky & Co. will soon be out of Cineworld and speculations were rife about who his/their replacement might be. (Tim Richards, an ex Regal CXO or industry outsider seemed the tipsters’ top bets.) But let’s also not forget that three of the biggest cinema chains in France, Germany and Australia are for sale, while Cineworld/Regal might not be the last Chapter 11/administration we see this year. If anything, we should be surprised that the cinema industry has not seen more re-organisation post-COVID – at least not yet. The same goes for the Hollywood studios and the on-off game of musical chairs with the tech giants.
A few attendees were overheard griping about what they dubbed “the Incredibly Shrinking Trade Show” which saw attempts at creative layout to make the active floor space look less small than it was. The grim joke oft repeated during the week was that before too long it will just be the Coca-Cola booth, Golden Link opposite and maybe PCO or a seat manufacturer. Something clearly has to be done because too many vendors are already moving into the suites upstairs or voting with their feet and staying away , as are delegates, even when meals are served there. Some vendors are waiting for their finances to stablize before officially returning, the pandemic has not inspired a radical rethink of the trade show, but either you drive change or change will drive you. Cinemas need vendors and integrators, but they need business to keep going.
There will continue to be known unknowns and unknown-unknowns. The WGA writer’s strike in Hollywood was only mentioned on stage once, but it drove home the message that it is a major threat down the line. Disney might yet be praised as prescient for moving much of its Marvel/Star Wars/animation slate back by a year, though don’t expect the cinema operators to thank them. Event cinema, local titles, anime, gaming and new uses for cinema auditoriums will not fill in for blockbusters that underperform or mid-size titles that fail to connect with audiences. Setting aside the threat of another pandemic and the receding worry about streaming, issues like shifting demographics, service sector and changing lifestyle consumption habits need to be monitored and addressed. Thankfully these topics did crop up at CineEurope, for example the UNIC People Programme.
A lean cinema industry should not be confused with a failing cinema industry. Excess has been reined in and the technology and tools are there that make cinema the best experience it’s been in its 125 year history. CineEurope too will change to reflect the industry and that is a good thing. Remember, cinema survives because cinema evolves.
This is my last editorial for The Marquee and this Friday is my last day with Celluloid Junkie. It has been a privilege to observe, write about and be a small part of the cinema industry these past many years. Thank you to the sponsors (Dolby for this newsletter) who sustained us as long as you did. I only wish there had been more of you. I don’t know what comes next, but I hope to stay in touch with as many of you as possible, whether I stay in the cinema industry or not. And you will always find me in a cinema, my forever happy place, with popcorn in hand.
Exhibitors
Cineworld Goes Into Administration in the United Kingdom
Cineworld, the second-largest cinema chain globally, has announced that it will file for administration in the United Kingdom to address its significant debts while keeping its screens open. Cineworld plans to reduce its USD $5 billion debt pile through the administration process. It assured customers that it would be “business as usual” and that the operations of its cinemas worldwide, including the Picturehouse chain in the UK, would not be affected. Despite the reopening of theaters and the release of major films like Spiderman: Across the Spider-Verse and The Little Mermaid, the company anticipates that admissions will remain below pre-pandemic levels in both 2023 and 2024.
With over 28,000 employees across 751 sites globally, including 128 locations in the UK and Ireland, Cineworld has faced significant challenges in the past year. It previously filed for bankruptcy protection for its Regal division in the United States, but hopes to emerge from this phase in the near future after restructuring its finances. The administration filing is a technicality stemming from coming out of the bankruptcy. The company will apply for administration in July, leading to the suspension of its shares and the erasure of existing shareholders. The restructuring process will reduce Cineworld’s debts by approximately $4.5 billion. The company has already generated $800 million through the sale of rights and will have access to an additional $1.46 billion if needed.
Cineworld had attempted to sell its businesses in the US, UK, and Ireland but was unable to find a buyer. Despite the challenges, Cineworld reported sales of $4.4 billion in 2019, the last full year before the pandemic, indicating the potential for recovery in the future.
Source: BBC
Exhibitors
Santikos Expands Through Acquisition of Southern Theatres Cinema Chains
Santikos Theaters, the leading theater chain in South Texas, has announced its acquisition of both The Grand Theatres and AmStar Cinemas from VSS-Southern Theatres. With this acquisition, Santikos expands its presence from 10 locations with 121 screens to 27 locations with 377 screens across Texas, Louisiana, Mississippi, Alabama, Georgia, Florida, South Carolina, and North Carolina. As a result, Santikos becomes the 8th largest theater circuit in North America.
In a sign of how local banks play a crucial role in helping exhibitors recover from the COVID-19 closures, Santikos CEO Tim Handren credited a partnership with the Bank of San Antonio for allowing them to overcome the challenges of the pandemic era and focus on future growth and expansion. He expressed excitement about the new team members and guests, emphasizing Santikos’ commitment to creating the best in-theater experience in the Southeast.
The company’s expansion plans had been in the works since 2018, and despite the hurdles posed by COVID, Handren says Santikos is now in a favorable position for additional growth.
Source: Celluloid Junkie
Exhibitors
Korea’s CGV and Lotte Adopt Different Approaches for Overseas
South Korean cinema majors CJ CGV and Lotte Cinema have adopted very different strategies regarding their overseas businesses. Both companies have seen positive results in Vietnam, with CJ CGV experiencing significant sales growth and operating profit turning into a surplus. Lotte Cultureworks, operating Lotte Cinema, also recorded increased sales and operating profit in Vietnam. However, while Lotte Cultureworks has chosen to focus solely on Vietnam, leaving its businesses in China and Indonesia, CJ CGV is adopting a different approach. CJ CGV, despite facing losses in China, Turkey, and the United States, is not entirely withdrawing from these countries and is anticipating a recovery in business conditions. CJ CGV aims to improve its deficit by leveraging local characteristics, strengthening local content, and entering cities with high growth potential.
Lotte Cultureworks’ decision to concentrate solely on its operations in Vietnam is attributed to the challenging business environment both domestically and globally, influenced by the ongoing impact of the COVID-19 pandemic. The company aims to enhance its internal stability by streamlining its profit and loss structure. In contrast, CJ CGV remains optimistic about the potential for recovery in countries with deficits. CJ CGV highlights the improving trend in China, with a second-highest visitor count during the Lunar New Year period, and the positive performance in Turkey, despite the impact of an earthquake. Additionally, CJ CGV emphasizes its strategic presence in the United States, contributing to the promotion of Korean culture and providing opportunities for global fans of Korean films.
CJ CGV’s strategy revolves around selection and concentration, focusing on utilizing local characteristics, expanding special halls, and implementing differentiated marketing to revitalize local film markets. While the company has downsized its theater presence in China and Turkey over the years, it remains hopeful about the future prospects in these countries. CJ CGV aims to leverage its position in the United States to attract global audiences to Korean films and contribute to the promotion of Korean culture.
Source: UPI News
People
Steve Knibbs to Retire From Vue
Steve Knibbs, the group managing director and deputy CEO of Vue International, is set to retire on 31 August, ending his 36-year career in the cinema industry. Knibbs, who has spent two decades at Vue International, having begun his cinema career at AMC Cinemas at The Point in Milton Keynes in 1987, then the United Kingdom’s first multiplex.
In his last interview Knibbs highlighted the significant changes the cinema industry has undergone, including the transition from 35mm film prints to digital projection, the rise of online platforms, and the expansion of amenities like recliner seats and food offerings. Knibbs also acknowledged the influential figures who shaped his professional trajectory and recognized the support and encouragement of Tim Richards, the CEO of Vue International.
Upon Knibbs’ retirement, Vue International has decided not to fill his role. Instead, Chief Operating Officer Claire Arksey will join the board, and the leadership team, recently restructured, will continue to guide the organization’s strategic and operational performance. Vue International, Europe’s largest privately owned cinema operator, operates across nine countries, with 226 sites and 1,990 screens. Knibbs’ departure marks the end of an era in the company and the industry, as he leaves behind a legacy of leadership, wisdom, and level-headed decision making.
Source: Variety
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Celluloid Junkie is the leading online resource dedicated to the global film and cinema business. The Marquee is our newsletter focused on motion picture exhibition; keeping industry professionals informed of important news, the latest trends and insightful analysis