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Friday, February 19, 2021

U.K. Cinemas Target Spring Re-Opening Following 76% Drop in Box Office in 2020

After three consecutive years of surpassing £1.25 million in annual ticket sales, the U.K. box office screeched to a halt following the onset of the Covid-19 pandemic. U.K. Cinema Association (UKCA) president Phil Clapp reported a 76 percent decline in box office revenue in 2020, a steep drop following back-to-back years where the market recorded its highest admissions figures since 1970.

Cinema admissions in the U.K. were 20 percent ahead of 2019 figures when the market endured a government-mandated shutdown in mid-March. A tiered re-opening effort across its different territories began through the month of July and culminated with the release of Christopher Nolan’s Tenet, which took in $7.1 million in its opening weekend. Tenet would go on to gross a total of $23.4 million in the U.K., the film’s highest-earning territory in Europe and the fourth-highest in the world after China ($66M), North America ($57.9M), and Japan ($25.9M). Considering the operating constraints facing the market during the pandemic, Tenet’s performance at the U.K. box office is comparable to the $34.5 million grossed by Nolan’s Interstellar in 2014. 

Cinemas in the U.K. were beset by additional operating restrictions in the Fall of 2020. Regional closures in northern England, Wales, and Scotland were instituted as early as mid-October. Complicating matters further were a new round of release delays from major studios, leaving the market in dire need of new titles. By early October, following news of yet another delay of the latest James Bond entry, No Time to Die, Cineworld, one of the market’s leading circuits, announced it would close all its locations until further notice

“It is very noticeable that those territories across Europe which were able to deliver a reasonably strong domestic slate of films generally performed better. It’s all relative—no one performed brilliantly—but if we look at France, Italy, and Spain, the margins are somewhere between 10 and 15 percent less of an impact on box office,” said Clapp.

“We benefit and suffer in the U.K. from the fact we share a language with the U.S., so what is identifiably a U.K. film as opposed to a U.S. film is less obvious. In 2019––and this is no criticism, because we were all happy for the money when it arrived––seven of the top 10 films in the U.K. box office were Disney films. Going forward there is a sense that, while undoubtedly that money was welcome, it does make the sector slightly more vulnerable to the types of supply issues we experienced last year.” 

By year’s end, only around 20 percent of cinemas were operating in the market. As of January 4, the U.K. market has been shuttered as the region continues its attempts to contain the spread of a more transmissible variant of Covid-19. 

While the UKCA states there is no clear timeline to reopening, it does expect a gradual re-opening to begin in the Spring––possibly as soon as April. “We genuinely have no inside track on the likely re-opening time for cinemas,” said Clapp. “When it does happen, we’re probably expecting it to happen on a national basis; by that I mean New England, Wales, Scotland, Northern Ireland at slightly different times. We are expecting some of the restrictions we saw before the lockdown: tiering and certainly social distancing to continue into the medium term, which probably means across the end of the year.”

Once the re-opening is underway, Clapp cites the ongoing operating and capacity restrictions facing U.K. cinemas as the primary reason for the entire sector, including the market’s largest circuits, to receive government aid. “We are asking the government to consider, having provided financial support for smaller operators, whether they would be willing to consider providing similar financial support for the larger operators. Those who have not received targeted financial support represent 80 percent of the market. They are the critical mass of the U.K. cinema sector, and without them much of that ecosystem would no longer exist,” he said. 

Clapp believes that the future of the U.K. cinema industry will see increased investment in the moviegoing experience––innovations such as premium large format, immersive seating, or dine-in cinemas––as audiences begin to venture outside their homes once again. Part of that future could also see a shift in programming to become less reliant on U.S. studios. “One of the lessons learned from the last 12 months or so has been that while the industry, and the U.K. industry in particular, has been very successful on the back of a strong U.S. studio slate, it has left us open to risk,” he said. “It has left us in a position whereby that tap being turned off, as it was for most of last year, meant that many U.K. cinemas weren’t able to fill that gap as effectively as colleagues in territories where they already have established relationships and may have a strong domestic slate.”

“What we’ve seen over the last eight months in particular is a whole series of new relationships being developed with other distribution partners. There was a point we reached last year where Netflix released more films in cinema than all the other studios combined. We’ve also seen an understanding that business models will need to develop and flex to recognize that some of those partners have a different view of the sector. I don’t think that means an 180-degree turnaround in the way this business works, but I do think it will be a more diverse business going forward.”

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