It was a plot twist that would have made Ian Fleming proud. For decades James Bond has been a leading light of cinema, delivering a reliable string of blockbuster hits to line pockets in Hollywood. But overnight the suave spy has been transformed into a villain, and has left cinemas fighting for survival.
The decision to delay No Time to Die — the 25th instalment of the Bond franchise — has had an instant impact on the cinema sector. Cineworld, the world’s second-largest cinema chain, yesterday announced it would shutter all its sites in the UK and US, putting 45,000 jobs at risk.
Hours later rival Odeon followed suit, announcing that a quarter of its UK venues will transition to a weekend-only model.
As fears rise over a further tightening of lockdown rules and operators contend with empty schedules, film fans have now been left wondering whether the UK’s cinema sector has entered its final act.
For cinema operators, the impact of the coronavirus pandemic has been devastating. The sector has faced months of closure, and while venues were able to reopen their doors in July, encouraging punters to return to the big screen has remained a challenge. Even with sites back up and running, current social distancing rules have put a brutal cap on box office takings.
Moreover, a pause on film production and delays to new releases have left cinemas with a dearth of upcoming hits to lure audiences back.
As a result, the industry is locked in a stand-off. While studios are holding off on big releases until audience numbers recover, cinema operators are unable to boost customer numbers without new blockbusters on the schedule.
Phil Clapp, chief executive of the UK Cinema Association, told City A.M. the dilemma was a “chicken and egg situation”.
“The reason [for studios delaying releases] is not safety, it’s because studios have a business model where they want to release titles globally at the same time.”
Philippa Childs, head of creative industries union Bectu, went further, accusing distributors of putting jobs at risk in pursuit of higher profit.
“This is short-sighted in the extreme and if other chains follow Cineworld’s lead it’s hard to see how there will be a fully functioning industry to return to in six months’ time,” she said.
Cinemas are now calling on US-based studios to shelve their preference for simultaneous global releases, while discussions with the government over additional financial support for the sector are still ongoing.
Drowning in debt
The impact of the crisis has been felt across the sector, and analysts have warned that independent cinema chains may be even more at risk of collapse.
And yet — for Cineworld at least — blame for this film fiasco cannot be placed with Bond alone.
“Although the delay of the latest 007 blockbuster prompted the decision, Bond isn’t the villain in this piece,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.
Analysts instead have pointed the finger at the London-based cinema chain’s substantial debt pile, which mounted following its £2.3bn acquisition of US cinema chain Regal in 2018.
Russ Mould, investment director at AJ Bell, said the £1.6bn of liabilities that came with the purchase price were now “crushing” Cineworld, while Jim Wood-Smith of Hawksmoor Investment Management the company’s debt-funded acquisition spree was an important lesson about weak balance sheets.
Cineworld yesterday tried to reassure investors by stating it was looking at raising further cash to help shore up its finances, adding that all liquidity raising options were being considered.
Full stream ahead
But even if Cineworld and its counterparts can weather the Covid-19 storm over the coming months, the crisis raises questions about the long-term future of the sector.
For years, cinemas have been fighting off tough competition from streaming services such as Netflix and Amazon Prime, which have drawn audiences away from the big screen and pumped billions of dollars into their own productions.
On the whole, cinemas have remained resilient. Last year UK box office revenue topped £1.25bn, while admissions hit 177m in 2018 — the highest level recorded for 50 years.
But investors are still throwing their weight behind Silicon Valley. Netflix’s share price is up more than a third since the start of the year, while shares in Cineworld have crashed almost 90 per cent over the same period.
Some analysts have also warned the closure of cinemas will accelerate the move towards streaming. Disney last month released its live-action remake of Mulan exclusively on its Disney Plus platform after a series of delays to its theatrical launch, sparking speculation over whether straight-to-streaming releases could become more commonplace.
Moreover, the severe impact of the delays to the Bond film on Cineworld raise questions over whether cinema chains are overly reliant on blockbuster releases.
One industry insider admitted that cinemas were being forced to rethink their dependency on a handful of major studios, adding: “We didn’t expect the tap to be turned off”.
Despite the stark outlook, cinema bosses are confident that demand for the big screen remains strong and are holding out hope for a happy ending. But as the major chains pull down the curtains and Bond’s latest adventures move further towards the horizon, there’s no doubt the sector is in for a rough winter.