COVID-19 lockdowns combined with threat of digital services may be the death of cinema, says GlobalData

Following the release of Cineworld’s results update showing it has seen revenue fall from $2.15bn in H1 2019 to just $712m in H1 2020 and adjusted EBITDA fall a staggering 93% from $757m to $53m, it is clear that COVID-19 has adversely affected the cinema industry.

Danyaal Rashid, Thematic Analyst at GlobalData, a leading data and analytics company, offers his view: 

“The spread of COVID in cinemas is expected to be typically lower than other economic-stimulating leisure venues such as bars and restaurants, where the enforcement of distancing measures has been eased. Despite this, governments are likely to continue to prioritize keeping economically stimulating businesses open. We have already seen how governments are prioritizing to keep cash-generating businesses open and the arts may, yet again, be sidelined. In the event of a second wave, this is likely to lead to cinemas shutting before bars and restaurants, should it come to this, as these provide less economic benefit due to smaller visitor numbers.

“If cinemas are closed again, this will be devastating – as demonstrated by the hit that chains such as Cineworld have taken in the initial lockdown phase. This is made even worse in the context of digital threats, with blockbuster movies such as Disney’s Mulan only being offered digitally and not in cinemas. COVID-19 has spurred on the digital-first model, and if it works and becomes popular, it could spell the death of cinemas. From this perspective, it depends on whether consumers are happy to pay for a blockbuster movie to watch at home and are okay with missing out on the more experiential and immersive adventure of going and watching a new movie in a cinema.”

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