Cineworld Considers Bankruptcy: Will Regal Be Forced To Close Theaters? 

Bad News for Movie Theaters and Studios

This is definitely not good for the movie theater industry. We have previously written on the plight of the movie theaters as a result of COVID-19, but even without the pandemic, there were signs that moviegoers weren’t necessarily satisfied with the moviegoing experience. Of course, big studio blockbusters were filling the seats, but medium and low-budget studio and independent films were not filling as many seats as they used to. Also, increased demand for blockbusters has pushed those films out of the multiplexes. 

It also didn’t help that during COVID, casual moviegoers have not returned to local cinemas, as they are not used to streaming movies at home, even though streaming does have its own issues. 

Streaming vs Theatrical

Although movie theaters are now having trouble filling seats, streaming hasn’t necessarily worked for the studios either. One of the worst decisions made by a studio, Warner Bros released all of their movies, including potential blockbusters, such as Dune and Godzilla vs Kong in both movie theaters and streaming at the same time. The lesson: Once you spend 100 to 200 million dollars making and promoting a movie, releasing it on streaming just doesn’t bring in the revenue as does selling movie tickets. 

One example is that Top Gun: Maverick was completed just before the pandemic and there was a lot of pressure put on Tom Cruise to allow a combined theater/streaming or streaming-only release during COVID. However, Cruise insisted that the movie be held until theaters opened back up so that it have an exclusive theatrical release. As result, after two years of waiting, Top Gun: Maverick was released theatrically only and has become one of the largest-grossing movies of all time, both domestically and worldwide. 

Other movies attracting big office numbers with theatrical-only releases post-pandemic include Jurassic World: Dominion, Dr. Strange and the Multiverse of Madness, The Batman, and Spider-Man No Way Home. 

What this indicates is that if there are movies people want to see, they will go to a movie theater to see them.

Also, moviegoers are filling IMAX, Dolby Cinema, 4DX, Cinemark XD, PRIME, RPX, and other premium screen format auditoriums, which indicates that if moviegoers can get an experience that is not available in a home setting or in smaller multiplex venues, they are willing to fork out the money. A growing number of consumers have home theater setups that, for all practical purposes, provide as good or better movie viewing experience than many small multiplex auditoriums, especially when you consider noisy patrons and high concession prices. 

Lingering Recovery Problems

A bigger problem is that movie theaters that were sitting idle throughout the pandemic now owe about two years of back rent or lease expenses, so even if those big blockbuster movies are able to fill those seats now, that revenue doesn’t cover all those past expenses even taking into account any local or national covid relief funds that may have provided some assistance, or additional tax breaks that may come into play.

In the case of Cineworld, bankruptcy may be the only way to recover. They may have to dispose of assets, such as selling off locations to smaller local or regional chains (such as Alamo Drafthouse and Landmark Cinemas) that may be more profitable, closing locations, or reducing/consolidating the available number of screens in some locations. 

Also, there is currently a labor shortage in many locations which means that to attract new staff, the costs of higher wages and/or salaries may come into play with very little extra revenue to pay for this added expense.

In addition, with no big blockbuster movies, as well as fewer movies overall, slated for August and September 2022, there isn’t a big incentive for moviegoers to spend money, as they are willing to wait for the big movies coming out starting mid-October (Black Adam) and going in the 2022 Holiday season (Black Panther: Wakanda, Forever, Avatar: The Way of the Water). 

Movie Theater Viability – A Least for the Near Future

It is unlikely that movie theaters will disappear completely, but as how we access and consume media changes, so will the role of movie theaters. The current trend appears to be that movie theaters will be the home of big blockbuster movies, with lower-budget and independent films being relegated to the streaming environment. Also, you may see more emphasis on local and regional theater chains than current global chains with thousands of screens. 

However, the movie studios will have to release movies that people will actually want to see, and theaters will not only have to provide a viewing experience not obtainable at home and also provide a clean environment with amenities that are worth the high ticket prices.

NOTE: This is a continuing story, as more information becomes available the article will be updated or follow-up articles as needed.