With active COVID-19 cases soaring and little sign of any blockbusters making their way to cinema screens in the near future, cinema operators remain in dire straits.
Abroad, this has meant that companies are burning through their cash piles and filing for bankruptcy. WhosWho.mt turned to Eden Leisure Group CEO Simon De Cesare to see how the local big screens are faring.
Back in August, you said ticket sales were picking up from the very low volumes soon after reopening, on the back of increased confidence. However, that was before the surge in cases that is still ongoing. Have ticket sales suffered due to the second wave of COVID-19 cases?
Attendance at the cinema is dictated by two factors at the moment: consumer confidence to return to closed spaces and the availability of films to screen. Unfortunately, both those variables have been very much against us.
When we reopened at the end of June there was still a significant fear of the virus, and as such confidence was low. We implemented aggressive social distancing protocols in our theatres, reducing capacity to about 20 per cent, and upped the cleaning regime massively. These remain in place till today, and we’re working hard to convince people that cinema is safe.
We also needed to source older content to screen in our theatres. Films such as Scarface came back to the big screen after some 37 years and the Harry Potter and Lord of the Rings series, along with numerous others, were brought back to theatres.
The slate for new films is being dictated by cinema openings over the world. For example, in the US, many key locations such as New York and California only reopened recently, and I believe many will be re-shut soon. Therefore, distributors have been pushing their releases into 2021, anticipating some return to normality around Q2 next year. Others have moved to release directly on digital platforms, bypassing the cinema screen.
As cases went down in July, and we released our first, and only, decent blockbuster, Christopher Nolan’s Tenet, we started to see some interest in people coming back to cinema. Again, we are talking about very low numbers, but when compared to zero while we were closed, we were happy to be up and running and able to bring the experience back to people.
The surge in cases in August and the continued reduced content available has made it almost impossible to operate. At this stage we are just trying to remain afloat by minimising our expenses, finding some creative content to screen, and waiting until the situation starts to normalise.
Attendance is around the 10-15 per cent of 2019 figures, which as you can imagine is very difficult to weather.
You mentioned the three largest cinema operators in the US were in trouble. Since then, one, Regal, filed for bankruptcy, while AMC releases continual warnings to investors that its cash is running low and may soon follow suit. Do you see a similar situation in Malta? Or is the industry weathering the storm better locally? If so, why?
These large corporations are somewhat different to our local businesses. Many of them would form part of larger retail and entertainment complexes and would have high rents associated with them. Many of them would have large administrative functions which are costly if they are dormant and non-productive. These companies in the US have been waiting for government support for some time and the delay of any stimulus package or support for wages, due to the political issues, is certainly something that would affect their viability.
Locally, I believe all cinemas own their land and do not need to rent, which is a big help. The biggest cost is therefore the payroll, with which we have received support from the Wage Supplement, which has allowed us to retain staff and remain open and offer a limited service. Having said that, the second largest multiplex in Malta has closed recently and it is not clear what their future will be. I cannot tell you how others are faring.
Also in August, you said mass redundancies had been avoided. Are you still managing to retain staff levels at pre-COVID levels?
We have had to reduce part-timers but all our full-timers are being very flexible in working multiple roles to help out. At this time we have reduced our operational hours and are only operating some seven screens out of 13, so we need to be flexible to provide people with their 40 hours.
The lack of films to show seems to have subsided a bit, with most of the films currently showing at Eden Cinemas being recent releases. Blockbusters on the other hand seem thin on the ground. Overall, has the situation improved?
There are a few releases, however they are still few and far between and the ones with bigger budgets are being pushed to later dates. Unfortunately, even the Christmas blockbusters seem likely to be pushed further into next year, especially with many European countries going under stricter lockdown.
The only big film still on the cards for Christmas is Wonder Woman, although I have my doubts as to whether it will be released as planned. Currently we are scrambling to find some classic Christmas films to fill up our seats despite the reduced number of screens.
So how dependent are cinemas on blockbusters?
Blockbusters are arguably the pillars on which the real cinematic experience hinges. Many of the smaller releases can be seen on large TVs in the comfort of one’s home, but you cannot see Bond or The Fast and the Furious in their glory on TV. These have to be experienced on the big screen while munching popcorn and slurping on a Coke.
Disney bypassed cinemas and released Mulan straight to Disney+. It is doing the same with its latest Pixar release, Soul. Is this a fundamental redrawing of the lines of the industry, as studios release content online on their own or partner platforms, or are we likely to see a return to normal practices once the pandemic is over?
As you said, it is redrawing the lines of the commercial relationship. I doubt normal will return. In the past cinema exhibitors were reliant on distributors and vice versa. Exhibitors needed the films for their screens and distributors needed the higher grosses and the word of mouth marketing they could achieve through theatrical ticket prices.
Studios have been trying to find a good way to maximise their profits by releasing on both digital and cinema at similar times, although theatres argue that they would not remain viable in this scenario.
The “theatrical window”, an unwritten rule that distributors would wait two to three months before releasing on on-demand platforms is being challenged while exhibition is at its weakest. Several large American chains like AMC and Cineworld have agreed new terms with Universal Studios to allow earlier release of their films on digital platforms in exchange for a cut of the digital revenues. I think more studios and cinema chains will eventually and reluctantly follow suit.
This fundamentally shifts the paradigm of releases and will result in a further throttling of smaller chains and cinemas as fewer films will be released in cinema.
What do you think the authorities could do to improve the business environment at this stage?
The support on the Wage Supplement was invaluable and necessary for survival and for us to be able to remain open and retain staff. This needs to remain in place into next year. I think the real question is, what do we need to do next to revive and regenerate cinema.
Firstly, I believe that cinema needs to be seen as a cultural experience, as it is seen in most other countries in Europe. It is true that there is some commercial junk out there but on the whole cinematic storytelling is an art form, and if used well can express and educate people on different viewpoints in the world. When the authorities can elevate cinema to a cultural experience, funds can be used to promote cinema.
Many other countries offer a reduced VAT rate on cinema tickets in order to support cinemas and to promote cinema-going to a wider audience.
Currently, it is estimated that more than 50% of people in Malta don’t go to the cinema at all. This is a wasted opportunity. This is essential if we want to retain cinema in Malta. Over the years cinemas have been decreasing in terms of theatres and seats, and this looks set to continue, threatening the future of cinema.
As an example, Europa Cinema, a program operated by the MEDIA desk of the EU, provides funding to cinemas showing European films simply because it spreads different European cultures around Europe.
I would like to see a greater push for Maltese filmmakers to create their own films. Most of the incentive focus is the attraction of foreign films to be filmed in Malta, however, more can be done to incentivise local film makers by for example facilitating tax credits for local companies to invest in local productions. More funding could also always be provided to promote local film creation and international distribution.
Eden Leisure Group CEO Simon De Cesare