The Uncertain Future of Cineplex Cinemas
The reel was rolling in the right direction for Cineplex. Late in 2019, U.K based international movie theatre chain Cineworld PLC offered Cineplex Inc. a $2.8 Billion takeover deal. Shortly after, Covid-19 spread around the globe forcing everyone into months of quarantine and fostering in the “new-normal.” With the world in lockdown, movie theatres were the last item on people’s Covid checklist. In mid-June the deal fell through before its June 30th deadline, with Cineworld claiming Cineplex breached their contract. Cineplex denies the claims and will be taking Cineworld to court.
Cineworld did not provide a detailed outline of its allegations, but Cineplex believes it is trying to scrap the contract on a “pandemic clause,” which they state the contract is protected from. Cineplex believes Cineworld is experiencing investment regret, noticing the bleak future for movie theatres.
Cineplex closed its 165 theatres across Canada in mid-March as the world, and Hollywood, entered quarantine. The summer blockbuster season is the most prosperous for movie theatres, and it will be missed this year as movie studios push back release dates of high-earning films. The only film still on track to meet its release date, postponed two weeks, is Christopher Nolan’s Tenet, scheduled for an August release.
Cineplex announced plans to roll-out a reopening phase starting with six theatres in Alberta on June 26th. To protect guests, Cineplex is offering reserved seating in all its auditoriums and limiting capacities to ensure proper social distancing. Strict cleaning protocols will be in place, with Cineplex teams dawning personal protective equipment, and VIP experiences involving food and alcohol canceled.
With Premier Doug Ford welcoming Ontario’s entrance into “Stage 3,” which will see indoor restaurants, playgrounds, and movie theatres re-open for all of Ontario outside the GTA, Cineplex’s re-opening will arrive at a large city near you soon. There is one looming unanswered question: will Cineplex be able to draw in people?
With masks made mostly mandatory, fears about the ease of spreading the virus have been calmed, which is good for Cineplex. If they execute all their new safety measures, customers should feel comfortable attending theatres in small groups. The problem, which is out of Cineplex’s hands, is that there is no quality content for customers to consume. There is nothing to draw them to theatres, in essence, nothing worth the risk. Russel Crowe’s thriller Unhinged and Selena Gomez’s The Broken Hearts Gallery are still set to meet their release dates, but big draws like Wonder Woman 1984, Morbius, F9, and the new James Bond film have been pushed back to late 2020 or early 2021 releases. Movie studios are not in the mood to lose money on their big draws in this time of uncertainty.
To fill content gaps, Cineplex will be screening oldies such as the Empire Strikes Back, Forrest Gump, Raiders of the Lost Ark, and Anchorman. These “classics” may not be enough to pull people from the comfort of their sofas. Wedbush Securities estimates that the North American box office will total $4.4 Billion in 2020, down 61% from 2019’s $11.4 Billion revenue.
A silver-lining for Cineplex can be found at drive-in cinemas, which are experiencing a surge in popularity, being deemed essential, and a safe way to be entertained. Even though movie offerings are dismal, people are still searching for a night out with friends, so no matter what Cineplex projects on their screens, people may show up to reconnect with movie theatre experiences.
If Cineplex fails to draw in crowds, this could be the perfect time for experimentation and finding new revenue streams. Using theatres for guest speakers to host mini Ted Talks, especially if Cineplex signs big names, would be one way to increase attendance. Stand-up comedy and stage productions could be another way to boost revenue. With a space that large, it would be a shame to save it for movie screenings. Cineplex was hosting successful gaming tournaments before Covid-19, and more of those might be just what they need.
The future is uncertain for Cineplex, but that doesn’t mean it has to be bleak. With a little bit of creative energy from their communications department, they may be able to salvage what is left of 2020