It is no coincidence that Vue’s USD $550 million debt-for-equity deal and HG Entertainment’s USD $450 million consolidation move in the Chinese cinema market came to light the same week. The success of recent films such as “Top Gun: Maverick” and “Thor: Love and Thunder” has made us forget the “long COVID” that many cinema operators still struggle with. Instead it’s easy to proclaim that the “the big screen is back,” to marvel over the #GentleMinions craze and to even worry about the third quarter slate of releases.
Cinema survived the pandemic, but the long term implications are only starting to be felt. There is much more still to come, such as the much-anticipated sequel to Cineworld’s legal drama that could see it forced to pay CAD $1.23 billion (USD $957 million) in damages to Canada’s Cineplex for a cancelled acquisition deal. And there are unresolved payments, issues and conflicts still simmering away between cinema operators and landlords, before the added headwinds of inflation, soaring energy prices, staffing shortages and supply chain challenges.
In China it was recently revealed that there are over 4,000 theaters in the country that are not open, and the occupancy rate is predicted to drop to a record low of 6.5% in 2022. In some regards it is remarkable that more cinemas did not close as a result of the pandemic in Europe and North America. But just because there are no shutters on a closed cinema, does not mean that the cinema and/or the chain that it is part of is not under considerable stress.
We are likely to see many more deals and announcements about changes in cinema operator ownership, although it is reassuring to see that Wall St analysts still have faith in the cinema sector overall. But while we should hope for a strong box office recovery, it is best to expect a cautious return to form, with 2024 being more likely than 2023 as the year that the global cinema market returns to the all-time-high-watermark of 2019. And the cinema market could look quite different by then.
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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