Bouncing Back: Cineworld makes comeback with Peter Rabbit 2
June 13, 2021
2 min read
What's going on here?
Cineworld enjoyed a strong post-lockdown opening weekend, with thousands turning out to view its latest releases, most notably Peter Rabbit 2: The Runaway. This sparked hope of an imminent recovery for the company and the wider film industry.
What does this mean?
The film industry has been one of the worst-affected during the pandemic, as lockdowns forced production to halt, cinemas to close and releases to be postponed. Global box office takings fell by more than 70% in 2020 compared to 2019. Cineworld was hit particularly hard (to see our report on that, click here). The company reported a loss of £2.2bn for 2020, the first loss in its 26-year history.
Things began to look up for Cineworld on 17 May 2021, when the easing of lockdown restrictions meant it could reopen most of its UK cinemas. The company’s opening weekend saw its highest weekend ticket sales since before the pandemic. This was accompanied by strong concession sales, as viewers purchased popcorn, snacks and drinks to achieve the full cinema experience. Cineworld’s share price increased by 4% following the trading update, as investors cheered the prospect of a swift recovery for the company.
What's the big picture effect?
The road out of lockdown offers some much-needed hope for Cineworld. However, its recovery depends on cinema attendance returning to pre-pandemic levels, which is subject to several variables.
First and foremost, cinema attendance depends on the continued easing of lockdown restrictions. This is not guaranteed and could be slowed or even reversed by a spike in coronavirus cases or the emergence of a new variant. Similarly, the progression of the vaccination rollout is likely to have an impact on cinema attendance levels. As more people receive vaccinations, consumers will feel increasingly comfortable in crowded spaces such as cinemas.
Moreover, cinema attendance relies on the pipeline of film releases. The latest James Bond film, No Time to Die, was originally due to premiere in April 2020, but this has been delayed for the third time to October 2021. The film cost $250m (£191m) to produce. Beverly Hills-based studio MGM took the decision to postpone its release until cinema footfall was sufficient to generate high box office returns. Many other big-budget releases, such as Marvel’s Black Widow, have been delayed for the same reason. If film studios are waiting for cinema footfall to increase to schedule releases, but releases are necessary for this to happen, the film industry finds itself in a catch-22 situation which is likely to hinder its recovery.
Another key factor affecting cinema footfall is the weather. There is thought to be a negative correlation between good weather and cinema attendance. UK box office sales fell by 20% during the sweltering summer of 2018, despite the much-anticipated releases of Ocean’s 8 and Jurassic World: Fallen Kingdom. Cineworld’s strong weekend coincided with a weekend of extremely bad weather across many parts of the UK. With summer approaching, better weather could curtail cinema-going and threaten Cineworld’s recovery.
The easing of lockdown and reopening of cinemas is clearly a turning point for Cineworld and the wider film industry. However, with much uncertainty surrounding when cinema attendance will return to pre-pandemic levels, the road to recovery will be long and bumpy.
Report written by Isobel Deane
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