Cinema bosses hope script has a happy ending

Covid-19 put James Bond’s latest mission on hold. Hercule Poirot’s cruise down the Nile was delayed. Lieutenant Pete “Maverick” Mitchell, set to take to the skies once more, was grounded.

Cinema executives hope that such blockbuster heroes will ride to their rescue when they return to the silver screen.

Thousands of multiplexes have been dormant for a year. Their owners fought for survival while releases such as the latest 007 film, No Time to Die, were pushed back again and again.

After the bleakest of years the sector appears to be turning a corner. AMC Entertainment, the world’s largest chain, expects to have reopened 99 per cent of its American sites by the end of this week. Odeon, its European unit, could be allowed to follow suit in England in May. Shares in Cineworld, which owns the UK’s biggest operator as well as Regal in the US, have almost doubled since the turn of the year.

The credits of this drama, however, have yet to roll. Analysts have warned of an uncertain road ahead for the industry’s protagonists.

Rich Greenfield, of LightShed Partners, said this month that the future of cinema going was “not in doubt” once this crisis had passed. “In fact we suspect movie theatres will be around for decades to come, especially with parents looking for ways to get away from their kids and kids looking for ways to get away from their parents.”

But he said in a note that the future of AMC was “very much in doubt” after developments over the past year “fundamentally changed” the ecosystem of film. LightShed recommended selling shares in AMC, which have been trading above $14 of late, boosted by Reddit day traders, with a target price of one cent, questioning forecasts that by next year its admissions will be down by only single digits on where they stood in 2019.

China’s speedy recovery over recent months has nonetheless offered a ray of hope. With cinemas in the country open at limited capacity its box office, now bigger than any other, enjoyed a record-breaking start to this year. Screenings attracted several hundred million viewers during the first two months, generating revenue of more than 15 billion yuan ($2.3 billion).

The picture in key European and American markets is more complex. Cinemas are reopening in a different world from the one in which they closed last spring. As projectors are fired up and lights dimmed once again, they face questions over whether they will ever draw audiences on the same scale as they once did. The pandemic collided with the creation of myriad streaming platforms, providing a captive audience of consumers largely confined to their homes. Demand for home entertainment grew exponentially and so did supply.

The streaming market’s rapid saturation is most evident in the US, where media heavyweights from NBCUniversal and WarnerMedia to Discovery and ViacomCBS have lined up over the past year to create digital platforms. Netflix, once the challenger, is facing unprecedented competition.

In the UK Disney+ fortuitously opened for business a day after the first lockdown was introduced and swiftly amassed millions of subscribers. In a matter of months Ofcom estimates that 12 million UK adults signed up to a new subscription service, of which about three million did so for the first time: 16 per cent had a Disney+ subscription in their household by early July.

Those behind the films expected to draw last year’s biggest crowds found themselves choosing between big screen or small. Two sequels of 1980s classics went in opposing directions, the Eddie Murphy comedy Coming 2 America released on Amazon’s Prime Video service this month and Top Gun: Maverick due in cinemas this summer.

With the wind in its sails Disney triggered a storm among cinema bosses. Instead of waiting for multiplexes to reopen, it released the Pixar animation Soul on its streaming platform over Christmas. Eric Wold, an analyst at B Riley Securities, said that studios’ experimentation with direct-to-consumer releases was “merely the result of not having really any other choice” during tight coronavirus restrictions. “While the balance of power may have seemed like it was shifting to the studios, we have predicted it would start to move back to equilibrium this year,” he told The Times, “and believe this is playing out.”

Onlookers with a more bearish view suggest that those calling the shots in Hollywood, having tested the waters over the past year, will unleash a wave of change over the coming decade. Studios with shiny new streaming platforms have been agreeing new deals with cinema operators that reduce theatrical windows — where a film is shown exclusively in cinemas — from months to weeks.

The biggest hitters have been quick to insist that these windows will not be shut altogether. Disney does not want to “cut the legs off a theatrical exhibition run”, Bob Chapek, its chief executive, told a Morgan Stanley investment forum this month, but consumers are “probably more impatient than they’ve ever been before”.

Still waiting on the likes of Bond, Poirot and Maverick, cinema giants know a thing or two about patience. In future they face a dual battle for business: both persuading studios to preserve their exclusive access to blockbusters and convincing fans that the silver screen experience trumps the convenience of their sofa.