Video Killed The Movie Star: Has Covid Wiped Out the Cinema?

With vaccination milestones beginning to tumble across Australia many will be looking forward to a summer of relaxed restrictions and greater freedoms. As the Australian economy begins to reopen in the coming months, pent up demand amongst consumers should provide a boost to the struggling tourism, hospitality, and entertainment sectors; as activities such as interstate travel, dining out and live music become available once again. Among the industries looking forward to a reopening are movie theatres. Will we see cinema-goers return to pre-COVID attendance levels, or has the pandemic accelerated a permanent shift towards streaming and home entertainment?

The COVID-19 pandemic resulted in global box office takings declining by 80% in 2020, with AMC the world’s largest cinema chain losing $US4.6 billion dollars of revenue. In Australia, box office earnings plunged nearly 70% from $1.2 billion in 2019 to $401 million. As social distancing requirements and stay at home health orders became ubiquitous, film studios, faced with plunging audience numbers responded by delaying the release of expensive blockbuster films and adapting their release strategy. Warner Bros made the decision to release all their 2021 films simultaneously in theatres and on their streaming platform HBO Max. This effectively ended the traditional 90-day theatrical window where films are shown exclusively in theatres before becoming accessible on DVD and streaming platforms. Disney has also been experimenting; with Pixar animation ‘Luca’ going straight to its streaming platform Disney Plus whilst the recent superhero film, ‘Black Widow’ was released in cinemas as well as being made available for an additional fee on its PVOD premier access service. This month, ‘Shang-Chi’ has been given a 45-day exclusive cinema release.

The pivot towards the dual release of films comes as film studios look to boost subscription numbers on their own streaming platforms as they attempt to compete with SVOD behemoths Netflix and Amazon in an increasingly crowded market. In Australia, Paramount+ debuted last month joining the likes of Netflix, Amazon Prime Video, Disney Plus, Stan and Binge. This shift comes as behavioural changes induced by the pandemic caused SVOD subscriptions to soar in 2020, with worldwide streaming subscriptions seeing 26% year on year growth to pass one billion subscribers according to a report by the Motion Picture Association.

The increasing prevalence of streaming combined with a still Covid wary public could be the perfect storm for struggling cinemas. A recent YouGov America survey found that between 20% and 27% of consumers in the US, UK, and Australia said they were less likely to go to the cinema in the future due to their use of streaming movie services. Additionally, the 2021 Media Consumer Survey recently released by Deloitte Australia found that 70% of Australians have a TV/movie streaming subscription (an increase from just 43% in 2018) and we spend an average of 7 hours watching these services each week. Unsurprisingly, the report also found that 55% of cinema audiences attended less than usual last year, with the main factors being concern about Covid safety and Covid protocols making the experience less enjoyable. Another interesting finding was that 47% of people would be willing to watch ads on a streaming service if it reduced the subscription cost significantly; a market already being explored by Foxtel Media’s AVOD service Tubi.

With an elevated household savings rate of 9.7% still well above pre-pandemic levels, theatre operators will be hoping to cash in on pent up demand with a slate of blockbuster films set for release in the coming months. On November 11th, Daniel Craig will make his final appearance as James Bond in ‘No Time to Die’. The film will premiere at the Royal Albert Hall in London on the 28th of September with the film’s director Cary Joji Fukunaga, leading actors including Craig, Rami Malek & Ana de Armas, composer Hans Zimmer and ‘No Time To Die’ performer Billie Eilish all in attendance. Health care workers have also been invited in a nice gesture toward their herculean efforts throughout the course of the pandemic. Other upcoming films include the highly anticipated adaptation of Frank Herbert’s ‘Dune’ on December 2nd, latest Marvel instalment ‘Spider-Man: No Way Home’ (December 16th) and Keanu Reeves return as Neo in ‘The Matrix Resurrections’ on January 1st.

Headwinds abound, with SVOD’s rise, a COVID wary public and the potential emergence of new variants of concern. However, cinema operators will hope audiences remember the magic of the big screen and return en masse once it is safe to do so. Renowned director Quentin Tarantino remarked in a recent podcast, “I have a living room; I want to go to a movie theatre.” Only time will tell whether others still do too.

Theo Sam is a data analyst with Media Precinct’s Research & Strategy team.